Australia Hampers Potential GAME Takeover

[Andy Chalk]

Australia Hampers Potential GAME Takeover

Videogame retail giant GameStop has cast a rapacious eye toward struggling U.K. retailer GAME but hasn't yet made a move because it doesn't want to be stuck with Australia.

Oh, Australia. Is there anything related to videogames that you can't screw up? It's hard to blame this particular situation on you directly, I suppose, but the truth is that your mere existence may soon lead thousands of people into the despair of unemployment. It seems that GameStop is very much interested in coming to the rescue of flagging U.K. retailer GAME, but is hesitant to do so because it doesn't want to end up with two feet in the Australian muck.

"It's widely known GameStop is looking at Europe," anonymous sources have told MCV [http://www.mcvuk.com/news/read/aussie-question-delaying-gamestop-move-on-game/091962], but the trouble is that GameStop already has a big presence in Australia thanks to the EB Games outlets it acquired in its 2005 merger with Electronics Boutique. Any deal for GAME would presumably include its Australian operations, which GameStop has no interest in.

GameStop does have the muscle to make a takeover happen, however. The company carries no debt and rang up over $3 billion in sales over the nine-week holiday period that ended on December 31. Say what you will about the death of retail, but GameStop still packs a serious punch, while GAME is cutting staff, closing stores and desperately trying to keep its head above water.

Speculation about GameStop's interest in GAME is also being fueled by its January decision to close [http://www.escapistmagazine.com/news/view/115457-GameStop-Abandons-U-K-Stores] its last remaining stores in Northern Ireland. The company said at the time that it intended to "serve the U.K. market with enhanced digital and online offerings" but the word on the street now is that the closures are actually a sign that it's spooling up for an acquisition.


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[AD-Stu]

Weird, I didn't think GAME had that many stores here and there'd be nothing stopping them either turning them into EB stores or (more likely) just liquidating the whole operation...

EDIT: LOL, my bad. They have something like 90 stores around the country, just not very many in my state

 

[Robert Ewing]

Hmmm... I would like GAME to be saved... And I know beggars can't be choosers... Errggh... Does it have to be an Australian games companyyy?

 

[Kopikatsu]

And so Gamestop goes global.

WORLD DOMINATION INCOMING.

 

[IckleMissMayhem]

Oh, Australia. Is there anything related to videogames that you can't screw up?

Heh. No.

Truth is, Game/Gamestation need to close some stores down for their own good. I can count at least 7 or 8 of their stores all within a 20min journey from my home (There used to be two instances of them being next door neighbours, FFS, until they knocked through the wall and made bigger shops.) No wonder they're struggling.

 

[42]

I refute that claim. we don't screw anything up with video games. the only thing that is screwed is our stupid ratings system. POLITICS I TELL YOU. and what GAME shops are you talking about? theres like 3-4 of them i have seen throughout the past 5 years and 1 of theme closed down and 3 of them were in areas WAY outside of sydney.

 

[SomeBrianDude]

I wonder whether HMV is going to try and capitalise on Game's struggles. Video games have never been their focus, but now kind seems like a good time to try and expand their share, what with the UK's biggest player being in such deep trouble.

 

[devotedsniper]

I don't know why they would want to if i'm honest, Game has always been overpriced and the staff there always seem, i don't really know how to describe them, none gamers is probably best cause they definatly don't come off as gamers.

At the end of the day they'd be best shutting down there shops and going online (i know it means thousands lose there jobs when there are already none in the UK, but they dont seem to be making money anyway). Either way like its been since i discovered Steam and shopto.net i will be sticking to these, i used to like Gamestation before game brought it (they used to have pretty good deals and the prices were not overpriced, now there just Game with the name Gamestation).

 

[cookyy2k]

I wonder whether HMV is going to try and capitalise on Game's struggles. Video games have never been their focus, but now kind seems like a good time to try and expand their share, what with the UK's biggest player being in such deep trouble.

HMV is only just staying afloat, it has agreements with its creators but can't really borrow anymore. I kinda think HMV will be the next one of these stories we hear.

 

[Toilet]

...trading one evil for another. I dont want "FUCKING GAMESTOP" stories to come to the UK.

I was hoping this power vacuum with GAME going down the hole would leave space for independent retailers to come back.

Also doesn't this mean that Gamestation will go down as well? They are both owned by the same umbrella company.

 

[Lizard Queen]

"in the Australian muck" ?????

Thanks for the random insult.

I'm not sure what it has to do with the story. They don't want to not be in the Australian market. They are already here. They just don't want redundant stores they would have to close anyway.

 

[Revolutionary]

Wow, I'm glad they don't want us. If Game Stop took over our Game outlets, that would give them a complete monopoly over game-specific retail, the prices are inflated over here as it is.

