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Game UK Could Lose $4 Million on Mass Effect 3

| 2 Mar 2012 15:52
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A financial analyst has tallied up how much profit the struggling British game retailer stands to lose over not stocking Mass Effect 3.

Game (and subsidiary Gamestation) locations are the biggest and most visible game retail stores in the United Kingdom. When British gamers heard that these franchises wouldn't be stocking copies of inevitable mega-hit Mass Effect 3 on its European launch day next Friday, one of the first questions to strike many was just how much cash the ailing retailer stands to lose. A financial analyst has now provided a figure to answer that question: By not stocking Mass Effect 3 for the foreseeable future, Game UK stands to lose almost $4 million in potential profit.

Speaking to The Guardian, analyst Mark Photiades from city firm Singer Capital Markets laid out the numbers. "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 ($9.5m - $11.1m) of revenues in the UK given the title will retail for £39.99 ($63)," he said.

"It is also worth noting that margins will suffer as a result of the reward card points being offered in compensation [for cancelled pre-orders]," Photiades continued. "We estimate this could amount to another £0.3m ($.475m) of forgone gross profit as typically pre-orders account for around 30 per cent of initial sales."

"So in total there could be £2m-£2.5m ($3.2m -$3.96m) of lost UK profit in a year where we are already forecasting losses of £8m ($12.7m)," added Photiades.

Truth be told, most UK gamers and international onlookers will have been able to guess that the numbers would look this bad. Game has been clinging to the edge of a massive debt-shaped cliff ever since it lost its credit insurance a few weeks ago, a loss which led to it being unable to stock a wide variety of new titles, of which Mass Effect 3 is only the latest (and so far, the most prominent). As Photiades notes, "[Game's] focus very much remains on pure survival as opposed to revival at this stage."

Rumors are also circling that GameStop (debt-free and clean) may be considering buying up Game's operations in the United Kingdom and other parts of Europe. However, GameStop isn't keen on the idea of purchasing the company outright as doing so would involve taking over stores in Australia, where GameStop already operates two successful game retail franchises.

The smart money is on more sharp-intake-of-breath news relating to Game UK appearing in the near future, it seems. In the meantime, Eurogamer has compiled a handy list of alternative retailers selling Mass Effect 3 for British fans.

Source: The Guardian

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