GAME’s identity crisis – can esports save the day?

With the sale of its Multiplay division for £19 million earlier this week, Game Digital plc – the parent company behind the high street retail brand GAME – reached a crossroads. Following the loss of the UK’s largest gaming services provider, the time has come for GAME to commit to a new direction in 2018.

The first GAME store opened in 1990, and since then the brand has had a rollercoaster of a journey. An initial era of solid expansion in an exciting new industry promised a bright future in the new millennium. In 2006, The GAME Group became the largest video game retailer in Europe, and the following year saw their portfolio expand to over a thousand properties worldwide, with an annual turnover cresting £1 billion.

But by 2012, the bubble had burst. Reckless expansion, coupled with the fallout from a brutal financial crisis, led to the company’s collapse into administration. An acquisition by OpCapita was followed by Game Digital’s incorporation in May 2014. The next month saw the company float on the London Stock Exchange; there, the brand was likely kept alive by the promise of digital growth in the market.

Then, in 2015, GAME acquired Multiplay, the biggest gaming services company in the UK, as they sought to consolidate their position in the new digital market landscape. Multiplay, famous for providing some of the most prominent games events in the UK – including Insomnia, the country’s largest gaming festival – was also renowned for its specialism in online game server hosting. The brand continues to work with some illustrious industry titles, such as DayZ, Rocket League, and Titanfall 2.

On the fiscal year ending on the 29th of July, 2017, Game Digital recorded a pre-tax loss of £10 million. Then, on Tuesday of this week, a mere two years after purchasing the company, GAME and Multiplay parted ways. With Unity’s acquisition of Multiplay comes an apparent U-turn in GAME’s direction – so what reason is there to believe that their backtracking is not just another sign of the retailer’s inevitable demise?

https://www.flickr.com/photos/mpuk/38288647762/
Multiplay Insomnia61 at NEC – Katy Eyre/iEventMedia

As it happens, there is still cause for optimism. GAME’s 2015 purchase of Multiplay came in at £20 million, and their sale at £19 million – but that number does not simply reflect a seven-figure mistake. GAME quietly came out of the deal retaining ownership of Multiplay’s events business and associated IP – including Insomnia, the UK’s ‘Glastonbury of Gaming’.

As traditional, high street games retail continues to decline, led by flops in the video game market such as Call of Duty: Infinite Warfare and Star Wars Battlefront 2, GAME is looking to another market: esports.

“The next two to three years will be telling. If GAME is to double down on its esports focus, expect BELONG arenas to form a mainstay in the UK”

When they opened the first ‘BELONG’ arena inside the Manchester Trafford Centre store last year, GAME spied a piece of driftwood to keep them afloat in uncertain waters. And with plans to have 35 venues operational by the end of 2018, it is no coincidence that they maintained a grip on Insomnia, one of the biggest platforms for esports in the country.

“Though our markets remained volatile last year, we made solid strategic progress as we continued to focus on those elements within our control; delivering on each of the four pillars of our strategy and creating a new cost base for our UK retail business,” said Martyn Gibbs, CEO of Game Digital, in a statement earlier this month.

“We have reviewed our operations and are now accelerating development plans as we seek to fully capitalise on the strong growth potential in the growing esports market”.

Retention of Insomnia, investment in local arenas, and a perennial hold on the UK game retail market positions GAME with a connection to every aspect of the UK esports industry, from grassroots to professional. And with game sales and local internet cafes creating an interest in competitive gaming that will bring people to events, and with their events in turn driving an interest in game sales, GAME might have finally cracked the code for a successful business model in the digital era.

“If GAME succeeds, the UK esports industry in its entirety will be better off for it”

The next two to three years will be telling. If GAME is to double down on its esports focus, expect BELONG arenas to form a mainstay in the UK gaming community, with tournaments and events providing incentive to get newcomers involved. With Insomnia seemingly going from strength to strength, now is the time to truly commit. If GAME succeeds, the UK esports industry in its entirety will be better off for it. If they fail, and suffer the same fate that befell video store Blockbuster in a new age that they failed to adapt to, it could be game over.