Sometimes the decline of a business enters a spiral.  Conditions in the marketplace change.  New competitors emerge.  Poor trading conditions lead to disappointing revenues.  Cash flow dries up.  Suppliers become reluctant to supply.  Shareholders begin to pull out, and it gets progressively harder to raise finance to reverse the decline.  That seems to be a fair summary of the current woes of Game Group, which is looking increasingly like the latest casualty on the troubled UK High Street.

According to the Guardian and BBC, the Game Group have issued a warning to their shareholders that it is on the brink of collapse.  The value of the company’s shares has fallen to a penny.

But Game desperately need cash, just to pay the rent on their stores.  With the picture so bleak, many suppliers are refusing to stock the firm with the latest new titles – a move which effectively finishes the business off.  Game publishers have withdrawn their latest hits from sale at Game over fears they will not be able to reclaim the stock if the company goes bust.

Game’s woes have largely been caused by its failure to keep up with fast-moving internet retailers and supermarkets, who often sold titles as loss leaders to tempt people in to buy less popular older games. The industry is also moving away from physical games to rapidly growing, and highly profitable, digital downloads. Instead of splashing out £40 on a video game CD for a £200 console, increasing numbers of consumers opt for 69p smartphone apps such as Angry Birds.

With debts high and losses mounting, it’s hard to see the way forwards for the company.  A take-over or buy-out looks unlikely, since according to this BBC video clip, Game is ‘at end of queue for rescuers’.

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Teacher of Business and Economics

King Edward VII School, Sheffield

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