May 2011. GAME’s newly redesigned Parramatta store is a pitch-perfect exercise in ergonomics; carefully dotted with display units, slick in silver. The latest products adorn the shelves, thoughtfully organised. A glorious debut. On a small raised stage in the centre of the store, surrounded by the Australian press contingent, stands Ben Grant, GAME’s Marketing Director, dressed in his trademark black. He clears his throat.
“Who is GAME?” he asks. “Don’t you mean EB Games?
“Well, I’m fed up of hearing that. We’re GAME and I’m very much proud of that.”
Five metres to Ben’s right is Paul Yardley, GAME’s Managing Director. Brought on initially as a consultant it is now his job to rescue GAME’s struggling Australian operation. This transformed Parramatta store is part of the plan.
On Paul’s left, ‘Phil and Ed’, a comedy duo. The first stage in a marketing blitz that will ultimately land GAME in some serious trouble. At least that’s what GAME hopes. They want to make waves, land a headline or two. ‘Phil and Ed’ is just the beginning.
Behind everyone, standing at the counter, watching it all transpire, is Parramatta’s store manager Travis Jones. He has no idea what the hell is going on, and he’s not entirely sure he likes it. His store has become an experiment. He’s not sure if that’s a good thing.
Just over one year later, Travis Jones, with stubborn tears in his eyes, will lock up GAME’s Parramatta store for the last time. He will head to Parramatta RSL for beers with a group of store managers who have just done the exact same thing. They will drink their sorrows until they drop and GAME will be no more.
Hotshot #1: Gordon Graham, a gruff Scottish Operations Manager. A man Travis Jones affectionately refers to as “a mean old prick”. The man who single-handedly saved GAME’s Irish territory from the abyss.
Hotshot #2: GAME’s brand new Managing Director Paul Yardley.
But Paul Yardley had already been in Australia for three months before his appointment — time he mostly spent sunning himself on Sydney’s beaches. Paul had just entered his 30s. After spending four years working for Deutsche Bank as an investment banker, he took a sabbatical, headed to the other side of the world, and quietly wondered what the hell he was doing with his life. He found his answer in a chance phone call.
In his past life at Deutsche Bank, Paul Yardley had spent the past three or four years getting to know the executives who ran GAME PLC. When he heard GAME’s Chief Executive was on a visit to Australia, he figured catching up for drinks was a decent idea. The conversation soon turned to business. GAME’s Chief Executive was frank.
“Australia’s a struggle,” she said.
“Why?” That was Paul’s first question. Surely Australia, with a population of 22 million and an engaged set of potential consumers, was the perfect market for GAME. What could have gone wrong?
That’s what she wanted Paul Yardley to figure out.
“She said, ‘Can you do a bit of consultancy work?” says Paul. “’Go look at GAME for three months? Figure what it is that we’re not quite doing right, see if the business in the right place?’
“I said, ‘Oh, that’s interesting. I’m very happy to do that’.”
Paul Yardley’s days of sunning himself on the beach were about to be over.
In its rush to expand rapidly, he concluded, GAME had been taken advantage of. They had an overwhelming amount of stores, paying extravagant rental rates for mediocre retail space. According to Parramatta Manager, Travis Jones, GAME’s previous Managing Director was essentially being paid to open as many stores as he could in as short a time as possible. It took the previous owners of the Game Wizards brand almost 20 years to establish 15 stores. In 30 months, GAME increased that number to an incredible 125. Ben Grant claims the UK wanted 200+ GAME stores in Australia as part of a global expansion plan. And they wanted them fast.
“GAME saw that the market in this country was big, and EB pretty much had it to themselves at that stage,” explains Paul Yardley. “There was a big attractive market, with $110 price points. So they thought, ‘Brilliant, here we go.’”
Here we go indeed. But while GAME was busy expanding, so too was its main competitor EB Games. Both were caught up in bidding wars for retail space throughout the country, allowing the Westfields of the world to play one against the other.
“The property market was very, very full,” says Paul. “Westfield had eight people begging for every site they had. So you ended up in this bidding war, and I think all the landlords were saying, ‘OK, GAME, OK, EB Games, I’ve got one site in the centre. I want a games store there. What’s your best offer?’”
Ben Grant agrees.
