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  • Gadgets, Gaming, News - Written by on Monday, May 14, 2012 11:56 - 11 Comments

    GAME Australia goes into administration

    news The Australian division of embattled video game retail chain GAME Group has gone into administration, video game media outlet Kotaku reported this morning.

    GAME has been struggling internationally for some time. Earlier this year, a number of major video game manufacturers began refusing to supply the company with stock because of a perceived ability for the company to be unable to pay its debts. In its home market in the UK, GAME went into administration several months ago and was purchased by investment firm Opcapita. In Australia, the company operates some 95 stores and staff numbers variously reported to be between 500 and 900, as one of the major local outlets for video games, alongside rivals like JB Hi-Fi and EBGames. Kotaku reported this morning:

    “final confirmation came this morning when all GAME stores were sent an email stating GAME had gone into administration. GAME’s Marketing Manager also confirmed this to Kotaku Australia, but declined to give further details.”

    Its financial difficulties in Australia — which resulted in reports that the company was looking for a buyer for its local operations — may have resulted in GAME locally putting some products on sale. In a prominent notice on its website, GAME Australia has published a list of major games which are on sale through its stores at the moment, including copies of major titles such as Zelda: Skyward Sword, Uncharted 3, Modern Warfare 3, Skyrim and more, for prices ranging from $5 up to $74 each.

    In the UK, GAME had reportedly struggled with a speed of expansion which it may not have been able to support, as well as competition from online gaming distributors.

    Companies such as Microsoft, Sony, Valve, Blizzard and EA are now distributing a large amount of video games through online platforms, and it is common for video gamers to download new content through the Internet rather than going into a physical retailer to buy a boxed copies of games.

    For example, the major video game release this month is expected to be Blizzard’s Diablo III game, the successor to its Diablo II hit released a decade ago. When the game is released tomorrow, a large number of Australians will have already downloaded the game’s final release code and will only have to log in to their Battle.net online service from Blizzard in order to be able to play the game.

    It is unclear what impact this phenomenon has had on GAME Australia, but internationally over the past few years, a large number of sales have begun to take place online rather than through physical stores.

    Update: We have received the following statement from PriceWaterhouseCoopers:

    AUSTRALIA – 14 May 2012– PwC partners Kate Warwick and Greg Hall have been appointed Voluntary Administrators of TGW Pty Limited – trading as GAME.

    GAME is a retailer of video games, games consoles and PC software & accessories and operates 92 stores across Australia, employing c.500 staff. TGW Pty Limited is a subsidiary of The GAME Group Plc, a UK public company which was placed into administration on 26 March 2012.

    Kate Warwick, PwC partner, said, “Initially we will continue to trade all stores, operating these on as close to a ‘business as usual’ mode as possible whilst we get a clearer understanding of the current state of the business and actively pursue options to secure its future.” Ms. Warwick added: “Prior to our appointment, the company’s management had been exploring interest in investing in the business with a number of parties and we will look to see whether this interest can be harnessed to continue the business or part of it through the voluntary administration process.”

    TGW Pty Limited’s UK based parent company faced serious cash flow and profit issues. “While we are still investigating the causes behind the Australian administration; the impact of the administration of its parent, an ambitious national roll-out combined with the current soft retail environment appear to be key factors,” said Ms. Warwick.

    Further updates will be made to creditors as soon as more information becomes available.

    Ms. Warwick also noted that the company’s customers hold various claims against the company under loyalty cards, gift cards and vouchers. Ms. Warwick said “We are working on schemes aimed at giving customers some return on these claims if they are used to make additional purchases.” Further details will be available to customers on-line or in store from appointment.

    Well, bookstores all around Australia have started closing as the nation shifts to its new eBook reality (hello, Amazon Kindle and Apple iBooks), and now it’s the turn of the video game stores. Personally, I try and avoid buying physical copies of anything in 2012, and I know there are many others like me in the Australian community.

    Why go to the trouble of going into a physical store to buy a game, when you can download it, often for the same price, from an online store? Why bother keeping a physical copy of a game on your bookshelf or stacked under the TV, when you own a digital copy, and can re-download it any time, as you can through platforms like Battle.net and Steam?

    Perhaps the only reason I would go into retail video game stores in 2012 (and I am an avid gamer; about to finish Dark Souls for the first time) is when I want to trade in old games which I don’t play any more. However, as I often don’t buy new games until their online prices come down six months after launch anyway, I’ve stopped trading in many of my old games anyway. The whole physical gaming thing just seems so antiquated.

    Of course, the online distribution model isn’t the only problem at the heart of GAME’s model. They’ve got stiff competition from other retailers anyway and low margins, and it looks like they’ve also botched some of their finances and management to boot. But in the long-term, you can’t help but feel that it’s the online channel which is the biggest threat to video game retailers — and rightly so.

    Image credit: GAME Group

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    1. Chell
      Posted 14/05/2012 at 1:11 pm | Permalink | Reply

      It’s all about convenience. It’s actually quicker to buy a game on Steam and download it, than it would be to drive to the shopping centre, buy a physical copy, drive home and install it.
      Cheaper too. Portal 2 (released last year) was $6.99 on Steam yesterday. It’s $30 at JBHiFi.

