http://www.nytimes.com/2013/09/30/technology/a-shrinking-list-of-blockbusters-dominates-video-games.html?pagewanted=all&_r=1&
Shrinking List of Video Games Is Dominated by Blockbusters
By NICK WINGFIELD
Published: September 29, 2013
Big video game makers, like their cousins in books and music, have scrambled in recent years to adapt to the digital technologies buffeting their business. Tens of millions of people now play games on smartphones and tablets, usually for a sliver of the cost of playing on a game console.
But one part of the games business is thriving as never before: the blockbuster.
The biggest console and PC games — usually those games that are part of an established franchise and have the slickest production values — are posting spectacular sales figures. This month, the latest in the gritty urban adventure series Grand Theft Auto took only three days on store shelves to reach $1 billion in sales, faster than any video game ever, its publisher said.
"The winners have gotten massive," said Doug Creutz, an analyst Cowen & Company, a stock research firm.
The richest games are getting richer partly because the industry makes fewer games over all, concentrating players' spending. Publishers are also squeezing out a little more money per game sold by selling add-on content and other digital goodies. And the legions of players eager to do battle with one another online create a sort of virtuous cycle, as players are attracted to the titles with the biggest pool of opponents.
Now, the most popular games, like Call of Duty, Halo and Assassin's Creed, or top sports games, like the FIFA soccer series, have the biggest development budgets and fan bases and are getting a bigger portion of sales. The top 20 games in 2012 accounted for 41 percent of total American game sales in stores, nearly double what they did a decade earlier, according to the NPD Group, a market research company.
"At a time when people are bemoaning the fate of the interactive entertainment business, if you pursue a strategy of giving consumers the highest-quality titles in the business, they will come out for what you have to sell," Strauss Zelnick, chief executive of Take-Two Interactive Software, the company that publishes Grand Theft Auto, said in an interview.
The lower output of publishers makes the stakes higher. In 2012, only half as many new games were released in American stores as in 2008, NPD said. Electronic Arts, the publisher of the Madden football series and other sports favorites, sold 67 different titles in stores in the fiscal year ending March 2009. In its last fiscal year, it sold 13. Because fewer games are released, game makers must get more sales out of those games that do reach store shelves.
"Every publicly traded publisher will talk about a 'bigger, better, fewer' strategy," said Edward Williams, an analyst at BMO Capital Markets.
But a blockbuster strategy comes with big risks. Games meant to be console blockbusters generally require tens of millions of dollars to build the graphics and gameplay that smartphones and tablets cannot yet match. Grand Theft Auto V, for example, features a sprawling game universe even more immersive for many players than big movies are for theatergoers.
Those costs require millions in sales — and create big losses if sales are weak.
The development costs on Grand Theft Auto V were likely to have been more than $100 million, and its marketing $50 million more, said Evan Wilson, an analyst at Pacific Crest Securities. He estimated that a typical console game would break even at about four million units, while that figure would have been one million a decade or so ago.
Game makers have tried to compensate for the higher costs by getting more out of consumers with each game. Like many big publishers, Electronic Arts sells its marquee titles, including the FIFA soccer games, at the standard price of $60 each. The company also lets gamers enhance the game by spending money online to compose fantasy teams of their favorite soccer superstars. For its last fiscal year, E.A. said such digital revenue from FIFA was more than $200 million, up 94 percent from a year before.
The growth of multiplayer gaming, in which players converge online to compete against one another, makes big games bigger through the benefit of what economists call the network effect, analysts and game executives say. This is the tendency for people to jump on the bandwagon of various services — whether Facebook or Craigslist — because that is where everyone else is.
Analysts say people buy Call of Duty not only because it is a consistently high-quality game, but also because their friends and others are playing it on the Internet. Mr. Creutz of Cowen and Company says he believes that is a dynamic not present with movies, even blockbusters like "Avatar."