 

[Von Strimmer]

Blaming an entire country? Thats some good journalism there...

Insulting us Australians only reduces your credibility and throwing in random insults (which aren't even funny) does little to bolster views to your article. I thought the escapist was meant to be above this sort of petty jibes?

O/T this is good, Australia already has too much market domination from individual retailers (JB, Woolworths, Wesfarmers) so now we might get a bit more competition in the market if Gamestop doesnt buy all our sole game companies.

 

[Therumancer]

Weird, I didn't think GAME had that many stores here and there'd be nothing stopping them either turning them into EB stores or (more likely) just liquidating the whole operation...

EDIT: LOL, my bad. They have something like 90 stores around the country, just not very many in my state

Well, the issue is probably that they already have enough market penetration in Australia where they don't feel there is any real point to more stores, especially when one of their big competitors is disappearing. Simply liquidating the stores can be tricky because a lot of it comes down to the deals made when the properties were leased, purchused, or whatever and what kind of contracts might exist especially at the higher levels. Believe it or not when you get up to the point of regional management you wind up with contracts that specify that the business cannot be sold unless the person in question has a job, or is given a hefty severance fee, and there are oftentimes requirements on what that job is going to entail such as managing at least X number of stores. High level executives don't like having their chains jerked ans given that they go in planning to committ as a lifestyle for decades in many cases (which is oftentimesa a good thing) they set themselves up to be ironclad.

I can't say what the problem is, but it could be either of the above. I'd imagine GAME, despite it's failure, has at least one big time executive in Australia with a hefty contract that has been running things, and simply can't be gotten rid of under the circumstances. Gamestop might be dealing with a situation where they might have to say keep at least 10 of those stores running just for that guy, or pay him a 10 million dollar contract cancellation fee. At a certain level you don't just say "your fired". In a case like that you probably have Gamestop already employing people on a similar level for the chain, and they aren't going to bring another guy in to cause disputes and so on.

On the property level, if they are say contracted to lease space for X amount of time thre can be penelties involve in cancelling the lease. You wind up closing the store and STILL paying for the space, or paying a big lump of cash for stepping out of the contract.

It can get complicated, and I'm no expert, I've just read other things having to do with chains merging, being absorbed, or going out of business and what the problems can be. The wording of contracts can also get pretty messed up at times, especially when you look at what businesses that felt they would be eternal go out of business. I believe Blockbuster had some problems declaring bankrupcy and closing (leading to the very slow phase out we've seen) in part because of the deal some of it's regional managers and warehouse people had. You basically wound up with a situation for a while where a bankrupt company that couldn't pay it's bills, also couldn't afford to go out of business by paying off agreed severance fees to cancel contracts. So basically they were in a situation where they couldn't run the business, and faced possible criminal penelties (especially given the inabillity to pay fines) for breaching contracts given the way they happened to be written. A problem that existed largely because Blockbuster apparently cut those deals when it thought it was the invincible shiznit and wanted to guarantee what it thought were the best and most ruthless people it could get were going to be tied to them and promised them anything they wanted including some pretty ironclad protections. Basically a lot of those sharks that had everyone hating Blockbuster when they were at the top of the game (yes, everyone hated Blockbuster and it's business practices) were turning their teeth on their own company as it went down... or so I heard. It also makes a lot of sense, if you pay someone to piss people off for a living (which Blockbuster did a lot) the guys doing that want to guarantee they are ironclad and won't be fired over political convieinence especially seeing as they will probably be POing all the people they would normally be going to for jobs if they found themselves out of work as part of the job they were going to be doing. Leading to "you will pay me a lot of money, and if you decide you don't want me anymore you will pay me enough money where I will never have to work again because if I do this nobody will ever hire me at this level again" type contracts.

 

[legendp]

How is it unprofitable when they charge a $110 over here in australia for a game that cost $60 in the US (and the australian dollar is at about 1.07 so why are we paying double). and it's not just retail, why are AAA games on steam a $100

 

[UberNoodle]

Yeah, as an Australian I feel so bad that the fact that there are already Electronic Boutique stores (Gamestop) in Australia means that a local chain in the UK won't be swallowed up by an American transnational.

WTF was this article about anyway?

 

[mik1]

"in the Australian muck" ?????

Thanks for the random insult.

I'm not sure what it has to do with the story. They don't want to not be in the Australian market. They are already here. They just don't want redundant stores they would have to close anyway.

LOL
This is the first thread I've ever seen remotely attacking the Australia. Calling the situation with video games in your country "muck" is hardly an insult.

Being a U.S. citizen I'm numbed to the whole attack on ones country via internet. Your country's stance on video games is fucked, deal with it.
My country's stance on everything is fucked I dealt with it.

 

[eezaak]

So glad I buy all my games online now. Screw paying EB's markup. $120 for a brand new release? Fuck that shit.