UK games retailer GAME could lose up to £2.5 million (or roughly $4 million USD) over its decision not to stock EA's Mass Effect 3, according to one analyst. Mark Photiades of Singer Capital Markets noted that lost sales and compensation to those customers who pre-ordered the game could prove detrimental to GAME's already fragile financial standing.
Photiades comes to this conclusion based on some hypothetical sales calculations:
"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% 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," said Mark Photiades of Singer Capital Markets.
"With new software margins of around 24 percent 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% 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."
It was revealed this week that GAME would not be stocking BioWare’s latest title in the series following a dispute with EA over credit. GAME also revealed that it would give Mass Effect 3 pre-order customers £5 in reward card points to spend in its stores.
(1 GBP = 1.58567 USD, according to xe.com)