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.