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GAME Australia in sale discussions following financial troubles

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GAME Australia could be up for sale in light of parent company The GAME Group plc’s suspension of trading, local managing director Paul Yardley told GamesRadar AU.

GAME Australia, which has 95 stores nationally and employs 600 staff, is a wholly-owned subsidiary of The GAME Group plc, effectively making it an asset of the UK Group, which yesterday announced its intention to appoint administrators. 

“We communicate with the UK very closely, and it will impact upon us structurally,” Yardley told GamesRadar AU. “However, it’s not as if we go into administration straight away if they do.” 

There were three viable business options for Australian operations if The GAME Group does go into administration, he said. The company could sell the business outright, source an investor and keep the GAME brand. Alternatively, they could find a solution that combined the two.

“The model we’ll follow depends on who decides to fund us and when. We’ve been in discussion with a number of parties and those are ongoing.”

Yardley refused to disclose whom the investors might be. The future of the Australian business would be uncertain if no ‘white knight’ investor materialised.

The Australian arm of the games retailer might have enjoyed more settled economics than, say, the UK and Spain, but it’s still on shaky ground. The company’s latest interim report recorded a turnover of £26.2 million, or AU$39.9 million, for the six months ending July 2011. That’s nearly a fifth less than the same period in 2010, which turned over £32.9m (AU$50.1m).

Ubisoft, one of its lead suppliers, does not currently have a credit limit with GAME Australia. Itself a global company, Ubisoft’s insurer will not cover it to supply GAME Australia. However, Bianca Silingardi, Ubisoft’s sales manager, told GamesRadar AU that the local team was keen to continue doing business with GAME and was investigating using a distribution channel. 

“We’ve got big releases coming this year and we want to stay in business with them,” she told GamesRadar AU. “However, we’ve got very strict rules from a global point of view and so for February their credit is $0.”

Australia has a vibrant gaming market, but that’s not to say the group hasn’t faced challenges locally. We’re at the bottom of the cycle - it’s been six years since the last console release, which has left consumers “reticent” to spend, Yardley said. 

Grey imports have also hurt, he says. “There are lots of cheap imports coming into the company. Having said that, people still like buying advice and the ability to return a product.” 

You can also blame a weakness in Wii console and software sales, which were down 50% year on year in 2011, Yardley says.

“For a games market that was worth north of $2 billion in 2008, we’re now worth $1.5 billion.”

The Group business is in a state of flux that will clearly affect GAME Australia in one way or another but, for the moment, it’s business as usual. Stores are open, shelves are stocked and publishers are keen to re-establish credit terms with the embattled retailer. 

“We will keep stocking the latest releases, as well as honouring all our pre-orders,” promises Yardley. “Our aim, as always, is to ensure we remain as the destination of choice for our customers and continue to deliver great customer service and knowledge.”

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5 comments

  • kitten - April 2, 2012 6:43 a.m.

    Gametraders I've found has been selling imported games, I discovered this when I tried to trade in my copies of Pokemon that I'd bought brand new from Gametradeers at Game, only to be told they were American games and I couldn't trade them in. I normally buy my games from ebay these days though so I'd be pretty unaffected too... still we can't really afford to lose any more jobs...
  • dexter_griff - March 31, 2012 6:47 a.m.

    for me i've always seen it as JB Hi-Fi and EB Games so if Game goes bankrupt i will be unaffected.
  • Tranquilbez34 - March 26, 2012 12:13 a.m.

    Oh God, I'm always in my local Game, I've bought Nine pre-owned games from them in the last months alone, they also trade and sell retro games. I have a friend who works there and he says it's awesome and I'm planning to get a casual job there as well. hopefully they'll pull through. Because the nearest JB Hi-Fi is 40 mins from where I live and I don't have my P Plates yet and EB Games is ridiculous.
  • Fenderstat - March 25, 2012 10:19 p.m.

    Being a PC gamer I don't much care for GAME. Their PC sections are abysmal and they don't offer the sales that EB games do on my chosen platform. What I do care about is competition, in Australia it's GAME or EB and if GAME drops the ball EB turns into the mega giant which everyone hates, free to do whatever they like with only the lame gametraders so resist their total domination On the other hand I do make the majority of my purchases on steam as most pc types would and I would be unaffected however my console cousins would suffer for it and any loss to a gamer regardless of the platform is a loss to us all.
  • Hobogonigal - March 24, 2012 10:18 p.m.

    I hope they don't leave as well. That would really just leave EB Games to take the monopoly and they are expensive enough as is. Also I had no clue that there was a GamesRadar AU team! I thought it was just UK and US. Who are part of the AU team then?

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