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GAME Digital: How the cyclical console release pattern is stifling GAME’s growth

The video game industry across the West is incredibly cyclical, with regular console releases every seven to eight years providing very large revenues to major players and carrying them through the period in-between releases. However a shift in the console market, with console developers choosing to release completely new consoles at a slower rate and instead releasing interim consoles (such as Sony’s PlayStation 4 Pro), has hurt GAME Digital, a company only recent out of administration. It’s profit warning announced on June 30, the result of Nintendo’s decision to prioritize deliveries of its new Switch console to regions other than Europe, has highlighted the company’s crippling reliance on a very small number of suppliers.
GAME Digital’s profit warning has become another indicator of the need for retailers to operate online. Companies such as Amazon have grown incredibly fast, due in part to the vastly reduced costs of not having a high street presence. While GAME Digital has some online presence, it is simply not strong enough to compete with Amazon’s Prime delivery service and the advanced online facilities of companies such as Tesco. Not only do these companies often offer more competitive console prices than GAME Digital but their diversification affords them greater security. A greater focus on online retailing by GAME Digital would do wonders for the company; costs would drop drastically, allowing it to pass savings on and become more price-competitive, and the company would be able to take advantage of the recent shift by consumers favoring digital downloads. Online video game marketplaces such as Valve Corporation’s Steam platform and Playstation’s PlayStation Network (PSN) have further degraded the importance of the physical video game store to consumers.
While GAME Digital is unlikely to collapse any time soon, it must consider significantly larger investment in its online services in order to break off the shackles of the degrading seven year cycle and develop its own independence.