“The arrival of GAME into the Australian market resulted in EB Games accelerating their store expansion plan,” he admits. “The landlords did very well out of the property expansion battle between us.”
Paul immediately set about the painful task of deciding which stores were financially viable, and which needed to be closed immediately.
“We took the business from 130 stores down to about 90 over a six-month period,” says Paul. “It was quite painful.“
Painful because of the job losses, admits Paul — Managing Directors typically don’t want to be part of a shrinking business — but the majority of the financial pain came from the exorbitant cost of closing stores. GAME were bound to multiple overpriced locations for three years, getting out of these contracts proved costly.
“We were losing so much money that it made sense to say to the landlords, ‘Look, we know we owe you for another three years, if we pay you six months rent, can we walk away?’
“We’d have that debate, and eventually they would say yes.”
Closing the stores was the first order of business. The second order of business was to whip the remaining stores into shape and make sure capable hands were manning the deck.
And that’s where Gordon Graham comes in. The man Travis Jones once called a “mean old prick”.
Travis And Hotshot #1
“GAME always told us the customer came first,” says Travis, and that suited him fine. “Before you stack a shelf you serve every customer. You make sure they feel comfortable.”
Travis admits that life before Paul Yardley was a little more relaxed. He was usually left alone to run his store, and visits from the previous Operations Manager were few and far between. Very little scrutiny was placed on how things were run.
But that all changed when Gordon Graham came on board.
“A lot of the staff members were scared of him,” says Travis. “He had a presence.”
Gordon Graham was ‘hotshot #1’. It was his job to fix what Paul Yardley believed was the second major issue with GAME’s business in Australia — the stores themselves. What did they look like, how were they run? Were the right people in charge of these stores?
Thankfully, Travis made the cut.
“Gordon was very strict in making sure everyone hit their targets,” says Travis. “He kept an eye on that. The feeling you got when he came over was this guy is fucking serious. A lot of the staff members weren’t used to that because the Aussie guys who were running it before were so laid back they didn’t give a fuck!”
But Gordon Graham gave a fuck — he gave several fucks. And despite feeling intimidated by his presence, most managers grew to respect his style. Gordon Graham expected the world from his managers, but was quick to reward success.
“He was definitely fair. Gordon rewarded good work quite well. At the end of the day we all understood that this guy knew what he was doing. We all respected that.”
The Bitter Pill
In a warehouse in Sydney 10,000 copies of the latest Just Dance gather dust. GAME, across 90 stores, is selling roughly 200 copies a week. It’s endemic of an ageing business model, endemic of the poor purchasing practices of GAME’s previous management team.
If GAME was to have any chance of surviving in Australia, changing the way it dealt with local publishers and distributors was essential. The constant overpurchasing of retail units had resulted in all kinds of difficulties.
“Historically we were buying too much,” admits Paul Yardley. “But that’s the way publishers tend to work, or used to work I should say. THQ were good at this.
“They’ll sell you 10 million, and you sell five. Then the publishers say, ‘well, that’s terrible isn’t it — what are you going to do about it?’ We say, ‘Well, alright we have to pay for it, right?’ Then they say ‘I’ll do you a deal, you put it on the front of your window for a week and I’ll take off $10 a copy.’
“So you end up being forced to do these things because you bought too much in the first place. You’re constantly in debt. Then the publishers say, ‘OK, if you buy 10 million of the next game, I’ll half the price of the last stock you couldn’t sell.’ So you end up in this sort of spiral. It’s a bit like being at the drug dealer where they give you the first hit for free.”
Paul Yardley wanted to change the conversation. Again, it was as easy as taking the right people out for a drink.
“There’s roughly, I don’t know, 12 people here in Australia who run the games industry,” says Paul. “If you have a beer with them once every three or four weeks, you don’t necessarily get everything you want, but you’re at least able to ask for certain things politely. They’ll say, ‘Yeah, I’ll give you that, but I won’t give you this.'”
The tough part of the conversation was obvious — GAME would now be buying less of what publishers and distributors were trying to sell. That was the bitter pill. The sweetener was a slicker business model, where GAME would consistently sell through the stock they purchased. Retail, as a whole, was changing, and GAME was helping drive that change here in Australia.
