GAME has published its financial results for the six months up to January 28th, including the key Christmas period, and what have we learnt? Well, very little in fact.
The figures largely tie with those we had from GAME back in January, when it updated us before its AGM. In short, the company blamed declining hardware margins and a less than stellar Christmas line-up for some pretty poor figures, with the GTV (Gross Transactional Value) down 6.9 per cent and a 26.7 per cent fall in profits, year-on-year.
Martyn Gibbs, CEO, speaking to MCV did clarify the tough trading situation, saying: "Console hardware and physical software sales were soft and in addition there were certain key titles that underperformed and the year-on-year lineup of games wasn’t as strong."
The fall off in margins on console hardware wasn’t unexpected, when compared to previous console generations. Gibbs told us: "We’re still seeing the cycle ahead of the last generation, if you add PS4 and Xbox One together, versus PS3 and Xbox 360 at the same time, we’re still seeing we’re distinctly ahead of that."
Falling hardware margins are expected then at this point in the console cycle, the issue is that boxed software sales, with a large installed user base of consoles, should be soaring to compensate.
However, a few softer-than-expected launches of key titles at physical retail dented that. We suggested that Black Friday may have been partly to blame, with the now established, price-cutting event lying too close to the traditional Christmas launch window. Gibbs largely agreed, commenting: "I think it’s for the industry to really think about how and when we are releasing titles over the peak period."
The company was also constrained on supply of the updated PS4 Pro console, which could have helped those hardware margins had it been in greater supply.
BACK IN THE BLACK?
Looking forward to the rest of 2017 the CEO was far more upbeat, and with good reason: "In terms of our current trading the GTV is up 20 per cent in the first seven weeks of the second half," he said.
There’s been a surprising number of big launches early this year as well. With Resident Evil 7, Horizon Zero Dawn and Ghost Recon Wildlands all performing well at retail. Then, of course, there’s the remarkable success of the Nintendo Switch launch.
Gibbs was also positive about successes in the business’ diversification. Its new Belong Gaming Arenas had seen great take up and boosted takings on the core offering by 14 per cent in those stores, when compared to the chain as a whole. He also talked about its fledgeling partnership with PC hardware firm Overclockers and the company’s growing PC digital offering.
And on the day the UK started its exit from Europe, Gibbs noted that profits from its Spanish arm were well up, with the region showing a particular penchant for Nintendo’s latest Pokemon title.
For the full interview, with adiscussion of Switch, VR, Brexit and Black Friday, see next week’s issue of MCV, in print or available as a digital download.