    2. Jake
      Posted 14/05/2012 at 1:26 pm | Permalink | Reply

      Well the main reason that I mainly buy retail games is because I simply did not have the quota to do so (was stuck on bigpond 3G wireless). Although the main resin that I buy retail now is for collectors editions, which would be quite difficult to download ;), now if only we had widespread 3D printer adoption.

      • Posted 14/05/2012 at 3:21 pm | Permalink | Reply

        Both valid points. If I was on 3G at home I would also buy a lot more boxed copies, and the collector’s editions can sometimes be worth it. In the case of Dark Souls, I got some extra artwork and DVD studio game development background with the game which turned out to be excellent bonus material.

    3. EMC2
      Posted 14/05/2012 at 2:57 pm | Permalink | Reply

      The main reason is cost.

      I can walk into a GAME store (or EB, or JB Hi-Fi) and purchase a hypothetical game for, say $60. At the moment, it is highly likely that this same game can be bought from a store elsewhere in the world (usually UK) for $40-$50 *delivered*. It is also likely that this same game can be bought online and downloaded for $30 (and if you are lucky you can get it on sale for <$20).

      *IF* I could buy a boxed copy from game for the same price of a downloaded version, I would 100% of the time.

      • Posted 14/05/2012 at 3:20 pm | Permalink | Reply

        “*IF* I could buy a boxed copy from game for the same price of a downloaded version, I would 100% of the time.”

        I wouldn’t. I have a family, a small business and video game, anime and sci-fi/fantasy book addictions. The less time I spend outside my cave, the better ;)

    4. Posted 14/05/2012 at 3:58 pm | Permalink | Reply

      The problem with downloadable games is that EB, GAME, and some other specialty stores actually are not that affected by downloads from Steam, GOG, Origin, etc since their market is very much not the PC side (and definitely not mobile gaming)

      Their market is for the console whether that is PS3, Wii, Xbox, PS-Vita, DS, etc that are specifically closed and controlled devices that require physical product to run. ie: BluRay, DVD, CD, Cartridge, Stick.

      Yes there are some downloading of major titles that places like PSN are now allowing for full RRP, and over 3gigs [sometimes 7gigs] per download (which is another major cost factor). But these do not affect the bottom line of GAME, EB, et.al. YET!

      The only downloading that does effect these organisations is the DLC that is produced, and also the new “one off online multi-player codes” which is really designed to slow down the second hand markets (especially in the USA where the “first sale principle” is law).

      GAME’s major problem here is offshore ordering from UK and ASIA, they can’t really compete since the suppliers will not match international pricing. $129 – $99AU RRP for a AAA title that you can get at the same time pre-ordered even for under $60AU delivered from UK/ASIA (and on the PS3 there are NO region problems) is a major problem.

      There other problem is the misconception by there suppliers that GAME Australia is similar to GAME UK and is therefore tarnished with the same brush, which is just not the case. Though as we all know mud sticks.

      Stores like GAME, EB, even Gametraders are needed since they unlike the JB, BigW, Target, etc know their products, their staff are as geeky as any gamer (well they have to be), and they allow 2nd hand trading (and is where they actually excel and make most profit from) .

      Personally this Voluntary Administration might be a good thing since dependent on outcome it allows them to re-establish themselves, remove the tarnished reputation they have received via the UK company. AFAIK there are no issues with management any more (18months ago there was, they sorted that) and the store staff are brilliant. The only problem they have is that they are an Australian company stuck in an untenable international regional pricing regime that must change. Yes they will always be a bit more expensive than online but the services they offer do outweigh that.

    5. Goddy
      Posted 14/05/2012 at 11:21 pm | Permalink | Reply

      I’m done with having sympathy for gaming retailers in Australia who have been screwing us for over a decade and then expect us to be understanding when they kick their own bucket.

      Whoever owned GAME needs to get a good, hard kick in the arse, and hopefully the other retailers get real shaken up by it.

    6. Gav
      Posted 15/05/2012 at 9:12 am | Permalink | Reply

      Like Goddy, I have little to no sympathy for gaming retailers. I know they are often under the pump becasue of factors outside their control, but like a lot of bricks and mortar businesses they simply havent adapted to a changing world. Movie stores were the same, and game retailers are going down the same path.

      Specifically to GAME, I have no sympathy at all. When you preorder a game that’s been 12 years coming (yes, Diablo 3) specifically to get the collectors edition, then get told THE DAY BEFORE RELEASE that you a) wont get the game, and b) you wont get your deposit back, well, thats unacceptable.

      They would have known weeks in advance they werent getting copies, and should have done a better job spreading what copies they had (I preorded the CE 6 months ago to make sure I got a copy), or advising people they were out of luck.

      If they cant even handle something like this, then there’s little hope they will trade their way out of their troubles, or keep whatever business they had previously if they do.

    7. Sean
      Posted 15/05/2012 at 12:01 pm | Permalink | Reply

      I want to echo the comments Renai made regarding the convenience of digital downloads. Plus I simply do not have the space to store physical boxes anymore nor would my wife allow it.

      The only game I have purchased in a physical form over the last 5 years was SWTOR from Amazon and that was to workaround the missing Australian release last year.

    8. luke
      Posted 28/05/2012 at 6:25 pm | Permalink | Reply

      At the end of the day when you buy a game from a store you make a job for some one who lives local its not about how cheap you can get a game for its about jobs people. thats why alot of small local stores close because we are to cheap to pay full price for anything and that makes me sick

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