"You don't have that online networking effect" with movies, he said. "My enjoyment of 'Avatar' is really independent of everyone else's enjoyment of 'Avatar.' "
Still, the movie industry, which is also largely dependent on blockbusters, has managed to keep box office sales stable compared with the video game industry, which is suffering an overall decline in retail sales. Last year, video games generated $7.09 billion in retail sales, 39 percent less than their peak in 2008, NPD estimates.
Restoring growth in the video game industry is difficult partly because players are spending more time with cheaper and free games. Revenue from the various methods of selling games online, like a $3 version of Angry Birds for the iPad or the $1 required to buy extra lives in the otherwise free game Candy Crush Saga, is by most accounts not yet big enough to reverse the slide in overall sales.
New consoles from Microsoft and Sony will be released in the coming months, and that could temporarily stem the tide of lower sales. The current generation of hardware has been around a while, with Sony's PlayStation 3 at seven years and Microsoft's Xbox 360 at eight. Game sales traditionally slow the longer a system is out, and revive when a new one is introduced.
The new systems will test whether console game sales have been permanently dented by the shifting ways that consumers play games, making it even more important that the blockbuster franchises showcase the consoles' capabilities to potential buyers.
Last week, E.A. released what is likely to be one of this year's biggest hits, FIFA 14, the latest edition of the soccer game that has become a smashing success around the world. By the end of March, E.A. said, it had sold 14.5 million copies of FIFA 13, its previous version, about 30 percent more than FIFA 12 had sold the year before.
David Rutter, the executive producer of E.A.'s FIFA game, said that in recent years the struggling economy had made gamers more discriminating about what they buy. As a result, critical plaudits — often a reflection of how much investment a publisher has put into a game — have become more important to sales.
The players' discriminating nature also means that many of them flock to game franchises they have enjoyed before — perpetuating the cycle of blockbusters.
"Consumers get excited about a particular experience and remain loyal to it," said Mr. Zelnick of Take-Two. "When you have a commanding market share, you maintain a commanding market share."
Yup.
That's been a trend for years.
It's the same with humans. The big ones are getting bigger.
Good. Read a book you nerds.
Quote from: Ed Anger on October 01, 2013, 05:27:05 PM
Good. Read a book you nerds.
He says, as he calls in an AC-130 gunship strike on his cousin.
QuoteElectronic Arts, the publisher of the Madden football series and other sports favorites, sold 67 different titles in stores in the fiscal year ending March 2009. In its last fiscal year, it sold 13.
Wow. I knew it had shrunk, but not by that much.
Then again, I think back to the tons of games I had for the original PlayStation, the couple dozen (maybe) I had for the PS2, and the handful of titles (most of which are from the same family) for the PS3, and it makes sense. Less games are being bought, and people are staying loyal to titles.
QuoteLast year, video games generated $7.09 billion in retail sales, 39 percent less than their peak in 2008, NPD estimates.
On par with other discretionary spending since the '08 crash.
QuoteAnalysts say people buy Call of Duty not only because it is a consistently high-quality game, but also because their friends and others are playing it on the Internet. Mr. Creutz of Cowen and Company says he believes that is a dynamic not present with movies, even blockbusters like "Avatar."
MP is where it's at now. Especially for shooters, sports and to a lesser degree, racers. With broadband so common now, it's the only way to game.
Quote from: CountDeMoney on October 01, 2013, 05:45:28 PM
Quote from: Ed Anger on October 01, 2013, 05:27:05 PM
Good. Read a book you nerds.
He says, as he calls in an AC-130 gunship strike on his cousin.
I ran him over with a jeep first.
I've actually been under the impression that PC gaming has been undergoing a bit of a Renaissance, mostly due to smaller independent developers.
Quote from: Razgovory on October 01, 2013, 09:53:47 PM
I've actually been under the impression that PC gaming has been undergoing a bit of a Renaissance, mostly due to smaller independent developers.
I agree, but they are looking at straight cash homey, and those games dont sell for much
That's true. Legend of Grimrock sold only 600,000 copies, but they only had four people working on it. So imagine they did fairly well.
Blockbusters are the future of console gaming, but the PC remains healthy.
