UK games portal Gameplay has laid off nearly all its UK staff.
UK-based games portal Gameplay last week announced it would lay off almost all its remaining staff. While it floated successfully less than two years ago, achieving a market value of GBP54 million, the company has failed to generate profits.
Gameplay has sold its European operations to try and raise some cash, but they haven’t fetched much. The sale of the Spanish business, which had cost Gameplay GBP7 million nine months ago, yielded just GBP1.4 million. The company’s value has dropped to GBP2.8 million – a 99% loss in value over the past year.
The problem for Gameplay was that as the technology market slumped and funding disappeared, its strategy of growth through acquisition became increasingly untenable. Simultaneously, sales of boxed games were hit by delays in the Play Station 2 and Microsoft X-Box launches.
But Gameplay’s US rival Electronics Boutique has been quick to move in. Having bought Gameplay’s Spanish business last week, it is clear that the US games retailer wants a bigger piece of the GBP6 billion European games software market. It established itself in UK online gaming earlier this year by buying portal BarrysWorld for a mere GBP400,000 after it went into receivership. Moving onto the European mainland in a similar fashion, by acquiring low-cost businesses and subsidiaries from declining rivals, seems the logical step.
Better still for EB, the games market looks likely to pick up. With the Game Boy Advance due to appear on June 22, followed by the X-Box and Nintendo’s GameCube consoles during the first half of next year, there is the potential to reap considerable benefits in the medium to long-term.
This success will also give EB the opportunity to gain a dominant position in the European gaming and software market by capitalizing on its online and offline presence. As a result, the firm will be able to use its already well-developed brand to extend its reach into online sales and gaming communities.
