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Analysts Predict Tough Christmas For Game Publishers
Thanks to Gamesindustry.biz for its article regarding predictions of a tough 2004 holiday season for all videogame publishers, as an analyst report from Banc of America Securities claims "competition in the games market will be much more intense than last year", and argues that "some games will just not receive any shelf space from retailers, and initial shipments of titles will be very low, even by historical standards." The report goes on to highlight some non-specific specifics: "We have very low expectations for games of other developers with less-known brands... including Acclaim, Midway (except Mortal Kombat), Atari, Eidos, Vivendi (apart from Half-Life 2, if it is released) and even Microsoft (apart from Halo 2)... Expect many disasters this holiday." Is there really a reason for game creators to worry about what sales Santa will bring them?
Christmas will most likely by DVD season, not games season. Newly released box sets of SciFi TV shows will feature highly as well as "classic" movies like Office Space.
So why don't video game publishers try to capitalize on the summer months, when the market isn't flooded with competitors and people seem eager to spend money on entertainment?
E.g.: Blizzard publish Warcraft III on July 3rd, 2002 and WC3: TFT on July 1st, 2003, and each sold several million copies within weeks of their respective release date.
I think we're forgetting the real meaning of Christmas - The birth of Santa
It's crazy some of the titles that get released at Christmas. All the big boys (well, er... let's make that EA) release big, often licensed games for Christmas, with a huge amount of advertising.
I find it bizarre that publishers put out games like 'Metal Arms: Glitch in the system' at that time which while being a very good game, is hardly going to be able to compete with all the big-name licenses out there at the time.
You have to remember that many of the games that are bought around Christmas are bought for someone else. When Mum, Grandpa or Uncle Alf goes into a game store looking for something to buy little Jimmy, they're going to go for something safe with a brand they recognise. That means FIFA, James Bond, The Matrix, Star Wars, WWE, or something they've seen a lot on the TV.
Somehow making it through the day doing a thing called work instead of thumping buttons.
The full text of this article from The Economist follows. The original content is subscriber-only; it is reproduced here in the hope and expectation that you will find it useful.
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Video games
A serious contest
May 6th 2004
From The Economist print edition
Can Microsoft's clever strategy level the playing field with Sony?
LIKE the combatants in a beat-'em-up video game, the makers of video-games consoles do battle in orderly rounds, one of which occurs every five or six years. The current round began in 2000, when Sony launched PlayStation 2. In 2001 Nintendo, the firm that once ruled the industry, launched the GameCube, and Microsoft made its first foray into the cut-throat market with the Xbox. Four years on, Sony is the clear winner, with sales of 70m consoles, followed by Microsoft with 14m and Nintendo with 13m.
Next week, the industry's biggest trade show, E3, which takes place in Los Angeles, will provide the first glimpses of the next round. It is expected to be a brutal two-way fight. For, after a difficult start, Microsoft has now established itself as Sony's main rival, and is gaining momentum. Most important, it has won the crucial support of games publishers, says Nick Gibson of Games Investor, a consultancy. That means Microsoft will "pretty much be neck and neck with Sony" in the next round. Nintendo, by contrast, has been less successful at keeping publishers on board, and has survived thanks only to the strength of its in-house software business.
Xbox Live, Microsoft's subscription-based online-gaming service, has also been well received. It provides features, such as global player rankings, that Sony cannot match. And although online gaming is still a minority sport, it is expected to be far more significant in the next round, as broadband connections and wireless home networks become more widespread. By signing up customers for Xbox Live now, Microsoft hopes to retain their loyalty into the next round.
But perhaps cleverest of all is Microsoft's new software-development platform for games, called XNA, a set of software tools that can be used to write games for PCs, Xbox and the forthcoming Xbox 2. According to Robbie Bach, Microsoft's "chief Xbox officer", insulating programmers from the underlying complexity of the console hardware "creates huge cost efficiency and flexibility." While Microsoft will probably not unveil the Xbox 2 at E3, says P.J. McNealy, an analyst at American Technology Research, the XNA tools will enable the firm to demonstrate the kind of things that will be possible on Xbox 2 when it appears.
