It has felt like a very slow and protracted saga, but GAME’s fall into administration today has by all accounts been swift… and brutal.
The first indication that all was not well came as early as late November, when The Telegraph asked the question “Can GAME survive?”.
However, it wasn’t until February 1st when the company was forced to rubbish reports that it would not be stocking that week’s new releases that MCV that learnt the chain was facing credit insurance issues.
That marked the beginning of a swift descent.
On February 2nd GAME confirmed a strategic review with an eye to a possible international store sell-off. By February 6th it had put a deadline on offers for its overseas business, and this was followed by the sad news a day later that 46 jobs were to be cut from GAME’s Basingstoke HQ.
Despite cries of support from the industry on February 9th, the news of a strategic review on Valentines Day and then confirmation that the chain would not be stocking the Nintendo-published Tekken 3DS on February 17th sounded the warning sirens.
The killer blow was left until later that month, however. While GAME seemed to weather the storm of missing out on Ubisoft’s entire PlayStation Vita launch title platter, it was the loss of Mass Effect 3 and the breakdown of negotiations with EA on February 29th that signalled the beginning of the end.
Despite assertions the following day that the rift with EA was only temporary, the whole industry now feared the worst. And while a summit with suppliers appeared to be positive on the face of it, by March 5th talk of administration was inescapable.
There was new hope on March 14th when MCV confirmed that Comet owners OpCapita had tabled a bid for the chain that would pay off all current debts. The contrast with MCV’s bold magazine cover that week cut deep, but ultimately all hope proved fruitless.
Last weekend it was revealed that the OpCapita bid had been rejected by the banks. Then last night MCV revealed the chilling reality of the situation – GAME was to enter administration and reduce its store count by 50 per cent.
12 hours later the company’s shares were suspended and just moments ago GAME confirmed that it has filed for administration.
BUT WHAT NEXT?
The key thing to remember is that GAME is now in a safe period, protected by a moratorium period of, as MCV understands, 10 days. During this period nothing can be sold or stripped, allowing the Board to make the crucial decisions needed to take the chain forward.
The outcome of this period is unclear. The most likely outcome is the birth of a new company, funded by current lenders. It will retain GAME’s most valuable assets but without around 300 of its current stores – most of these are expected to come form its Gamestation portfolio. Everything outside of the UK and Spain will be sold off.
There is some good news for staff. Monies raised from the sale of assets will first be used to pay off any overdue wages. Next in line are secured creditors – the banks – then other creditors and lastly shareholders.
Other options still remain in play, however. GameStop remains very interested in GAME’s UK and Spanish operations and could well make a move for the firm now it has entered administration. Other bidders are also still involved in the process.
We can’t ignore the fact, too, that a total closure remains possible. GAME might not yet survive this, as uncomfortable as that may be.
Today the industry faces up to the bleak prospect of a UK High Street without s specialist games retailer. Here’s hoping Ian Shepherd and his staff have what it takes to ensure that doesn’t happen.