Gameplay goes bricks and clicks with Dixons

Online games retailer Gameplay has switched to a bricks and clicks model after agreeing deals with retail giant Dixons and its majority-owned ISP Freeserve.

Gameplay, awarded Yell's website of the year last month, will take its brand to the high street through the rebranding of Dixon's seven-strong mini-chain of @Jakarta games shops. The retailer will also manage Freeserve's online games channel under a four-year agreement.

Under the terms of the deal, Dixons has taken a 12.5 per cent stake in Gameplay, with a conditional option to acquire a further 10 per cent of the company in a deal which would value Gameplay at around £167m.

The new Gameplay stores will be jointly owned through a shared venture, with Gameplay outsourcing operations to Dixons. Both companies see the deal as a way to expand into new channels including the web, and broadband, interactive digital TV and mobile phones, many of which Gameplay has already invested in.

Dixons will also pre-load a Freeserve co-branded version of Gameplay's online gaming software on each PC it sells, and Dixons' finance director Ian Livingston, also a non-executive director of Freeserve, will join the Gameplay board.

Established in March 1999, Gameplay has raised £93m in capital, including investments from BT and BSkyB, and has 900,000 customers. @jakarta has seven stores and a database of 60,000 users through a loyalty scheme. It made losses of £2.6m on sales of £6.5m in the year ending 29 April 2000.

Gameplay chief executive Mark Bernstein said a high street presence would help the company's relationship with games publishers and developers.

"Today, most games are sold in boxes on the high street and the addition of a focus UK high street presence and the partnership with Dixons will help us deliver stronger relationships with games publishers and developers," he said.

"We see this as important for the business while the industry consolidates and migrates towards online distribution of games software."