The contrast with Sony is striking. While Microsoft is focusing on software, Sony is emphasising hardware innovation for its PlayStation 3. Its plan, which it has yet to describe fully, is to use a new kind of chip, called Cell, as the basis for both the PlayStation 3 and its consumer-electronics devices, such as DVD players. With multiple Cell chips working in parallel, the PlayStation 3 will be a powerful machine. But its radical new architecture will require games programmers to start from scratch. In the meantime, Sony is trying to keep developers focused on the PlayStation 2.
Microsoft senses an opportunity. It is widely expected to steal a march on Sony by launching the Xbox 2 towards the end of next year, kicking off the next round before Sony is ready. "Microsoft has taken the gloves off," says Mr McNealy. The PlayStation 3 is not expected until early 2006, and even then only in Japan; analysts do not expect the worldwide launch until late 2006. (Nintendo's successor to the GameCube is also expected in 2006.) Last time around, Sony's 18-month head start and Microsoft's status as the industry's newcomer meant that the Xbox never had a chance of catching up with PlayStation 2; it was always going to be just a trial run for Microsoft. But now Sony and Microsoft look evenly matched--and the battle can begin in earnest.
Did they forget that this is coming out? Will sell tons...
Political correctness is the newest form of slavery.
Is it just me, or has anybody been noticing that everything's just been going bad for developers nowadays? I mean, it seems like every other day you go on Slashdot or Gamespot and there's an article about a development studio getting shutdown, or a publisher laying workers off, or a company's earnings report lower than last year, etc. People always talk about the video game being a growing industry, but all it seems to be is shrinking. This is very discouraging to somebody such as myself who is in the game development industry, because it feels like this industry is going to collapse any second.
I definitely got my money's worth from this title but I regretfully bought it for my early-60's father a few years ago. He still plays it 10-20 hours a week. Single player. Ugh. I remember having to go to his house and beat a (pre LOD) multishot Bremm Sparkfist for him because he was stuck on him for days. Good times..
link.
Flourescent (adj): smelling like ground wheat.
Don't forget about Christmas bonuses at that time. Around Christmas time, lots of people have instant disposible cash and lots of reasons to blow it FAST.
Of course some games will crash and burn. If the industry insists on fixed pricing, then it is inevitable that consumers will only buy the most publisised games, as this is the only criteria, other than biased reviews that they have. Whereas if some games were cheaper they could take that into consideration when buying.
If studios are worried, then they should cut the prices of their games. That way more will sell. Better than none selling at all.
May the Maths Be with you!
They need to sell/market games based on demographics.
For example, games aimed at younger kids should come out around christmas because thats peak season for them. (being that most of those games are bought by parents).
And games aimed at older kids/teenagers/young adults (who increasingly have part time jobs e.g. paper round, fast food or whatever as a source of money to spend on games) should be released at the times of the year when the target audience is most likely to have disposable income and/or free time.
Another thing to remember is that for younger kids, the parents (or grandparents etc) are more likely to be the ones making the decisions on what to buy. Although kids will ask for stuff, just because the kid asks for Gorefest Fighters 3005 Extra Special Extra Super Gore Violence Edition doesnt mean that they are going to get it (cue simpsons quote about episode with bart wanting Bonestorm and ending up with a golf game instead)
On the other hand, bigger kids/teanagers/young adults (and also adults) are going to be more liklely to be making their own decisions on what games to buy (especially if its their own money they are spending)
I do think that there is a market for smaller games (that dont have a huge name/licence attatched). However, that market disappears when the studio does the wrong thing and spends big $$$ on the production.
So why don't video game publishers try to capitalize on the summer months
Easy. Games are sold retail, and retail is Christmas. No matter how many dedicated gamers exist that would buy games in the summer, it can't compare to the legion of mothers and wives that walk into game stores at Christmas.
Moreover, because retail is Christmas, investors expect high fourth quarter earnings. Say you're Vivendi, and you release Game X in August. For the same, it sells well. Let's say 2 million units, hypothetically. Now, release the game game fourth quarter (xmas), and due to competition you only sell 1.5million.