Quote from: The Brain on October 01, 2013, 03:32:32 PM
It's the same with humans. The big ones are getting bigger.
:XD:
I'm a simple man with simple tastes.
Yeah, it's basically high stakes block buster focused AAA titles on one end, and scrappy indies on the other, with very little in between.
That said, I think it's a good time to be an indie, what with PC development, Steam distribution, mobile, and now even the consoles are trying to have more support. Plenty of opportunities to find yourself a niche do well. Or fail, but at manageable stakes.
I miss buying two poorly-copied games cassettes for a pound at the local market.
Quote from: Jacob on October 01, 2013, 11:14:03 PM
Yeah, it's basically high stakes block buster focused AAA titles on one end, and scrappy indies on the other, with very little in between.
has it ever been different?
I mean to say that the costs of making AAA titles today is certainly higher, in proportion to the lower tier than it was in the early 90s, but has it once been a "level market", where most games are at about the same level and only a few ones in the bottom (indie) and top (AAA) budget wise?
Quote from: viper37 on October 02, 2013, 12:45:33 PM
Quote from: Jacob on October 01, 2013, 11:14:03 PM
Yeah, it's basically high stakes block buster focused AAA titles on one end, and scrappy indies on the other, with very little in between.
has it ever been different?
I mean to say that the costs of making AAA titles today is certainly higher, in proportion to the lower tier than it was in the early 90s, but has it once been a "level market", where most games are at about the same level and only a few ones in the bottom (indie) and top (AAA) budget wise?
I think there used to be more games in the middle.
Quote from: viper37 on October 02, 2013, 12:45:33 PM
has it ever been different?
Yes, it was different for at least a decade. Plenty of games were made that were moderate successes at the time, with sales of 100K-200K or whatever, and they were perfectly viable for the studio and the publisher. It used to be that if you made a game with decent gameplay and good production values you'd be okay unless you were really unlucky, and if you hit the sweet spot you'd make lots of money.
It's much much much harder to make your money back on top or mid range console game with decent production values these days. If you get your blockbuster, you're laughing and pretty much any money you spent are justified in retrospect.
QuoteI mean to say that the costs of making AAA titles today is certainly higher, in proportion to the lower tier than it was in the early 90s, but has it once been a "level market", where most games are at about the same level and only a few ones in the bottom (indie) and top (AAA) budget wise?
I think you've misunderstood something. I don't think anyone is saying what you just said. It used to be that the top (AAA) band was much bigger and easier to get in to, and the risks were smaller (and more related to execution than marketing).
Quote from: viper37 on October 02, 2013, 12:45:33 PM
Quote from: Jacob on October 01, 2013, 11:14:03 PM
Yeah, it's basically high stakes block buster focused AAA titles on one end, and scrappy indies on the other, with very little in between.
has it ever been different?
I mean to say that the costs of making AAA titles today is certainly higher, in proportion to the lower tier than it was in the early 90s, but has it once been a "level market", where most games are at about the same level and only a few ones in the bottom (indie) and top (AAA) budget wise?
Didn't the article adress this exact point? That the top 20 title now carry more than twice the market share they did previously?
Quote from: Berkut on October 02, 2013, 04:06:32 PMDidn't the article adress this exact point? That the top 20 title now carry more than twice the market share they did previously?
I believe it did.
Quote from: The Brain on October 01, 2013, 03:32:32 PM
It's the same with humans. The big ones are getting bigger.
:Embarrass:
Jake, how are you defining "AAA" and "scrappy independents"?
Quote from: Razgovory on October 02, 2013, 11:10:16 PM
Jake, how are you defining "AAA" and "scrappy independents"?
AAA - highly polished console titles with marketing budgets at least in the 10s of millions. Basically anything that could be sold for the standard full retail price ($69.99 or whatever) and were available in all stores on launch day.
Scrappy independents - about 30-40 people or less in the studio releasing through alternate channels; not through major publishers. If they are more successful and scale up, it becomes a bit more blurred.
So is Paradox a 'scrappy independent'?
InExile and Obsidian are now I guess as well.
