Computer games have weathered the economic downturn better than other items on the high street as consumers look for affordable entertainment but even that trend may now be coming to an end.

Game Group, Europe’s biggest games retailer, has been one of the UK’s more resilient high street performers in the past year but its sales have started to fall as consumers tighten their belts. The retailer said yesterday that like-for-like sales were down by 15.4 per cent in the 21 weeks to June 27, compared with a 6.3 per cent fall for the 11 weeks to April 18, suggesting that the decline has accelerated sharply in recent weeks. Investors took fright, sending its shares down 22p, or more than 13 per cent, to 142p.

Game is suffering from a tough comparison – in the same period last year there were unusually high sales after a number of high-profile releases. Sales rose by an unprecedented 25 per cent after the launch of high-profile games and consoles including Mario Kart, Nintendo Wii Fit and Grand Theft Auto IV. In the second half Game benefited from the demise of its rivals Woolworths and Zavvi.

The retailer expects pretax profits for the first half of the year to come in at between £13 million and £16 million, down from £36.4 million at the same time last year. The price of video games has decreased as economic conditions worsen, with Game predicting a 10 per cent decline over the course of the year.

Lisa Morgan, the chief executive of Game, said: “These figures are against a difficult comparison with last year and we expected this to happen.”

However, some analysts disagreed. David Stoddart, analyst at Altium Securities, cut his forecast for pretax profit for the year by £2.3 million to £115.9 million. He added: “These sales performances are weaker than we have assumed in [the first half].”

Gaming companies traditionally perform much better in the second half of the year as sales are boosted by Christmas and big product launches. Game Group hopes to benefit from the launch of Wii Fit Plus, DJ Hero, Mario and Sonic at the Winter Olympics and Singstar: Take That in the second half of the year.

An anticipated price cut for the Play-Station 3 in time for the Christmas market should also help to boost sales.

As new third-generation consoles such as the PS3 and the Nintendo DS go on sale, the appeal of computer games is broadening to include women and older people as well as the stereotypical teenage male players. More than 22.5 million third-generation consoles had been sold at the end of last year, compared to 16.5 million second-generation consoles.

Game, which operates in nine European countries as well as in Australia, plans to open between 50 to 60 new stores before the key Christmas trading period, mostly in Spain and Australia.

Synergies of £16 million from the integration of Game and Gamestation, which it bought two years ago, are expected this year.

Ms Morgan is eager to maintain the retailer’s focus on video games without diversifying, although it sells iPods through Gamestation stores.

A growing number of gamers are trading in their old games for cash or money off new games, or buying games that have already been played, according to the company.

While the preplayed market comprised about 10 per cent of the business five years ago, it has moved up to 18 per cent. Ms Morgan said: “Because we can control the price we buy and sell at very closely, the margins on preplayed games are much higher – about 39 per cent as opposed to around 22 per cent for brand new games.”

HMV, the music and books retailer, has just rolled out a similar scheme called Re/Play to its UK stores in anticipation of more people wanting to get money back for their old games.

Sales through its website are rising, with growth of 75 per cent to £99 million last year, as part of a long-term trend towards buying games online.

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