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| Version 2 | Version 3 |
|---|---|
| Game Digital shares plunge as 'challenging' market hits sales | Game Digital shares plunge as 'challenging' market hits sales |
| (about 2 hours later) | |
| Shares in video games Game Digital have plunged by more than a third after it said "challenging" conditions in the UK market would hit profits. | Shares in video games Game Digital have plunged by more than a third after it said "challenging" conditions in the UK market would hit profits. |
| Game said there had been a faster-than-expected decline in sales of older games formats, while the switch to the newer Xbox One and PlayStation 4 consoles had been slower than expected. | Game said there had been a faster-than-expected decline in sales of older games formats, while the switch to the newer Xbox One and PlayStation 4 consoles had been slower than expected. |
| It now expects underlying earnings of £30m for the half-year to 23 January. | It now expects underlying earnings of £30m for the half-year to 23 January. |
| That compares with earnings of £43m reported a year earlier. | That compares with earnings of £43m reported a year earlier. |
| Shares in Game Digital fell 70.75p, or 34%, to 135p. | Shares in Game Digital fell 70.75p, or 34%, to 135p. |
| Revenues fall | Revenues fall |
| "The trading conditions in the UK video games market have been challenging," said Martyn Gibbs, the company's chief executive. | "The trading conditions in the UK video games market have been challenging," said Martyn Gibbs, the company's chief executive. |
| "The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market. | "The switch over from the older gaming formats to PlayStation 4 and Xbox One software has impacted profitability across the UK market. |
| "The extent of the impact of this switch over has only become apparent in December which has been compounded by lower year-on-year High Street and shopping centre footfall." | "The extent of the impact of this switch over has only become apparent in December which has been compounded by lower year-on-year High Street and shopping centre footfall." |
| In the 21 weeks to 19 December, Game said that total revenues fell 6.7% to £466.8m, with UK revenues down 11.4% from a year earlier to £353.5m. | In the 21 weeks to 19 December, Game said that total revenues fell 6.7% to £466.8m, with UK revenues down 11.4% from a year earlier to £353.5m. |
| UK sales of products related to the Xbox One and PlayStation rose by £19m to £114.6m. | UK sales of products related to the Xbox One and PlayStation rose by £19m to £114.6m. |
| However, Game added this had been "more than offset by the unexpectedly steep decline in Xbox 360 and PlayStation 3 content sales" which more than halved, dropping by £30.8m to £23.4m. | However, Game added this had been "more than offset by the unexpectedly steep decline in Xbox 360 and PlayStation 3 content sales" which more than halved, dropping by £30.8m to £23.4m. |
| The retailer also said sales had been "disappointing" since the start of the school Christmas holidays. | The retailer also said sales had been "disappointing" since the start of the school Christmas holidays. |
| 'Warning sign' | |
| "UK sales have fallen off sharply in the past few weeks at the most critical time of year for Game," said analysts at Liberum. | |
| "While a decline in old format sales was expected, the scale has surprised the company while the importance of Christmas trading has hugely magnified the issue." | |
| Patrick O'Brien, retail analyst at Verdict, said Game's comments were a "big warning sign about the role of the console cycle". | |
| Previously, he said, revenues surrounding new games consoles - including software - have peaked two to three years after their launch. However, the slower-than-expected pick up in sales related to the latest consoles suggests digital downloads are eating into traditional revenue sources. |