Game Case Study




Between 2007 and 2009, GAME was on the expansion trail. The acquisition of its major UK rival, Gamestation, substantially expanded its UK footprint whilst at the same time the retailer continued to grow its network overseas. The timing could not have been worse. As the financial crisis plunged the global economy into recession, sales in the console market rapidly declined. GAME was left saddled with an over-expanded UK store network, a high central cost structure and a strategy focused on the aggressive pursuit of online market share at the expense of margin.  By 2011, these factors, combined with the growing cash requirements of the international business left the business struggling to fund its working capital needs. By January 2012, a number of major suppliers were still owed for goods supplied during the peak Christmas period and the management team’s relationships with suppliers and capital providers were damaged. The banks cut the size of GAME’s working capital facilities and certain key suppliers stopped shipping product.

On 26 March 2012, the banks placed the company into administration and appointed PwC to run the administration process. Half of the UK stores were closed with immediate effect as PwC looked to stabilise the business.

Suppliers lost confidence and subsequently ceased shipping to the business. A loss of customer confidence due to the lack of stock, the sudden closure of nearly half the estate and the suspension of the customer loyalty and gift-card programmes, sent sales plummeting. By 29 March 2012, the situation had deteriorated significantly and the company was days away from a full liquidation.

OpCapita purchased the assets of the UK business out of administration on 1 April 2012 and nine days later it acquired the profitable Spanish business on 10 April 2012.



For OpCapita, the acquisition of GAME was a deal which had been in the making for more than six years. OpCapita had been tracking the business closely since 2006 when the last games console cycle was just beginning and valuations did not yet reflect the upside in the business.

The turnaround strategy devised by OpCapita with the GAME management team centred on five key areas:

1. Reconnecting with customers

Key to the success of the turnaround was keeping customers following the store closures in administration. Through a targeted customer communication programme and by leveraging the company’s customer loyalty programme, the company successfully transferred around 40% of revenue from all the closed stores to the retained store base, enabling the company to rapidly regain its market leadership position within just four weeks.  

OpCapita recognised that “pre-owned” product was core to the business and quickly set about expanding GAME’s presence into new categories as part of a longer term strategy to exploit this core skill and reposition the store portfolio for the digital world. The ability to trade-in games was recognised as an important pull factor for dedicated high spending gamers and to these customers, having a store close by was a clear attraction offering a convenient way to exchange products.

Lastly, a strategic decision was taken to move away from a dual fascia store base. The legacy Gamestation brand was integrated into a single unified offer under the GAME fascia. This enabled a unified customer experience, materially reducing the complexity of the business and generating significant marketing savings through “one brand.”

2. Strengthening supplier relationships

Seven days after the acquisition, key suppliers were back on board providing stock for the first major product launch following a series of meetings with David Hamid, Henry Jackson and the GAME management team in the first few days following the acquisition.

This swift response was testament to the strong track record of the management team, the strength of the turnaround plan and a concerted communication supplier campaign in the first week of OpCapita’s ownership, to rebuild relationships.

Post-acquisition, the team set about building much closer and more collaborative relationships with suppliers with a view to finding new and innovative ways of working together.

By the first Christmas December 2013, the company’s peak trading period, GAME had secured exclusive content for 19 of the top 20 video games in the UK. GAME now regularly collaborates with its key suppliers to create and market versions of new video game titles that feature exclusive content or other exclusive offerings including clothing, toys and posters.

3. Focus on cash

OpCapita restructured the Group’s UK head office to reflect the reduced store portfolio and revenue level, narrower geographic focus and single fascia. The result was annualised central cost savings of c. £10 million.

OpCapita also set about tackling the inflexible lease structure across the store estate. The OpCapita team led a 12-month initiative which saw more than 300 leases successfully renegotiated before being assigned out of the old administration to the new company. This enabled the business to emerge with shorter lease periods and monthly payment terms, providing significantly enhanced operational flexibility, and savings on the annual rent bill as well as additional cash savings.

This cash was subsequently re-invested as capex to revitalise the store estate.

More broadly, OpCapita worked with the company to create cultural change with a heightened focus on effective cash management and optimisation.

4. Improved use of customer insight

OpCapita recognised the loyalty programme was instrumental in retaining GAME’s customer base in areas where stores had been closed. OpCapita worked with the company to drive a strategy targeted at enhancing the gaming experience and participation in the gaming community for the benefit of the company’s 16 million reward card customers in the UK and Spain.

A comprehensive programme to reward loyalty was put in place, with reward card customers offered early access to events, launch parties and midnight openings, building an active and engaged “GAME community”.

5. Investment in online and digital infrastructure

OpCapita recognised that GAME needed to address digital migration head on and create a truly multi-channel business which could offer customers a seamless experience both online and in store. Under OpCapita’s stewardship GAME:

• Successfully launched an award-winning app which combined the loyalty card programme, a digital wallet, trade-in scanning and price checking, promotional communications tool and digital community communication

• Improved its internet offering with a new website launched in 2013 which now generates over one million unique visitors per week

• Expanded its digital download offering, including the back catalogue of retro heritage games (the first time some games publishers had allowed this to happen)

• Invested more than £2m into the development of a marketplace trading platform for the Group

• Developed an innovative in-store mobile app called “Scan-It”, giving product related information based on image recognition technology.  “Scan-It” includes the ability to make individual price offers to customers in-store based on their loyalty point availability and provides analytical data on items customers looked at but did not purchase in-store.



The result of the operational initiatives was a transformational turnaround, which rehabilitated the company from collapse in 2012 to a highly profitable company in 2014. GAME is now well-positioned to capitalise from near-term console launches and the long-term trend towards digital migration. From EBITDA losses at the time of acquisition in 2012, GAME delivered £51m of EBITDA at the time of OpCapita’s exit in 2014.

Operating from a smaller store footprint, secured on more flexible leases, the company succeeded in driving an effective multi-channel strategy which saw an expansion of online sales, new product offerings, enhanced, exclusive content and improved customer service.



The renamed GAME Digital was successfully brought to IPO on the main market of the London Stock Exchange just two and a half years following the acquisition out of administration.

As part of the IPO, more than 20,000 of GAME’s most loyal customers were given “virtual loyalty” shares.

In October 2015, OpCapita was awarded the Operational Excellence Award for the EMEA Lower Mid-Market by Private Equity International.


Key Facts

Sector:                              Video games retailer

Country:                           UK

Investment Date:            April 2012      

Exit Date:                         June 2014