The future of video games retailer Game Group looks increasingly uncertain, as it emerged today that its key supplier Electronic Arts (EA) will no longer distribute its products to the business.
According to a report from The Telegraph, the withdrawal of EA titles may have been taken by Game after it failed to agree new terms with the video games producer which would have allowed the beleaguered high street chain to imorove its margins.
Game has only just received additional backing from its lenders in order to ensure that it meets its forthcoming banking covenant tests, as sales continue to slide in its stores.
EA produces some of the biggest gaming titles on the market, including sporting titles Fifa & Tiger Woods, making this disagreement potentially very damaging.
In an internal memo seen by The Telegraph, Tom Devine, Game Group’s Group Channel Director, said: “Last week we held an event for our partners in the industry and explained the challenges we are facing in the short term – and we asked for their support. We asked them to trade with us using manageable credit terms, and for them to continue to do that whilst we work through the strategic review and refinancing our business.
“We gave the industry commitments – we committed to integrity and openness in our dealings, and working with everyone equally.
“We committed to only stocking products on which we could get the right credit terms, regardless of the title or the supplier. We will not stock products if the terms are not right for our business – we will not sacrifice long-term credit requirements for short-term sales opportunities.
“As a result of us taking this position – a position that we believe is critical to our long-term health as a business – we have taken the very difficult decision not to stock EA’s March releases, including Mass Effect 3.”
Mass Effect 3 is one of the biggest impending releases for the market, and Game has had to offer a £5 voucher to all of those customers who had already pre-ordered the game from the retailer.
Shares in the business have reportedly fallen nearly ten per cent following the news, and Game is believed to currently owe as much as £295 million to its suppliers.
Devine added: “As a specialist retailer dedicated to games and gaming, it is never easy to make a decision not to stock a title, particularly one with such a strong fan base, it is imperative that we treat every supplier evenly, that we stick to our commitments, and that we don’t sign up to payment terms that will hamper us further in the future.”