GAME to loose £2.5m profit by not selling Mass Effect 3
Laurence Howe / 5 years ago
GAME could miss out on £2.5 million in profit by not stocking Mass Effect 3.
The struggling high street shop is missing out on a potential £7 million in revenue by not selling the biggest game of the year so far, an analyst has calculated.
“Working on the assumption that a decent triple-A title sells 0.8m-1m titles in the first few weeks of release in the UK and assuming GAME has around 20 per cent share, we calculate that by not stocking Mass Effect 3, GAME is potentially missing out on around £6m-£7m of revenues in the UK given the title will retail for £39.99,” analyst Mark Photiades at Singer Capital Markets told The Guardian.
“With new software margins of around 24 per cent this could result in £1.5m-£2m of lost gross profit in the current year.
“It is also worth noting that margins will suffer as a result of the reward card points being offered in compensation. We estimate this could amount to another £0.3m of forgone gross profit as typically pre-orders account for around 30 per cent of initial sales.
“So in total there could be £2m-£2.5m of lost UK profit in a year where we are already forecasting losses of £8m.”
Photiades’ mention of Reward Card points is in reference to GAME’s £5 voucher compensation offer to customers who have seen their Mass Effect 3 pre-order cancelled this week.
GAME’s last-minute cancellation of pre-orders could, Photiades said, force gamers to shop elsewhere.