I know we've seen a mixed response to the news of Chipsworld's struggles on the MCV comment boards, but I'd like once again to offer my sincere condolences to all those who have lost their jobs or been affected by the sad demise of Chipsworld. Don, in particular, has been a long-standing figure in the UK games retail landscape and will be missed. Please be kind people - it's horrible to lose your job and to lose a business.

The management and staff at CHIPSworld have my deepest sympathies. Shutting down a business or being made redundant are a horrific experience.

But isn't it time we stopped blaming the credit crunch and the recession. Zynga has grown to hundreds of millions in revenue during the credit crunch. Playfish and Playdom have grown to $100 m each. Companies like Jagex, Bigpoint and GameForge have grown to $50m+.

More than that, Modern Warfare 2 saw the biggest launch ever and grossed $0.5 billion in the first week and Joe Danger sold 50,000 units on PSN in the first week.

The industry is changing. Margins at retail are getting squeezed and they are losing volume to onilne alternatives (both core and casual).

I have huge sympathy for CHIPS, but it is not about the recession.

You're right, Nicholas, that some businesses have managed to successfully navigate the recession, but it's especially tough for traditional games retail right now. To compare Chipsworld to Zynga is a bit harsh - one is fighting against a myriad of threats (decreased margins, pressure on price, supermarkets, digital growth, changing hardware cycle) and the other is riding the crest of the biggest boom sector in gaming.

Ben, I'm not trying to compare Chips to Zynga. I'm just taking issue with this sentence:
"Since the summer of 2008, Chipsworld Ltd has battled against the credit crunch, mounting unpaid debts and the recession in order to keep afloat."

It's actually battled against a decline in retail sales as consumers move online, as evidenced by the growth in PSN/XBLA, iPhone, Facebook and web revenues. It has battled against changing consumer behaviour buying fewer marquee titles (which are usually available at the supermarkets more cheaply) and, yes, to an extent, it has battled the recession.

But by blaming the recession (which I think is the least important of the three), rather than the true causes, Chips is not helping the games retail sector think about and understand it's long term future (if indeed it has one).

As a wee nipper I used to visit the original CHIPS store frequently - it was round the corner from my grandparents. Since then I've watched CHIPS grow and have huge respect for Don, Nik and everything the team has achieved.

Nevertheless Nicholas is spot on - if the likes of GAME are struggling due to industry trends it's hard to see how CHIPS or others can thrive without radically changing their business models.

Best of luck to everyone affected - will be interesting to see how Grainger Games reacts.

PS we've just had a new indie open in Glasgow Reload (?) just yards from Gamestation & G-Force

Chips traded successfully in a physical games market smaller than the one that exists at the moment. Casual / portable / online are all growth areas that's indisputable, but I suspect that none were the factors that specifically led to their current problems, which are actually far more linked to the economic climate, availability of credit and competition in the physical sector.

But don't let that stop you adding it to your "job loss tracker" and flogging your casual sector consultancy.

As a fellow Indie we must all be saddened by this news.

Although my time in the industry is not as long as Don McCabe's I fear that mine too maybe coming to an end.

I do not blame Recession or Credit Crunch - it is a simple fact that gamers now want to pay far less for games.

The internet companies can onlly survive if they fiddle the VATMAN by using Luxembourg and Jersey

The Grocers are screwing everyone, but will put up their prices when we are all gone

As an Indie Retailler we either have to adapt in some way or get out whilst we can with our shirts and dignity intact.

For the lads at Chips our industry thanks you for your contribution and guidance in the early days of our businesses has given us.

To the Internet companies watch out the VATMAN is coming and the Grocers what comes around goes around

@allan

Credit is limited when the market doesn't believe in the long term future of a business. That's an indicator for me that the market believes in a bigger threat than just short term economic conditions. And I agree that competition in the physical sector is a big factor.

But my main reason for commenting is that so many retailers seems to be looking with their own world (physical retailing) and seeing recession/competition as the main threats. I don't think they are. When the recession ends, which it will, I don't expect retail to bounce back. That's my point.

(And of course it's self-promotion. that's what bloggers do. but my services are just as relevant to Activision trying to build a long-term service business out of Call of Duty as they are to the "casual" sector")

I think Allan's correct here.

