UK retailer GAME sees steep profits drop as console sales fall 30%

UK-based video game retailer GAME reported its full-year earnings this week, and while some numbers went up while others went down, perhaps the most notable figure saw the steepest decline: profits.

GAME reports £4.9m (~$6 million USD) in profits for the year, a roughly 81 percent drop from the £25.8m it reportedly earned in the year prior. That's a sizable drop, and it's especially interesting because GAME execs are chalking it up in large part to a steep decline in sales of game consoles (and, to a lesser extent, games for those consoles) within the UK.

"Trading conditions in the UK video games market have remained challenging throughout the year. The transition from older gaming formats to PlayStation 4 and Xbox One ('New Format') impacted profitability across the market," reads an excerpt of the report GAME chief Martyn Gibbs gave to shareholders. "The effect of this transition was further compounded by both lower footfall over our key Christmas trading weeks and a quieter schedule of major new games releases in our second half. "

He went on to report that GAME's console sales dropped roughly 30.5 percent year-over-year. The company saw a slight uptick in sales of "New Format" (i.e. Xbox One or PlayStation 4) games for the year, but Gibbs cautioned that "whilst we are encouraged by the strong growth in our newer product categories, this was not sufficient to offset the margin decline from sales of Xbox 360, PlayStation 3 and other older format software during the year."

This is well in line with the ongoing slump in game console sales that U.S.-based game retailer GameStop has been dealing with this year. Back in May, the company reported about the same drop in game console sales (28.8 percent) and made roughly the same argument: a weak slate of games for the consoles made them less attractive to shoppers.