Video game retailer Game Digital has said that a "highly competitive" market over the Christmas period was to blame for a drop in sales of 6.7% in the 11 weeks to January 10th.

Although hardware sales rose, driven by "increased promotional activity", lower prices and margins for popular consoles such as the PlayStation 4 and the Xbox One means that year-end earnings are likely to be "broadly in line" with 2014's total of £51.3 million, missing analysts' forecasts.

Martyn Gibbs, GAME Digital CEO, said: "Our market has experienced significant uptake of Xbox One and PlayStation 4 with both achieving the current installed base in half the time of their predecessor consoles in our core UK market. We have exceeded our expectations for the first year of the new console releases and are well placed to capitalise on over 4 million Xbox One and PlayStation 4 owners in our two major markets.

"Our strategy is to grow customer lifetime value and over the Christmas trading period, starting with Black Friday, we invested margin in offering gamers competitive product propositions through the bundling of games with hardware and reduced pricing, to recruit as many new generation customers as quickly as possible. We now have a huge customer base within the new formats, to sell both mint and preowned physical and digital content and accessories to over the long term.

"We have a solid line up of new physical and digital games being launched in our second half and have already secured a number of key exclusives. Our teams remain focused on delivering our unique specialist gaming experience for our customers."