VIDEO games retailer Game Group must change its strategy to meet the growing demand to download titles online if it is to make a success of its takeover by private equity firm OpCapita, a senior industry figure has warned.
Comet-owner and turnaround specialist OpCapita yesterday unveiled a deal to buy what remains of Game out of administration, saving nearly 3,200 jobs and keeping 333 stores open.
News of the rescue comes just a week after accountancy firm PwC was appointed as Game’s administrator, at which point 277 stores were closed with the loss of 2,104 jobs. OpCapita said it would rehire some of Game’s head office staff, who were made redundant last week.
The firm collapsed after being unable to pay its £21 million quarterly rent bill, according to industry sources, while the company’s banks – which included Royal Bank of Scotland – worked to rescue their £100m of lending to the chain, with RBS owed £45m.
Richard Wilson, chief executive of Tiga, the trade body for computer games developers, said a rescue deal would only be the start of a long journey for the company.
Wilson said: “This deal should save many jobs and stores and will buy Game breathing space during which it can develop a new business strategy. Game has suffered from physical and online competition, the shift from physical to digital games and the decision by big global publishers not to stock Game with new releases.
“Given the rapid transition to digital gaming – with consumers spending money on platforms such as Steam, Origin, the App Store, PSN, XBLA and Android market – Game will have to develop a digital strategy and fast.”
Wilson said that, by moving into downloadable titles, Game would be able to help support smaller computer games developers.
Andy Payne, chairman of the Association for UK Interactive Entertainment, added: “OpCapita is an expert in the retail field. The key thing is making sure Game comes back with the right strategy and the right people leading it. The computer games industry in the UK needs a specialist retailer like Game.”
Henry Jackson, managing partner of OpCapita, maintained: “We strongly believe there is a place on the high street for a video gaming specialist and Game is the leading brand in a £2.8 billion market in the UK.
“We have assembled a strong team of experienced industry operators to implement the programme of operational change that is needed.
“There is a huge amount to do but we look forward to the challenge of restoring Game’s fortunes in partnership with its employees and suppliers.”
OpCapita bought electrics retailer Comet for £2 in February from Kesa Electricals, which also supplied a £50m “dowry” to the turnaround specialist to take the loss-making chain off its hands.
The private equity firm promptly installed retail sector veteran and former Dixons boss John Clare as Comet’s chairman and vowed to return the chain to its “low-price, 1980s roots”.
OpCapita was launched by Jackson in 2006 as Merchant Equity Partners to invest in European consumer, leisure and retail businesses. Its previous deals have included investing in furniture chain MFI and French retailer BUT.