Updated: UK Video Games Retailer Game Group Goes Bankrupt, Closes 277 Stores, Lays Off 2k Workers

Next Story

Night Of The Living Social Network: Friends Reunited Relaunches Tomorrow As A Digital Scrapbook

It’s been on the rocks for months now, but now international video game retailer Game Group looks like it is finally sinking: today the company announced that it is formally entering administration — another sign of the woes hitting more traditional parts of the gaming world as people turn to new services like cloud-based gaming and mobile apps for their playing fixes.

PricewaterhouseCoopers says that it has been named the administrator for the UK and Ireland operations of a series of assets: GAME Group plc, Game Stores Group Limited, Gameplay (GB) Limited, Game (Stores) Limited, Games Station Limited, Game (retail) Limited and Gamestation Limited. They are acting fact: the main website says it is currently down for maintenance. And PwC has announced the closure of 277 of its 600+ stores just hours after the announcement.

That will also mean that 2,104 employees are getting laid off in the process. The accountants say that 333 stores, employing 2,814 people, will remain open. “A number of parties who have expressed an interest in purchasing part or all of the business and assets of the group,” PwC said in an updated statement.

The bankruptcy move comes after the company suspended shares on the London Stock Exchange on March 21.

The group reported a turnover of £1.6 billion ($2.6 billion) in 2011 (ended January 31), from services that included retailing video game hardware and software. It had 609 stores in the UK and Ireland, and employs over 5,500 people in the two countries; it has further operations in Spain, Portugal, France, Czech Republic and Australia.

Mike Jervis, one of the two appointed administrators at PwC, says that the move was made in response to “serious cashflow and profit issues” in the recent past, but also the trappings that many retailers face in the onslaught of competition from business models that don’t support distribution through physical stores: high fixed-costs, “fluctuating capital requirements”, and a too-ambitious international roll-out strategy.

Mobile gaming — one of the newer forms of gaming that has disrupted the video gaming industry — has quickly grown in popularity and in some cases even seems to be taking the place of traditional, console-based gaming: a survey last week from MocoSpace found that 96 percent of respondents play mobile games at home.

PwC continues to look for a buyer of the assets to keep it a going concern. But if the kind of retail downfall in music, video and books is any indication of what might happen, there may be some challenges in meeting that hope.