The report into the administration of the GAME retail business has just been published. In April GAME entered administration, bringing an end to the last standalone GAME stores on our high streets.
The rapid rise of AI could spell the same fate for some businesses if they don't recognise the need to change their business model quickly. It is also a reminder that we, as consumers, have a choice in how we adopt new technology, and the inevitable consequences of those choices.
For twelve years GAME was one of our biggest clients and we enjoyed producing some fabulous and memorable events with the management team and store managers during that time. We are sad to see the loss of GAME and the jobs of those who created such a vibrant business.
We also worked with the business through four different CEOs, the takeover of Gamestation, ridiculously delayed by the Competition Commission, and the initial collapse and downsizing in 2012.
With the launch of the Sony PSP handheld device we saw the power of an internal event when GAME retail enjoyed the highest global sales at launch, and GAME had record sales of accessories.
Our relationship ended when the then CEO attempted to pivot GAME into live gaming through the acquisition of Multiplay, the company behind many large gaming tournaments and events.
So what has all of this got to do with AI?
Ultimately, technological change undermined GAME's business model.
At its peak, GAME sold a mixture of new game titles (discs in boxes), new hardware (gaming consoles, controllers and accessories) and pre-owned games. Those pre-owned sales accounted for a significant proportion of the company's profits.
The business model was simple. Sell a new title, often with midnight queues outside stores on launch day. Once the player had completed the game, they could bring it back to the store and receive trade-in value against another new or used game. It was good for GAME’s profits, but also good for consumers because they could release value from games they no longer wanted and ultimately play more games for less money. Pre-owned was bad for publishers because they earned nothing from those re-sales.
Then technology changed.
As broadband speeds improved and internet connections became more reliable, consumers increasingly chose to download games rather than buy them on disc. Publishers benefited too. Selling directly to players increased their margins by removing the retail middleman, while consumers gained the convenience of instant access. The downside was that consumers no longer owned something they could trade-in or resell.
Physical games still exist today, but they now represent a shrinking minority of sales and their long-term future looks increasingly uncertain.
A specialist retailer built around selling physical games and profiting from trade-ins could not survive unchanged. GAME had already shrunk significantly from its heyday by the time it was acquired by Frasers Group in 2019. Frasers retained the GAME brand, kept the online business and integrated GAME concessions into Sports Direct and other group stores, largely moving away from the traditional standalone retail model.
It is worth remembering that GAME did not fail because people stopped playing games. Quite the opposite. More people play games today than ever before. What disappeared was the need for a retailer sitting between the publisher and the customer.
There are many businesses today that can already see similar pressures emerging as AI-driven technology develops. The demand for their products or services may not disappear, but the way those services are delivered, and where value is created, almost certainly will change.
There is no guarantee of survival, but recognising that change and adapting to it, rather than resisting it, is arguably the only realistic strategy.
And there is a food for thought for every one of us too.
Every time we choose convenience over human interaction, lower-cost over expertise, or automation over personal service, we help reshape the market. Individually those decisions seem insignificant. Collectively they determine which businesses thrive, which adapt, and which quietly disappear.
AI will not eliminate every business it touches, just as digital downloads did not eliminate gaming. But it is likely to reshape many business models just as profoundly.
The businesses that survive are unlikely to be those asking, "How do we protect what we've always done?" They will be the ones asking, "How do we create value in a world that has fundamentally changed?"
