Game Digital’s revenue slides but esports expansion holds promise
Video game retailer Game Digital has posted a fall in revenue in its end of year results as it is hit by a tough market for pre-owned games.
Revenue for the year to 28 July fell slightly from £782.9m to £780m which the company blamed on "continued challenges in the pre-owned business" which it said had "impacted on the overall gross profit rate".
It said where “quality new releases”, such as God of War III, have come to market, its “volumes have been positive".
Read more: Not happy with your job? Get paid to test games like Grand Theft Auto
Its expansion into esports in collaboration with Sports Direct is progressing however, with its first new esports arena under the agreement, dubbed Belong, opening in Westfield Stratford on 17 August with a second arena in Lakeside Thurrock planned for September.
Game said it expects to report an increased year end cash position of £58m as a result of its “highly disciplined” approach to cash management.
Chief executive Martyn Gibbs said: “We have made further progress in the second half of the year to right-size the UK retail business by reducing the cost base, whilst capitalising on all market opportunities to address the challenges and changes in the UK retail market.”
Read more: The new Zelda game is the best thing Nintendo's made in years
“The existing 19 Belong arenas continue to perform well with all key metrics advancing, a considerable affirmation of the offering. Opening the first two arenas in collaboration with Sports Direct represents a significant step forward,” he added.
Paul Hickman, an analyst at Edison Investment Research, argued: “After making progress in a difficult market, Game Digital’s more promising future represented by the strategically important Belong gaming arena concept is not reflected in the company’s share price.”
The company’s share price rose 1.63 per cent in morning trading to 28p.