Failing to get your latest product ready in time for the Christmas market is probably the computer gaming industry's equivalent of getting knocked out in the the third round of the FA Cup by a bunch of non-leaguers.

But Eidos's announcement this morning that its Championship Manager 5 will not now be ready until 2005 is just the latest blow to a company that, amid sometimes fevered takeover speculation, has issued three profit warnings this year. It's looking like a case of more Christian Gross than Arsene Wenger at Eidos.

What today's announcement may do is simply speed up the process whereby Eidos - the originators and importantly still the manufacturers of the Lara Croft series of games - is snaffled up by one of the bigger, better-geared PC games companies from the United States.

The global computer games industry is said to be worth up to £2.8 billion each year, but the combined market value of Britain's five largest quoted firms in the sector is only £185 million. Eidos, worth £133 million, is by far the biggest, and in common with rivals Argonaut, appears to be struggling against bigger American rivals to develop new products and deliver it in a timely fashion on both the domestic and American markets. It was a 32 per cent sales decline in America that was almost single-handedly responsible for the Eidos's £2 million loss reported in June.

It is not only British game developers which are struggling to match their American rivals. In 1998, Nintendo, the Japanese giant, owned a quarter of the US market and sold five of the top ten videogame-console games in America.

But the Japanese share of the US market has plunged to 29 per cent in 2004, from 49 per cent six years ago. With the sales of games for ageing consoles such as the X-Box and Sony-manufactured PlayStation shrinking from $3.4 billion in 1998 to $2.2 billion, it is clear that here is a market that requires constant (and often expensive) innovation and renewal of product lines. The delay in delivery of the much awaited PS3, for instance, has been a curse on games makers worldwide.

The computer games industry has consolidated as the games have become increasingly sophisticated. This has enabled the likes of Electronic Arts and Activision, the world's two biggest players, to increase annual revenues by 24 per cent and 26 per cent respectively, between 1996 and 2003. By contrast, Eidos grew revenues by an average of 3 per cent a year over the same period.

Eidos once had a collaboration agreement with EA, but the end of that deal coincided with the British company's delivery problems, and the fact that EA is working on its own football management game can only make matters worse for Eidos.

In the style of such companies, Eidos is not shy when it comes to singing its own praises. The "Championship Manager series is undoubtedly the greatest football management game of all time" its website boasts. The pity of it all is that they are probably right.

But like an off-form striker, Eidos is only as good as its last game, and if it keeps missing sitters when inside the six-yard box, then the spectre of relegation will loom large. Eidos put extra resources into the development of CM5, what it described as "a 30-strong squad with more ‘gallacticos’ than Real Madrid".

Also like Real Madrid recently, Eidos has failed to fire on the pitch.

According to a development blog on the company's website, posted more than a month ago, CM5 was experiencing some problems in its final refinements, largely because its fantasy teams were conceding too many own goals. The dread "chairman's vote of confidence" cannot be far away.

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