Those wider issues in games, yes, are driving people to online. But specifically in the retail sphere the fierce competition between stores, driven by price erosion and tough margins (all a result of economic challenges) is the biggest problem - and which will have had a major hand in Chips' demise.

The games industry is broad, and yes it's exploding in some areas and imploding in others - but there aren't always explicit lines linking each of these areas.

Consumer Price expectations have also fallen due to Digital. Or more specifically how publishers have priced content in a hugely competitive market space.

Why buy GTA Chinatown Wars for £20+ on DS when you can but the same game for £5 from the Apple App store ?

Gaming has changed - boxed product sold through retail is a declining yet still very important component of the market

It's a shame that people are to lose their jobs and to see the demise of another UK trader. However there's clearly more to a retailer like Chips going out of business than the recession. The video games industry has grown and evolved, more players with seemingly unlimited pots of money have entered the retail games market, digital distribution, online market places offering reduced prices and so on as well as the current economic climate have all contributed to the struggling high street. What worked in 2000 for places like Chips clearly isn't working in 2010. I sincerely doubt it will bounce back either.

The VAT-dodging activities of the international companies, shipping out of little British tax havens, have also massively undermined indie retail. It's not just competition they're struggling with - it's unfair competition from people able to afford accountants and lawyers who know how to game the system.

I would like to express my sadness at this news. This is yet another a loss to the High Street and to the matter of an ongoing 'diverse retail experience'. You will be much missed.

Don and Nic - on a personal note it has been a pleasure working with you both over many many years and I wish you both all the best for the future at this very difficult time.

this is not just about indies,its also nationals on the high street
publishers you keep up the good work
and you will only have online and supermarkets to sell the games too
this is an absolute disgrace,how you continue to let the industry collapse
hope your happy with yourselves
act now,this has surely got to be the wake up call you need
support the industry !!!!!!!!!!!!!!!!!!!!
R.I.P chips

And in what way should the publishers act? I hate to break the news to you, and speaking as an ex industry retail veteran, but publishers are in no way obliged to prop up the retail sector, particular the independent sector which only makes up for a very small percentage of the overall market.

Got loads of respect for Nik Agar, and this is sad news. I wonder if any of the stores will be sold off to other chains, so as not to bring the total indie count down further, =P...?
Glad to hear the franchise business is still going, and hope this news won't adversely effect it in anyway.

obviously you did not read my comments
i said the high street indies and nationals

I read your comments perfectly well. You're clearly laying the blame at the feet of the publishers. Can you explain how you came to that conclusion please?

I will steer clear of the sage like discussions, the world is changing and changing fast. But I worked directly with Don and Nick some years back and I had nothing but good experiences. Honest, decent and above all good men. The industry has lost out and that is very sad. Don & Nick I wish you the very best of luck in the future.

What is the probability of Nik & Don buying some or all of the stores from the administrators?

Remember it is Chipsworld Ltd that has got the unpaid debts, not them personally. They will have been paid for their work within Chipsworld Ltd, so personally should be financially sound

Everybody has got a different view on what has happened at Chips and their opinions on the 2 people who are accountable as directors of Chipsworld Ltd.The people I feel sorry for are the staff that have lost their jobs and the franchisees who bought into the story and invested.
The market has changed over the years and it continues to do so at a more rapid pace of late but the companies who will succeed will either be the big boys with pots of money or the people that are creative who can quickly adapt and move with the times.These guys had an opportunity but they live in the past.
I've got no doubts that they will have a pre-pack agreement with the liquidator and they have bought some of the assets and stock at a very good price and they will be trading again very soon without the debt and 12 property leases.

And another one goes.............

What will it take for the industry to come together to look after itself eh? Exactly when is enough enough, what is it going to take or will have to happen for everyone no matter who you are (gamer,retailer,developer,supplier,distributer etc) to realise that this games industry although from the outside looks rosey and on a crest of a wave is in fact standing right on the abyss of a HUGE collapse.

All of you who are educated and old enough will remember the industry crashes or 1984 and 1993, hell even the lull of 2005 was horrible, has nobody learned from the previous mistakes?

I dont care who you are or what sector you work in, everyone must stop scrambling for a bigger piece of a shrinking pie and work collectively as a community to sort this mess out.