“Retailers started to understand that when we bought four million we sold 3.8 million,” explains Paul. “Brilliant. Perfect. Because they don’t have to worry about the next shipment and how we’re going to pay for that.
“Whereas before GAME were screaming, ‘Ship it in! We’ll sell 10 million!’ Then we’d come back, saying, ‘Give us some discounts! We can’t sell them!’”
A Brief Encounter
“Ben Grant definitely has… uh, a different kind of mind when it comes to marketing.”
In 2010, GAME’s Marketing Director Ben Grant had very little to lose. He had already handed in his resignation. Ben Grant initially arrived in Australia in 2008 on a 12-month contract; GAME had acquired the Game Wizards stores, and Ben was asked to come over to Australia and help drive this new commercial undertaking. Two extensions and three years later, he was ready to go back home to England. Ben Grant missed his family.
But the proposition offered was impossible to pass up. Paul Yardley and GAME’s UK Directors gave Ben a blank slate — reinvent GAME’s image from the ground up, build GAME’s brand awareness to the point where they could no longer be ignored, to the point where no one would ever mistake them for EB Games again.
“The brief I was given was a once in a lifetime opportunity,” he says.
It was a dream assignment, but Ben’s budget was almost non-existent. It was the challenge that motivated him: How could he maximise brand awareness with minimal investment?
Ben’s first step was GAME TV, hosted by Phil and Ed.
But Ben Grant’s intention was to elicit some sort of reaction, positive or negative, so he pressed on. There were harmless campaigns like the Battle Of The Clans or the Sonic Quest, but Ben was intent on stirring the pot. As far as he was concerned, the more controversy the better. The likenesses of Phil and Ed were used on some fairly juvenile reward cards — strategically positioned holes allowed owners to get a little ‘creative’.
And then there was the notorious ‘WTF?!’ campaign…
“I would much prefer to have had 100 per cent positive press coverage, but this resulted in a lot of free media coverage and articles,” says Ben. “People were talking about GAME for the first time.”
And Ben Grant was just getting started.
“The GAME swingers thing?” begins Travis Jones. “That was really fucking weird, and it should never have happened.”
“Everyone who worked for GAME was thinking, ‘What the fuck is going on. Has it really come to this?’”
GAME Swinging. It was the culmination of Ben Grant’s reinvention of GAME. An attempt to maximise exposure with minimum marketing dollars, a last gasp shot at rebranding GAME as something completely separate and distinct from its competitors. It backfired. Massively.
But GAME Swinging was supposed to backfire. It was designed to fail, right from the start.
The actual event itself, however, was far from harmless. GAME Swinging began, as you’d expect, with some gaming and a few drinks. Later, however, a series of clearly paid male and female models spontaneously began removing their clothes and wandered around the venue naked. A promotional video for the event ended with a male and female model leaving the event, heading up to a hotel room and suggestively closing the door behind them.
By the end of the video, no one was ever in any doubt — what initially seemed like a curious, if misguided, dating concept was actually a calculated attempt at grabbing shock headlines. Today, Ben Grant is happy to admit as much. His goal was to create controversy, to generate media headlines and mainstream outrage.
“GAME Swingers was a PR stunt,” he admits. “We wanted make the national news and cause enough public outcry to get the event closed down.”
From the beginning, says Ben, the GAME Swinging event was designed to achieve a handful of distinct goals: get the GAME brand on national television, distance GAME from EB, and shock consumers. But Ben’s ultimate goal was to generate multiple letters of complaint that he could then send to the media to prolong media coverage and get a “second bite of the cherry”, as he puts it.
Ben even ascribed a financial target to the GAME Swinging operation: he wanted the event to garner $1 million dollars of free media coverage. In the end, according to his estimates, GAME pulled in roughly $500,000 — half of what Ben had initially hoped for.
“Would I do it again? No,” he says.
“I would have tried something else more controversial that would have obtained double the media coverage, with an even bigger shock factor.”
But by the end of Ben Grant’s media blitz, he was mentally and physically drained. He left Australia and headed back home to his family in the UK, having built GAME’s brand awareness from 18 per cent to 50 per cent in just over a year.
“Ben Grant tried his best to promote GAME in different ways,” says Travis Jones. “I give him real credit for that.”