Quote from: Ed Anger on October 01, 2013, 05:27:05 PM
Good. Read a book you nerds.
Is it ok if I read it on my tablet?
Quote from: Jacob on October 02, 2013, 02:34:20 PM
It's much much much harder to make your money back on top or mid range console game with decent production values these days. If you get your blockbuster, you're laughing and pretty much any money you spent are justified in retrospect.
did the popularity of the consoles kill the mid-market gaming?
Quote
I think you've misunderstood something. I don't think anyone is saying what you just said. It used to be that the top (AAA) band was much bigger and easier to get in to, and the risks were smaller (and more related to execution than marketing).
Ah, ok, I get it. The top AAA band required less money than today, because there was less marketing.
Can badly executed games really get to the top, revenu wise, counting only on their marketing skills?
Wait. Don't answer that. I think Dragon Age 2 was very profitable for EA. :(
Quote from: viper37 on October 02, 2013, 11:44:54 PM
Wait. Don't answer that. I think Dragon Age 2 was very profitable for EA. :(
So glad I did not buy that game. I played the expansion to the first one and was rather horrified by the changes they were making.
Quote from: Valmy on October 02, 2013, 11:30:13 PM
So is Paradox a 'scrappy independent'?
InExile and Obsidian are now I guess as well.
I dunno... I don't spend that much time thinking about these definitions. I'm primarily thinking of newer start ups that haven't quite found their niche yet when I say "scrappy independent"; Paradox et. al. are independent, but they're pretty established... so I guess I wouldn't call them "scrappy". But if they want themselves that (or if you want to do that) that's fine by my.
When I say "scrappy independents" I'm thinking of companies like Switchblade Monkeys (working on their first title, hoping it works), Klei (with a track record of decent non AAA games, or Super Cell (wildly successful with their few games).
Quote from: viper37 on October 02, 2013, 11:44:54 PMdid the popularity of the consoles kill the mid-market gaming?
It severely wounded it.
QuoteAh, ok, I get it. The top AAA band required less money than today, because there was less marketing.
Can badly executed games really get to the top, revenu wise, counting only on their marketing skills?
That's not the issue from my PoV - it's that well executed games with decent marketing can still fail to generate sufficient revenue.
Quote from: Valmy on October 02, 2013, 11:30:13 PM
So is Paradox a 'scrappy independent'?
InExile and Obsidian are now I guess as well.
Paradox doesn't produce much in the way of console games.
Quote from: Berkut on October 02, 2013, 04:06:32 PM
Quote from: viper37 on October 02, 2013, 12:45:33 PM
Quote from: Jacob on October 01, 2013, 11:14:03 PM
Yeah, it's basically high stakes block buster focused AAA titles on one end, and scrappy indies on the other, with very little in between.
has it ever been different?
I mean to say that the costs of making AAA titles today is certainly higher, in proportion to the lower tier than it was in the early 90s, but has it once been a "level market", where most games are at about the same level and only a few ones in the bottom (indie) and top (AAA) budget wise?
Didn't the article adress this exact point? That the top 20 title now carry more than twice the market share they did previously?
I'll admit it's still a little hard to read, but still...
The richest games are getting richer partly because the industry makes fewer games over all, concentrating players' spending.It also doesn't adress the size of the mid-market.
EU1 & 2 could be classified as being made by an indie developper. EU4 is certainly not in the leagues of Call of Duty, but I don't think it can be classified as an indie developper anymore. Do they make money from their games? I tend to think so, since they are still in business. I don't think I'll see the day either were Europa Universalis XX is greated with as much media attention as Call of Duty XX.
I know what it takes to be at the top, I know what it takes to be at the bottom. I also know big publishers like EA now make more money from titles than they used to, even if they sell it at the same price, due to creative fiscality and digital distribution instead of physical. Small time publishers can't exactly afford to have their sales placed in an offshore office.
What I don't know, is how hard is it to keep things afloat in the middle today vs a decade ago. How hard is it to reach that breaking point where you're no longer indie, today, vs a decade ago? Were smartphones a good thing for gaming studios because selling games at 1$ means more units, therefore more publicity for your next game?