It's plain to me that inside 5 years the only players left will be the survivng publishers each with a few developers, online sellers such as play and amazon etc and maybe the supermarkets if they can still be bothered after their hand in the raping on the market.

Game, gamestation...... They are all on borrowed time, I dont care if you don't like your local store or even your local independant because you didnt like a trade in price or the price of the latest big name game, many times over it's not their fault as they are now totally dictated to by larger companies, i'm sorry but as a very long time gamer former store owner i feel that its maybe now upto every individual to chip in and make sure we always have specialist retail outlets or places we can all go to and immerse ourselves in our culture.

Over the past 2 years we have seen so many original and quite frankly household names go, along with so many jobs and the impact it has had is vast, I don't care how cheap you get cod 235 for come november from whatever supermarket or online retailer, if all you do as a so called gamer is shop by price your a traitor to the so called industry you love, it's like pirates moaning about a game that they didnt even buy on online forums.

All this stuff is so short sighted and harms any middle to long term plans for the industry, before anyone flames this posting just think how long an industry can survive without the specialist support that things like magazines or games shop bring?

I tell you now that listening to things like fans feedback via star ratings on the psn store or xbox live arcade is no substitute for real knowledge or experience.

I have never even been inside a chips shop because there isnt one near us but i've been reading mcv and its former publication for donkeys years and have always respected them as regular contributors. I will finish by saying that i recognise another nail in the coffin when i see one and im so sorry for all those people who have lost their jobs or even lost a local store they loved so much.

Any bigwigs reading this from any publisher or retailer both high street and online should take a moment to think about when it will be their time to moan and cry.

R.I.P Chips, and all those others we have recently lost.

Nik

"I've got no doubts that they will have a pre-pack agreement with the liquidator and they have bought some of the assets and stock at a very good price and they will be trading again very soon without the debt and 12 property leases."

With large debt to publishers and HMRC I fail to see how they can resurface and trade again. What crediability will they have with all the the publishers that they skipped out on. If chips does resurface I very much doubt it will be in the physical realm and question how long the franchise stores will now last.

If I were a franchisee I would immediately looking to have my franchise fee's slashed, especially the 2% marketing fee, how can you market a failed enterprise. In fact the 2% just went to produce that magazine they put out 4 times a year and give Don's wife a job.

I would also question following a business model that results in the closure of 12 stores, and as for stock distribution fee......what stock? Where will they be getting that from. I knew a lot of the franchisee's and know that they were not happy, this could be the final push they need to seal the fate of Chips Franchise as well.

Ken ....It wont be the publishers that they owe money to as I cannot see them buying direct as they weren't big enough.It will be the distributors who are owed money and if they do set up again then I've got no doubts some of these companies will supply them again but under tighter financial terms i.e payment up front.
Lets not forget that Chips had major financial troubles in the early 90s and they bounced back from that.
To protect their franchise business they will want to set up some retail stores again so they can justify their fees/percentage from their franchisees if there is any of them left after everything that has happened.

why is this verim,still on here
he is a bitter nasty little man
and should be barred

Alot of people commenting have hit the nail on the head, as an indie trader you have to move with the times otherwise you will fail.

My shop is 3 doors down from one of the CHIPSWORLD outlets that has closed & my business is growing..

But i work full time in my shop 6 days a week & do all the buying & selling myself..

The 2 guys in question here may have done alot of hard work setting up there business 25 or so years ago,but when thinks are not working,you need to move with the times & look at how other retailers are doing well whilst others are failing..

Biggest thing is to get off your arse & stop relying on people who are on minumum wage to run your shop for you..

I'm not blaming the staff, there hands were tied,they were told what they had to buy stuff in for & what price they had to sell for..

They did'nt have any money on a morning to buy off customers & they wen't down to only having one staff in, who closed the shop @ dinnertime for an hour so he could have his lunch..

Which is probably the busiest time of day because everyone who works in the town centre goes shopping on there dinner hour..

We have loads of people buying stuff before they go back to work & chips is shut..lol..

We might not be able to beat the supermarkets or online for the price of new release games, but customers cannot exchange there unwanted games or consoles with either of the above, which is where we can do good bussiness.

& you only have to look at E-BAY or AMAZON to know how much some of the retro stuff is worth these days..

