Mass Effect 3 loss could cost GAME £2m

Ben Parfitt
Mass Effect 3 loss could cost GAME £2m

The consequence of GAME not stocking Mass Effect 3 could be £2m of lost profit and a £6-7m drop in revenue, one analyst has predicted.

“Working on the assumption that a decent triple-A title sells 0.8m-1m titles in the first few weeks of release in the UK and assuming GAME has around 20 per cent share, we calculate that by not stocking Mass Effect 3, GAME is potentially missing out on around £6m-£7m of revenues in the UK given the title will retail for £39.99,” Singer Capital Markets’ Mark Photiades told The Guardian.

“With new software margins of around 24% this could result in £1.5m-£2m of lost gross profit in the current year. It is also worth noting that margins will suffer as a result of the reward card points being offered in compensation.

“We estimate this could amount to another £0.3m of forgone gross profit as typically pre-orders account for around 30% of initial sales. So in total there could be £2m-£2.5m of lost UK profit in a year where we are already forecasting losses of £8m.

“This latest development is further evidence of just how tough the situation is for GAME right now. The focus very much remains on pure survival as opposed to revival at this stage.”

At one stage yesterday GAME’s shares fell as low as 4.65p, though they are currently trading slightly up at 4.76p.

But the bad news isn’t reserved for just for GAME. Mass Effect 3’s omission from GAME and Gamestation shelves is bad news for EA too, according to Peel Hunt’s John Stevenson.

“We expect Mass Effect 3 will suffer as a consequence of not supplying GAME, noting other titles that GAME has not stocked recently, while lower profile, certainly failed to impress in terms of chart position.

“We understand GAME is now selling the Ubisoft Vita titles, illustrating both the fluid nature of events and the importance of GAME to suppliers in the UK video gaming market. “

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Tags: GAME , Retail , ea , mass effect 3 , loss , impact , revenues , profits

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5 comments

Ouch. That's a lot of cash.

Joseph Brown

Joseph Brown INDUSTRY
Mar 2nd 2012 at 9:04AM

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"With new software margins of around 24%" - please please tell me where I can obtain software margins of this level on this game!!! I Wish...

Jon Doyle

Jon Doyle INDUSTRY
Mar 2nd 2012 at 2:11PM

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I totally agree with Jon Doyle,Indies pay inc Vat £38.40 and sell for £39.99,a whooping £1.60 margin
24% margin and GAME are virtually bankrupt,something is a miss in the running of the company

The key argument here is:
How copies of Mass Effect 3 will be sold in the UK ?
EA must anticipate a certain figure,if it is still high,will GAME be missed ?,and does the UK really need GAME

andrew rhodes

andrew rhodes INDUSTRY
Mar 2nd 2012 at 6:47PM

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Moaning about your cost prices as an indie compared to an international retailer is not helping your case. All it shows is that your concerns are skewed by your own self interest. Understandable but not helping your credibility.

Game will have to make a lot more than individual shops per unit as they have rather a lot of expensive staff to pay along with numerous other overheads, some of which will look a luxury given there current position.

Publishers have spent at least the last decade being relieved of vast amounts of marketing money and terms being dictated to them by a very powerful retailer that had a market share for new releases of over 25%.

I think it is unrealistic to think this is not behind the current impasse with EA and Nintendo. They are taking a perhaps one off chance whilst they have some power to renegotiate their terms of supply. Game are saying no so the publishers hide behind the argument of credit insurance not to supply them.

Why are Game saying no as you would think they would do everything at whatever cost to keep major new releases coming in to their stores? Even at a reduced profit! Then renegotiate later their terms later, that is the bigger question here!!

Phil Robinson

Phil Robinson ELITE GAMER
Mar 3rd 2012 at 10:43AM

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i think game need to try and come up with a new strategy

Damien Curtis

Damien Curtis STUDENT
Mar 3rd 2012 at 2:38PM

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