Soon those stresses became visible fractures; the bank was concerned. GAME wasn’t exactly proving itself to be a profitable company that could pay its bills on time. The dance went sour.
“It was around about that time the UK noticed their dance partner was eyeing up the girl behind them,” explains Paul. “They started to think, ‘OK, now we really are in trouble.’”
GAME’s credit, like anyone’s, was tied to a number of financial covenants. There was a golden ratio: to manage its debt GAME PLC had to prove a certain level of profitability. And it had to cough up a certain amount of cash for expenses.
And therein lay the issue — heading into 2012 GAME, as a global company, wasn’t profitable enough to maintain those financial covenants. It was struggling. Majorly.
“Initially the banks were friendly,” explains Paul. “They listened carefully and GAME outlined a plan to restore profitability to the group. All the way through this we really, honestly believed this was just a game of poker. The banks would say, ‘You’re going to break your covenants’. We would say, ‘Well, yes, we might, but we’ll come good again in six months time.’”
But the stakes were high. The dance became tense. GAME’s lenders, in the first quarter of 2012, sent in financial services firm PwC to double check if GAME’s generous business forecasts actually held water. GAME PLC was put in the difficult position of having to work in the same offices as its potential administrators. One false move and the accountants working across the office would have their heads on a silver platter.
“There was this mob of accountants sitting in the UK offices saying, ‘be nice to us or we’ll tip you over the edge’,” explains Paul.
And all the while, looming on the horizon, the spectre of store rent, paid quarterly in the UK. It was an expense that always had the potential to sink GAME. There were over 600 stores across the UK. A lot of cash to pay in one hit; an almost impossible sum of money.
And, in the end, it was this store rent that took GAME PLC to the cleaners.
“GAME UK went to pay the rent and the bank just said ‘nope’,” says Paul. “It was very much a moment of ‘insufficient funds’.”
“At that point you haven’t got an option. If the bank won’t give you any money and you can’t pay your rent. You haven’t got a business anymore.
“So the UK had to call in the administrators.”
The mothership had just gone bust.
A Moment Of Clarity
You would expect chaos. Meltdowns. Staff walkouts. You’d expect instantaneous storewide sales across Australia. In truth, no one knew what to expect when GAME PLC went into administration. Most assumed that when the UK went pop that, in turn, GAME Australia would go pop.
A reasonable assumption, but what actually happened was this: Paul Yardley drove to his office, sat down on his chair, took a deep breath and exhaled. At his desk, in the midst of the insane situation he had just inherited, Paul did some thinking. The Australian banks are still dealing with us, he thought. We have money in the bank. We can pay our rent, and we can buy stock. We still have a business.
“We had this moment of clarity,” says Paul. “We realised we didn’t have to do anything day one. We could keep going.”
But there was fallout. Paul Yardley and his team had been busy transforming GAME into something approaching a profitable business, but that process required a cash investment. If GAME was to survive it needed a buyer, someone who would continue to fund GAME’s reconstruction. But, before that could happen, it was the responsibility of the management team to reassure everyone — business partners, staff members, themselves — that recovery was possible.
“I spent a lot of the first few days telling everyone ‘We’re still here’,” says Paul. “We’ll find an answer.”
On the frontline, however, everyone’s confidence was shaken.
“Although none of us wanted to believe it,” says Travis, “we all knew the UK situation would affect us in Australia. We were told numerous times that it wouldn’t, but it scared the absolute fucking shit out of me. That was the start of everything, when everyone started wondering, ‘Are we going to be OK?’”
The answer to that question depended solely on Paul Yardley’s ability to find a buyer for GAME Australia.
Falling Down The Crack
Crack picture from Shutterstock
“We had some good healthy discussions with a number of people,” says Paul.
But one buyer suddenly left negotiations — that was a blow. Then, later down the track, the second prospective buyer pulled out. GAME’s bargaining power was significantly reduced.
And, finally, May 13. GAME’s final prospective saviour walked away. All was lost. GAME was too risky a proposition. For those who didn’t understand the cyclical nature of games retail, GAME was simply too much work for too little reward.
“There were three things that anyone coming into the situation had to get their heads around pretty quickly,” explains Paul, “and this was hour by hour stuff.”
