No official announcement has yet been made, but the talk in the industry today is that New Zealand-owned independent retail chain The Gamesman has been acquired by multinational giant EB Games. The takeover will take effect on 1st July.
The Gamesman's eight stores will be rebranded. Employees have been told there will be no immediate job losses, although the probability seems high that staff rationalisation and closure of duplicate stores in some locations might occur at a later date.
From our sources we understand that although The Gamesman was struggling to compete against mass-market rivals, it was not in any immediate financial difficulty. Rather, the primary motivation for the sale of the stores is to enable the owners to redirect their focus on their distribution business, Gamewizz Interactive. Gamewizz operates as a sub-distributor for key brands including Nintendo, EA, Take 2, Atari and Codemasters. It also holds the license for peripheral maker Mad Catz and several other PC software and movie brands.
Gamewizz's position in the market was previously made difficult by their relationship with The Gamesman. The close links between the distributor and retailer apparently discouraged other retailers, including EB Games, from using Gamewizz because they were viewed as a competitor. The sale of The Gamesman will eliminate this barrier, meaning EB Games may begin purchasing from Gamewizz.
Consolidation in the New Zealand game retail market has been occurring ever since EB Games opened its first stores here a few years ago. Independent chain Central Park Interactive was sold to Gamesplus in 2005, which was acquired by the ill-fated Icon Entertainment (together with Blockbuster video and Sounds music stores) which went bust at the end of last year after losing millions of dollars.
EB Games is a subsidiary of American behemoth GameStop Corporation, the world's largest video game retailer with over 5,000 stores throughout America, Europe, Australia and New Zealand. Their international backing and buying power means they can afford to "buy" market share in countries like NZ by cutting their margins to nothing (or negative), in order to put pressure on local competitors.
Large, mass-market retailers such as The Warehouse, and international chains like Dick Smith Electronics and JB Hi-Fi, who are able to leverage their scale to also cut margins, have put additional pressure on independents.
The sale of The Gamesman will make Gameplanet Store the largest and longest-running independent video game retailer in New Zealand, having begun as GameZone in 1994.