At the beginning of the month we told you how retailer GAME were having difficulties after some insurance companies stopped giving credit insurance to suppliers of the chain. The company was working with publishers to find a solution to the problem, and at the time was pleased with the support it was receiving. But now the writing may be on the wall as EA refuses GAME any new stock for March.
The news of the breakdown between the two companies saw shares in the GAME Group slide almost ten percent to only £5.32 almost immediately after it broke. Now according to an article over at The Telegraph the retailer won’t be stocking upcoming titles such as Mario Party 9, Tiger Woods PGA Tour 13, and Mass Effect 3.
This apparent falling out between the two companies has come after GAME said it had worked out special deals with suppliers and lenders, which seemed to give the company an important lifeline. This would have also meant it didn’t miss any banking requirements.
Gamers that have preordered Mass Effect 3 will be offered a £5 voucher by the retailer, and will now have to purchase EA titles at the various rival retailers. Tom Devine the groups channel director sent a memo round to stores, which suggested the move was down to GAME and not EA to stock the games.
It does state though that EA didn’t want to alter or change its terms for GAME to make enough profit from stocking the games. The memo read that the company had reached out to its partners to make them aware of the short term challenges it faces, and asked for their support with “manageable credit terms”, while the company restructures itself.
The memo went onto reveal that the company will now only stock products it “could get the terms” for, and they wouldn’t sacrifice long term deals in favor for short term opportunities. It went on to say that the company reached the difficult decision not to provide next month’s releases from EA.
GAME Groups last published earnings revealed the company owned suppliers £295 million as of the end of January 2011, and was settling its bills within thirty days. The recent agreement the company made with suppliers provided GAME with generous rebate payments, which will help it in the short term.
Although not all the details are known surely it would make sense for GAME to stock AAA titles even though it may have only made a small amount on each sale. The retailer obviously would need all the income it can get to ease the pressure, and whether you are a regular customer or not, it would still be in everyone’s best interests if they can survive their current troubles.
Do you hope GAME comes through the current situation?