Is the game over for Game Group? Most worrying of all, is the loss of faith from some customers. On the company's Face­book page, when it announced that it would not be stocking Mass Effect 3, the long-awaited shoot "em game from Electronic Arts, over 500 customers posted messages. Most were very negative. One, from Jason Lane, succinctly summed up the feeling of many: "GAME YOU SUCK!!" The strength of feeling, of course, is proof of the loyalty many have for the company, which has 11m reward card holders in the UK, most of whom are active members of the scheme. It is believed that there is at least £10m of unspent reward points sitting on these cards. Those customers who pre-order any game from the shop receive double ­reward points, the main reasons why they were so annoyed when their Mass Effect 3 pre-orders were cancelled. The company felt compelled to send out about 80,000 vouchers, worth £5 each, to mollify these customers. The crisis at the Basingstoke-based company has accelerated swiftly since it warned in November that sales had star­ted to fall heavily. It had about £120m cash on its balance sheet following Christmas trading, but this was a timing issue - helped by all the games and consoles bought as presents. Since then it has eaten through much of the cash, buying new stock, paying staff and in two weeks" time it has a quarterly rental bill, estimated at £15m, that needs paying. Peter Smedley, analyst at Charles Stanley, calculates that its average net debt through­out the year is about £70m. He said yesterday: "Imminent collapse into administration is now a real possibility." But the real problem, accor­ding to many analysts, is not the short-term lack of cash caused by a fall in trading and a high cost base caused by 600 UK shops and 6,000 British employees. It goes far deeper. Back in 2009, British consumers spent £500m more on video games than the combined total of cinema tickets and buying DVDs and Blu-ray discs. At the time, the figures were hailed as proof that the video games industry had come of age and that they were part of an increasing number of families" daily ­entertainment. The Association of UK ­Inter­active Entertainment, the trade body, estimates that one in three people are gamers in this country. But at the same time, despite the increasing acceptance of gaming as mainstream entertainment, sales have suffered. The total amount of sales ­generated from video games, accessories and consoles fell 13pc during 2011 to hit £2.52bn. Nearly all of this fall was cyclical, according to Ian Shepherd, the chief executive of Game. When an exciting new console comes out, consumers not only buy the equipment but also a few new games. The gaming industry used to see a batch of new consoles every three to four years. But there have not been any full-blown new consoles since 2006/7, when Nintendo released the Wii, Microsoft brought out the Xbox 360 and Sony's PlayStation 3 hit the market. Mr Shepherd is confident that the Wii U, due later this year, and with the promise of high definition games and a touch-screen control, will kick-start the cycle again. But many industry insiders are sceptical and point out that the industry has shifted forever, and the future of gaming, while bright, does not lie in consoles and video games on discs. It lies in social gaming and free apps on smart phones and tablet computers. Nicholas Lovell, a consultant who runs Gamesbrief, says this market works on a completely different business model, based on free, or very cheap games, which then encourage you to spend incremental amounts of money unlocking new levels or on accessories. Just look at all the children who play Moshi Monsters or Club Penguin and spend most of their money on the associated fluffy toys, not the games. Digital is the fastest growing market and Game's business model just isn't suited to it. The supermarkets, or Argos, can supply commodity video games, while interactive digital games will be downloaded from specialists websites. It is unclear where Game, despite its loyal customers, fits in.