You've made less money, and probably spent more in advertising to get it. But because investors pay far more attention to fourth quarter earnings than third, every dollar made during Christmas is technically worth more to the company than if that dollar had been made in summer.
Even Hollywood adheres to retail law. It's best season is probably summer, but when it has to go through a retail channel (DVD sales) the studios plan their most profitable releases for Christmas. If there's any deviation, it's only because the picture companies are more financially secure than the gaming companies.
GTA: San Andreas will be coming out in, what, late October early November?
Ooh, the poor publishers, I'm sure they'll hardly sell a single unit of it.
GCHQ Quantum Insert installed. If only our tongues were made of glass, how much more careful we would be when we speak
some games will just not receive any shelf space from retailers,
Looks like there's opportunity for more retailers. Or a lumberjack could just go and build them more shelves...
Here's the true question: When will Border's bookstore start carrying video games? They already have videos...
But the greater question is: whay do those games not sell?
Ah, because people don't tire of them as quickly... They are too cheap to make real money for the amount of hours of entertainment they provide. Yet gamers won't spend more than 60 bux.
The solution for the gaming industry: go open source. Work with each other, instead of reinventing the wheel with every little detail. Provide game networks at low cost. It will eliminate piracy (nothing to pirate when the source is available), and you will make money on subscription.
On subscriptions: get together and form a payment association/company, and sell game time cards. Price them at $.25 per hour. That way, if I play 100 hours a month, I'll pay $25, but if I only play 10 (which honestly is all the time I can spare, you'll still get $2.50. Right now you're getting nothing from me, since the games are too expensive, and the memberships are too expensive. The last game I bought was Age of Kings in what, 2000?
Another piece of advice: make games that are cinematographically spectacular, yes, but more than that, make games with good gameplay.
"Piter, too, is dead."
The games industry needs to get alot better focus on their target audience and the way they spend their income on entertainment (Books, music, dvd's and games). It is simpel micro-economics. Only a small fraction of a monthly income is spent on entertainment in these areas and in my personal experience, if I have bought a book for 20 euros, I won't easily buy a new dvd or game of the same price. It is not that I am not tempted, but I just don't have the money.
The problem with newly released games is that they cost twice as much as a new book (take for instance Confusion Neal Stephenson) For me they go beyond my monthly entertainment allowance and I therefore have bought CSI in the bargain bin this month (only 7 euros) but certainly haven't bought a 50 euro game.
Even worse is that many new games are not as much fun as they appear to be. This is true for cd's, dvd's and books as well. However, the pain in buying the wrong thing is much lower because of the lower prices.
So all in all the games industry needs to make it worthwhile for me to buy a game at a whim, without considering the enormous price and without making me scared that I might have bought a lemon. In order to do this, prices have to come down. Way down to the same level of a good book, cd or dvd.
Use Adsense for Charity
Christmas is popular because sales double to triple. However, the number of titles released is an order of magnitude greater. *That* is the fundamental problem-- too many titles chasing too few dollars.
The game biz is more like the music biz than the film biz. Glut of titles in the 4th quarter, only big established artists do well then and the rest wither on the vine. New artists that get launched in the 1st quarter benefit from the breathing space.
We just followed this model by releasing The Suffering in March, NBA Ballers in April and Psi-Ops in June. Mortal Kombat is coming towards the end of the year. The results seem to be paying off since those games have sold decently.
None of this is rocket science, as you point out, and I'd be surprised if other companies aren't working towards it as well. It depends where your games are in their development schedules as to when you can start adjusting their release dates.
I would take slight issue with your use of Warcraft as an example. There are a very few games released each year that will generate monster sales no matter when you release them. Halo 2 and The Sims 2, Gran Turismo 4... no-one wants to go up against them with anything. I'd say the Warcraft games fell into that category. Far Cry might be a better PC example - it wasn't already a guaranteed home run.
Graham
If they make good games, they dont have to worry.
There saying that games aren't going to make any money except for the ones that do.
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