So many questions unanswered.
I think part of the problem is that most of the people here are PC gamers while the article is about console games. It seemed to me that PC gaming fell apart over the least decade and has rebuilt itself. Since then PC games and console games have been moving apart.
Quote from: Razgovory on October 03, 2013, 12:02:28 AM
I think part of the problem is that most of the people here are PC gamers while the article is about console games. It seemed to me that PC gaming fell apart over the least decade and has rebuilt itself. Since then PC games and console games have been moving apart.
Yeah... PC gaming is kind of its own thing. I think it has been getting a bit of a boost as a result of the changing console landscape. But yeah, when people speak of AAA games and blockbusters and things like that, they're usually speaking about console games.
Quote from: Valmy on October 02, 2013, 11:30:44 PM
Quote from: Ed Anger on October 01, 2013, 05:27:05 PM
Good. Read a book you nerds.
Is it ok if I read it on my tablet?
I'll allow it. No medieval stuff though, that gets you worked up.
I am reading The Wages of Destruction: The Making and Breaking of the Nazi Economy on Languish's recommendation. :swiss:
I was viewing some tasteful female nudes.
Quote from: Razgovory on October 02, 2013, 11:57:23 PM
Quote from: Valmy on October 02, 2013, 11:30:13 PM
So is Paradox a 'scrappy independent'?
InExile and Obsidian are now I guess as well.
Paradox doesn't produce much in the way of console games.
Ah good point. That is a key difference. I haven't played a console game since I bought a X-Box just to play KOTOR.
Quote from: Jacob on October 03, 2013, 12:55:50 AM
But yeah, when people speak of AAA games and blockbusters and things like that, they're usually speaking about console games.
I'm 100% racist when it comes to gaming. I even refuse to acknowledge there are other devices than PC for intelligent gaming :P
Nah, seriously, everyone's right, and I'm mostly basing my feelings on what I know of the PC market. Never really cared for console gaming. I played a little with the Atari 2600 and the Coleco of my cousins, but having had my first computer at 8yo, my way was traced :)
What I do know about console gaming though, is that since the very beginning of their popularity, I've heard developpers complain it costs more to develop a game there than on PC.
I thought the X Box would be a great improvement, because it's mostly a PC, and the ports are supposed to be easier, but it seems I will have to wait the new Steambox to see if it changes the way we game on PC.
I find that many games developped for consoles first&foremost lack content and deepness. It seems developpers are limited by disc space on consoles, so they reduce content & graphic quality, wich drags down the experience for PC game players. And of course, the majority of console players being teenagers, they dumb down their games, story-wise. I might be a tad elitist, though ;)
Jacob, where do you see mid-level companies like High Voltage Software (http://en.wikipedia.org/wiki/High_Voltage_Software) out of Chicago? They've stayed steadily busy with mid-level games for 20 years now.
Quote from: merithyn on October 03, 2013, 03:12:15 PM
Jacob, where do you see mid-level companies like High Voltage Software (http://en.wikipedia.org/wiki/High_Voltage_Software) out of Chicago? They've stayed steadily busy with mid-level games for 20 years now.
It totally depends on the business skills of their leadership.
They could try the indie route, but those companies usually have too much overhead to do so successfully (at least without downsizing); they can still land third party contracts, but there are fewer of them and they're less secure (it sucks ramping up to a 100 person team, and then having funding pulled mid-dev).
From their track record it looks like they mostly make mediocre licensed games; that may be a viable business model still since the licenses are strong - so like I said, it completely depends on the connections and skills of their deal makers.
Quote from: viper37 on October 02, 2013, 11:58:00 PM
I know what it takes to be at the top, I know what it takes to be at the bottom.
We don't need to here about your sex life if this thread.
:)
Pretty decent article on Indie game devs: http://www.polygon.com/2013/10/4/4768148/the-next-generation-of-indies#ooid=s3cXRiZjq1yDypoB3UURIV5vQBqlo1if