“One. If I’m not from the games market, if I’m new to this, what I’m seeing is a declining market. I’m investing in a company that’s telling me it’s going to turn around in a few year’s time but I’ve got no proof of that. Will I gamble four million bucks on that?
“Two. Let’s say I buy into the gaming market. I’ve got a business that’s been through a pretty tough six months and lost a lot of good people. Do I have the appetite as a buyer to rebuild this thing? A lot of people were like, ‘That sounds like a lot of fucking hard work actually’. Quite high risk.
“Three. GAME is a funny size really — 90 stores. If I’m, say, Anchorage Capital, I can buy Dick Smith, which has 400 stores. I could put in $20 million and make $200 million. Or I could put in $4 million into GAME and make $20 million. Both are going to take the same amount of energy.
“I think we fell down the crack in a way. Just an awkward size at an awkward point in the market cycle.”
May 13, Paul Yardley has two very difficult phone calls to make. The first is to GAME’s lawyers. He double-checks the figures, triple-checks his options. The last thing he wants is to be charged with insolvent trading. As a Managing Director, that may be the one thing that follows him to his grave. Paul Yardley is now out of options. He saves the most difficult phone call for the next morning.
May 14. Paul Yardley calls PricewaterhouseCoopers (PwC). We know you’re outside waiting, he says. You can come in now.
It was official, GAME Australia was in administration.
“You make that phone call,” he says. “You actually sign a piece of paper. You sign a piece of paper that says GAME is bust. And then you’re depressed.”
No Longer In Control
Employees in the back are busy packing boxes; buyers are on phones, frantically negotiating with distributors. Reluctantly, Paul Yardley stands up in the middle of GAME’s head office. He watches as productivity slowly grinds to a halt. He begins to talk; he explains the situation as plainly as possible. He scans the room for a reaction. Fear, exhaustion. Before the day is out there will be tears.
“Everyone had worked so hard,” says Paul. “It was like being in the trenches and you’ve just lost the war. It’s not an episode I care to repeat in my corporate life.
“You sign a piece of paper. Then you call a staff meeting. You say, ‘this morning we’ve had to put the company into administration, we’re very sorry. And I’m very sad to be standing in front of you telling you this. Here is Mr PwC who will now tell you what’s going to happen, what that means for you. Because I won’t be here any more.’”
At that precise moment, Paul remembers one specific conversation. A few weeks back an employee came into his office. “Will I lose my job if we go into administration?” he asked. “I don’t know,” Paul replied. “But there’s a good chance you will.”
“My wife lost her job four weeks ago,”” the employee continued. “How am I supposed to cope when my family has lost both sets of incomes within two months?””
The memory sent Paul reeling.
“There’s not a lot you can say to someone in that situation,” says Paul. “Those discussions and conversations weigh very heavily on you. You walk round the office and people are crying. I wouldn’t wish it on my worst enemy. I really wouldn’t.”
Two years after he first agreed to help reel GAME in from the brink, one year after GAME’s reinvention, Paul Yardley walked out of head office. No longer responsible. No longer in control. No longer in charge.
“You go from the busiest, most mental time of your career and all the pressure of administration to nothing. Absolutely nothing.”
He headed directly to the nearest pub and ordered himself a stiff drink.
‘I Read It On Kotaku’
Travis Jones wasn’t angry, just disappointed. Alright, maybe he was a little bit angry.
News of GAME’s administration spread fast. Before Head Office had a chance to inform its 700 members of staff, most had heard or read the news elsewhere.
“It was on a website before we heard it from GAME,” says Travis. “Actually I read it on Kotaku. They didn’t say anything to us about what was going to happen. They denied it until the day it happened and I felt that was very unfair. I think everyone saw it as a bit of a kick in the nuts.”
Paul Yardley blames the lack of information on, well… a lack of information. GAME’s final potential buyer pulled out on May 13. Paul made the call to PwC the next morning but, up until that moment, he genuinely believed that GAME could be saved. Part of it was an attempt to keep spirits up, but he did, as he puts it, “believe his own hype”. Paul didn’t think GAME would go into administration until the day GAME actually went into administration.
But that didn’t make things easier for staff on the frontline. The situation was bad and it was about to get much worse. With GAME in administration it could no longer guarantee its customer’s pre-orders, of which there were literally thousands.
