Game Digital has agreed to a £52m takeover by retail tycoon Mike Ashley, potentially paving the way for video gamers to descend on House of Fraser stores for live battles in purpose-built gaming arenas.
In a statement to the stock market, Game said it had little choice but to accept an offer from Ashley’s Sports Direct leisurewear group, which bought a 26% stake in the company in 2017 and has built its holding to nearly 40%.
Analyst Zoe Mills at Global Data said Game was accepting the offer “begrudgingly” because it was struggling to cope with a marketplace in which gamers often bypass traditional retailers altogether.
She said this had left Game Digital more reliant on its embyronic partnership with Sports Direct to open a network of live video gaming arenas in stores, under the Belong brand.
“Game launched the first arenas back in 2017, but it has only grown to just over 20, despite the planned tie-up with Sports Direct that was set to open its Belong arenas in up to 100 new locations,” she said.
“Now that Sports Direct controls House of Fraser, there is a clear option to utilise some of the increasingly redundant space in some of those stores, helping to generate higher footfall and increase its investment in experiential retail,” she said.
Game said: “In coming to this recommendation, the board has considered the growing size of Sports Direct’s shareholding in the Group and the reliance Game has on Sports Direct for supporting its future growth prospects combined with the ongoing industry headwinds, current negative retail market outlook and the likely elongated current console lifecycle which are expected to impact the future financial performance of the group.”