By Max Clarke

Declining sales at leading high street video games retailer, Gamp Group plc (LSE: GMG), have seen its profits more than double, to £48million due in part to a global slowdown in video game sales.

"2011 has been a very tough year for the video games industry,” said the Group’s Chief Executive, Ian Shepherd. “A combination of a cyclical low point in the industry itself and unprecedented macro-economic conditions have led to significant market revenue declines. “

High profile releases including the critically acclaimed Deus Ex: Human Revolution momentarily stemmed losses, but have been unable to reverse the long-term pattern of decline.

“Like many other retailers,” continued Shepherd, “we believe that trading conditions will remain tough for the remainder of the year, and have set our plans accordingly. We are determined to again outperform a difficult market this Christmas, by using our unique specialist position to give customers the very best choice and value.”

The Group are turning away from their traditional sales model of over the counter disks and exchange, to embrace a host of technologies including vitrualised and cloud-based services.

The rise of online games rental services, including NetFlix and LoveFilm, both of whom lend games for a fraction of the cost of purchase are forcing the high street retailer to reassess its business model.

The advent of OnLive, a cloud-based games provider that has been highly successful in the US, will further erode the profitability of hard-copy games sales.


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