The highest profile launch around that time was Diablo III. A large majority of customers had paid this game off in full, and GAME couldn’t provide the game or offer consumers a full refund. The laws of administration define customers as debtors, and if they wanted their money back, they would have to head to the back of a very long queue. The harsh reality was most of these customers would not be getting their money back. Not then, not ever.
And it was the job of GAME’s store staff to inform customers of that fact.
“It was hard dealing with that many complaints,” says Travis. “There was so much frustration and anger.”
At the time, Travis had roughly 25 fully paid-off pre-orders in his store and countless others that were partially paid. Travis and his staff had to bear the brunt of this. Every day, there was an incident. Every day, they had to suffer volleys of abuse from frustrated consumers.
“We were getting yelled at by customers demanding $10 or $20 back when we were all about to lose our jobs,” says Travis.
There was one incident Travis will never forget: “He was an absolute pearler.”
“He was my customer, so he came directly up to me. The guy had $50 down on a game for his son; a decent amount of money. I tried to explain to him that GAME was in administration, that we couldn’t give him the game or his money back. I said, ‘If you want to register to get your money back, you should head to our website…’”
At that precise moment the customer lost any semblance of control. In front of his wife and kids he exploded with rage, screaming, shouting, threatening violence.
“I said, look, mate, your kids are here, calm down, it’s not my fault.”
The customer then calmly and casually walked his wife and children out of the Parramatta store — before charging back with another stream of abuse that threatened to turn physical.
“He ran back in saying he was going to jump the counter and punch my head in! I had to get security in to drag him away!”
It was a difficult situation for everyone involved: for the consumers, who lost money, for GAME’s staff members who had to manage the situation. The games industry had become increasingly dependent on the pre-order model for a multitude of reasons — to gauge interest, to measure the success of marketing campaigns — but it proved a dangerous game to play in a volatile retail environment. With distance and perspective, Paul Yardley admits the pre-order model GAME and other retailers used (and still use) is heavily flawed.
“It’s a lesson for everyone about retail in general,” explains Paul. “Any money you’ve given to a retailer before you’ve taken something out of the door isn’t protected. You rank below everyone in the list of creditors.”
As someone who has worked at the highest level of retail Paul’s advice is simple.
“The games industry loves having pre-orders because it’s the best indicator of what will sell,” he says. “But paying them off? It’s terrible. Because it puts you at risk.
“My advice for people would be this: unless you’re very sure of the standing of your retailer, don’t risk it. Don’t ever pay anything off in full.”
20 Years To Build…
In the end it took PwC eight weeks to close GAME completely.
“Twenty years to build, eight weeks to close it down,” says Paul.
On the last day of trade, Travis Jones made sure all of his full-time staff were rostered, he owed that to them he thought. Morale was low. They packed games into boxes, they tossed a football around in an attempt to lighten the mood. Towards the end of the shift, Travis brought in some beers. They sat around and clinked some bottles.
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“We just tried to celebrate the fact that GAME was GAME and it was going under,” says Travis.
Paul Yardley took longer to let things go. He distinctly remembers two particularly harsh weeks in the middle of winter, directly after GAME’s closure. It took six months for him to put the events of the last two years into some sort of perspective.
“You reflect, you twiddle your thumbs,” he says. “You feel very depressed for a while. And I don’t use that word lightly because I don’t think you should.
“Up until November 2012 it still felt very fresh and raw. But now everyone has their new jobs; I realise it could have been worse.”
Travis Jones was one of those people with a new job, in retail, in a new store, but he’ll never forget his last day at GAME, as he locked up the flagship Parramatta store for the very last time.
July 2012. Just over a year before, Ben Grant stood on a small raised stage and said GAME had to “adapt or die”. Somehow, GAME Australia managed to do both, and it almost felt inevitable — but for Travis it genuinely was the end of an era.
He’ll never forget his last day. The boxes packed, the display units dismantled, GAME’s flagship store felt like a strange tomb — a historical relic, a last testament to a retail model in transition. In the end there was nothing left but storage space.
“Walking out of my store and locking up the padlock for the last time, I did get teary. I had so much care and respect for that store and I worked harder for that company than I have for anybody.
“For me, memories of GAME are always going to be good.”