Analyst: GAME Could Lose Millions over Mass Effect 3 Decision

March 2, 2012 -

UK games retailer GAME could lose up to £2.5 million (or roughly $4 million USD) over its decision not to stock EA's Mass Effect 3, according to one analyst. Mark Photiades of Singer Capital Markets noted that lost sales and compensation to those customers who pre-ordered the game could prove detrimental to GAME's already fragile financial standing.

Photiades comes to this conclusion based on some hypothetical sales calculations:

"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% share, we calculate that by not stocking Mass Effect 3, Game is potentially missing out on around £6m-£7m of revenues in the UK given the title will retail for £39.99," said Mark Photiades of Singer Capital Markets.

"With new software margins of around 24 percent this could result in £1.5m-£2m of lost gross profit in the current year. It is also worth noting that margins will suffer as a result of the reward card points being offered in compensation. We estimate this could amount to another £0.3m of forgone gross profit as typically pre-orders account for around 30% of initial sales. So in total there could be £2m-£2.5m of lost UK profit in a year where we are already forecasting losses of £8m."

It was revealed this week that GAME would not be stocking BioWare’s latest title in the series following a dispute with EA over credit. GAME also revealed that it would give Mass Effect 3 pre-order customers £5 in reward card points to spend in its stores.

(1 GBP = 1.58567 USD, according to xe.com)

Source: GI.biz

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Re: Analyst: GAME Could Lose Millions over Mass Effect 3 ...

GAME has lost money in three ways:

1) Lose of profits: They would have made up to £2.5 million in profit due to their unique status (only retailer with collectors's edition + unique pre-order bonus) (also remember the stats where based on the profit from the normal version not the collector's edition).

2) Paying people who have pre-ordered either £5 worth of reward card points or a £5 online voucher (depending where they brought the game). That is £5 worth of items GAME dont get any profit on in the near future.

3) Lose of future sales. People are already buying games elsewhere and this cements the idea of buying elsewhere...especially if the place you brought ME3 from instead has a reqard card system.

Re: Analyst: GAME Could Lose Millions over Mass Effect 3 ...

"UK games retailer GAME could lose up to £2.5 million"

How the fuck can they lose money from a game they aren't going to make money off of in the first place?

 
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