They have no-one to blame but themselves, yes its harsh after 25 years of hard work,but other companies are surviving & some are growing,so you can't blame there downfall on the gaming market..

So comparing customers after a deal to video game pirates is ok is it? The comment was offensive and I replied in kind. The fact my post was removed but some git calling genuine customers thieves because they choose to pick up a bargain rather than shop at their local independent says mire about you than it does about me. So, how about removing marks post please. As a reader of this site I find his remarks offensive.

I used to have a franchise with Chips, they (Don, Nik) used very underhand methods that ended with my position becoming untenable. They did this with a lot of the franchisees (and I bet a few of the curent ones) and were extremely unprofessional. I complained to the British franchise Association but discovered that this is a toothless organisation run by franchisors for franchisors. I wrote to MCV with a warning but my letter was never printed (or followed up), so much for unbiased journalism.

I will not shed a tear over their closure and hope that this gives the other franchisee a chance to break free.

All my thoughts are with the long suffering underpaid staff that lost their jobs.

There's a big difference between removing posts that one user may or may nor find objectionable and removing posts that contain foul language. Keep it clean and we'll leave as much as we can.

i,ll try not to swear!

i was defending them at first but in fact i see now after talking to our local chips franchisee just how bad it is for them. maybe don and nik should open a subway. they always get enough rolls

How exactly does the chips frnchise work? Do you do all the buying & selling yourself & then have to give a % to chips?

you do the selling but you have to buy from chips themselves, which is where the problem lies (one of them) because they will only supply you with what they have, and they themselves never have enough of anything. with second-hand titles, the same unsellable stock just goes around and around the whole company. often we would return to them stock that would could never sell and they would send it back to us 2 weeks later. and on it went.

they would regularly tell us to buy our new titles from asda or tesco instead of chips sending them to us. genius

Actually you dont buy from Chips themselves, all the franchisees all have direct accounts with the suppliers - the only items that come from Chips is 2nd hand games.

There seems to be a few Ex Franchisees posting on here, lets say hypothetically i have a franchise with someone and wanted advice on getting out of it, who should i talk to? Considering you say you cant talk to the British Franchise Association?

So what do u do when someone brings stuff in to sell or trade?

Can you buy in what you want or do you have to go through chipsworld first & are the pre-owned stock chips give you @ a good price? It sounds ridiculous to me & no wonder how they have gone bust & can't see how the franchise stores can survive if chipsworld are still wanting a % of the profits..

Surely they can't expect a % from there franchise stores if they have gone bust?

The BFA was useless, they (like MCV) would only want to portray a squeaky clean image of Chips and other franchises.

I'd get legal advice, to sell back to the franchisor is normally the first instance but all Don and Nik will offer is the cost price of the stock and not much else. But with that option I do not see where they will get that money from or what they will trade as now that chipsworld is bust.

Selling it is another option but who would buy it in these difficult times.

You could take them to court for breach of franchise agreement, I don't know about you but they never visited my shop (as stipulated in the agreement) the support was pathetic and the stock provided was either too little, wrong or of sub standard.

I'd stop paying their fees straight away though.

I agree with Ex franchisee, DO NOT GO TO DON & NIK if you want out, seek legal advice, the goalposts have dramatically changed and a lot of clauses in the franchise agreement are no longer valid. And yes, the BFA are useless unless you are a franchisor.

As an ex-employee I have very little sympathy for the higher management at chips. When the business began to buckle management resorted to underhand and ruthless methods concerning customer relations as well as routine harassment and bullying of store staff. Whether this was in a vain attempt to bolster profits or simply as some form of stress relief, fellow employees and I could never work out. In many ways I am relieved for those outside of Don and Nick's inner circle whom are unemployed as a result. I wish them all the best and hope they find a happier pace of life beyond the crumbling chips empire.

Walked past my local chipsworld shop this morning & its back open with a slight re-vamp,wonder if they are back in business ??

Yeah sounds like it was all a method to ditch some debt. Very clever.

From what ive heard pretty much all the stores are back open today, just less the few non profitable ones. Sounds like everyone that slatted chips/don/nik on these boards will be eating their own words. They've just ditched the debt and business as usual. Im guessing that the new "current" business without the drain of interest/loan/debt repayments will be quite profitable, also take out the few stores that were loss makers that they have left closed. Good clever move it sounds