Lack of computer game blockbusters blows hole in Game Group sales

Sales at Game Group have taken a tumble after the company suffered from the absence of a blockbuster computer game launch.

Game reported this morning that like-for-like sales fell by more than 15% between the start of February and the end of June, compared with a year ago.

The company’s sales fell by 10% but the chief executive, Lisa Morgan, insisted the results were in line with expectations.

Morgan laid the blame for the sales plunge on computer game developers. A string of hugely popular games were launched in the first half of 2008, including Grand Theft Auto IV, Mario Kart and Wii Fit, but this year’s big games are being held back until nearer Christmas.

“Last year, we saw an unprecedented level of hardware and software sales,” said Morgan. “There have not been any huge blockbusters so far this year.”

Game expects to post pre-tax profits of between £13m and £16m for the first half of the year, compared with last year’s record-breaking £36.4m.

The retailer is now pinning its hopes on a successful run-up to Christmas.

“The lineup for the second half of 2009 is extremely strong,” said Morgan, citing upcoming titles such as Wii Fit Plus, shoot ‘em up Halo ODST, and football games including FIFA 2010 and Pro Evolution Soccer 2010.

Game is also banking on Sony cutting the price of its PS3 console before the end of the year.

With the recession eating into disposable income, Game has been buying old games back off its customers in part-exchange for new titles and selling them on as ‘pre-owned’ games.

“This is a vital part of our customer offer and more and more customers are recognising the benefits,” said Morgan.

The practice is particularly profitable for Game: the gross profit margin on a pre-owned game is 39%, compared with 22% for a new one.

Looking to 2010, Morgan said that the anticipated launch of motion-sensitive technologies by Sony and Microsoft – following the success of the Wii – should give the sector a boost. But some analysts fear tougher times are ahead, with sales of the Wii console halving so far this year.

Shares in Game were down 18.5p at 145.5 in early trading.