Top of its GAME

Analysts may well look back at 2007 as the tipping point when the games industry began to eat itself.

So many developers were bought up that we could fill all 900-odd words of this feature listing them all; Vivendi bought Activision and in so doing squared up to a dominant EA; and in the retail sector, there was the significant GAME deal for Gamestation.

In 12 short months, it seems big business has got even bigger – and GAME’s record-breaking financials, released last week, are testament to that. With the not-insignificant addition of its former rivals’ Christmas sales, 2007 was the year GAME Group grew into a truly dominant retail force.

So dominant that the Gamestation deal was referred to the Government’s Competition Commission. The fact that it was given the green light this month dispels any accusations of monopolising the market, says deputy CEO and group finance director David Thomas: People will have different views. From our perspective, the confirmation of the fact that the Competition Commission does not feel that there will be any significant lessening of competition in the marketplace means that we’ve demonstrated that there are significant competitors within both mint and pre-owned sectors. Therefore, GAME Group is not in a position to take advantage.”

So you can forget any accusations of sinister dealings and evil, power-hungry GAME execs. And now that those lingering doubts over the acquisition have been laid to rest, the GAME management team has a big job on its hands – the integration of one leading games retail chain into another.

We’ll start to implement the integration in the second full year – post May 2008,” says Thomas. It’s really a situation where once you get to September, you have to ensure that the business is in good shape and everything is ready for Christmas. So we have a window between now and September 2008 to undertake some elements of the integration, and then we would expect that further elements of integration will roll into 2009.”

There will undoubtedly be seismic changes to come at both companies, which have remained largely separate from each other since the 74 million deal back in May – but GAME Group CEO Lisa Morgan is confident that the shared attitudes and cultures that exist between the two businesses will make this process much simpler than it sounds.

The difficult and the easy parts of the integration depend on whatever business it is that you’re working with,” she tells MCV. The management team at Gamestation have done a sterling job in driving through such an excellent performance over Christmas and I think it’s a real credit to the team within the Gamestation business that while all this uncertainty has been going on, they’ve put 100 per cent focus and passion into delivering record breaking results.”

So while Morgan has nothing but praise for Gamestation’s performance under such strained circumstances, there is clearly still work to be done to finalise what, when and how the two companies will become one. We’re not in a position to talk about our plans yet,” she adds. We won’t be until we’ve had the chance to sit down with the Gamestation team in York.”

GAME ON:

THE FESTIVE FRENZY

Lisa Morgan: The real success of Christmas was the fact that we were selling five formats which all put in incredibly good performances. I think Wii has hit the headlines because of the innovation it has brought to market and because demand was constantly not being met by supply. But ultimately all the formats did extremely well over Christmas. But there’s no doubt that the Nintendo DS was a really strong performer. Sales last year were nothing short of stunning.”

BROADENING THE MARKET

Lisa Morgan: If you look at the top 20 for the full year, two thirds of the games are family games or what you would call mass market franchises. I think it signifies a very important change in the market – not just for GAME but for the whole industry.

I think the hardware manufacturers and publishers have done a brilliant job of broadening the overall marketplace, bringing some terrifically innovative products through and giving us the tools we need to push forward our specialist offer. We’d like to really thank everyone for their support.”

EUROPEAN EXPANSION

Lisa Morgan: There are great opportunities in the markets we’re in throughout Europe. We have a lot of work to do – I wouldn’t say we have any areas of our business wrapped up – it’s a tough market and you can never take your eye off the ball. We’ve got some great people in our business to pick up that mandate and run with it.”