Support NeoGAF

[DR2K]

Mirror's Edge and Dead Space were huge sales disappointments. There, that is what happened.

Both of which are getting sequels.

 

[kame-sennin]

That is still not how companies are valued. A companies value is it's stock price multiplied by the number of shares, has nothing to do with revenue directly although clearly that is something investors will strongly factor in.

If a company can cut costs, then revenues do not need to increase.

That has nothing to do with my post. My post was about the growth needs of large companies.

 

[Rolf NB]

I think that's partly true - they're certainly moving there, but a lot of the developers are still struggling away on console/handheld development.

As for whether the move to DD for these kind of games is entirely desirable... I'm not sure. In principle, it should benefit smaller developers, and less polished, more experimental games - and you can certainly point to some notable successes - but I think the issue of limited audience for your titles raises its head. The number of people actually using their consoles online and buying DD titles is still a small percentage of the total userbase, so any dev moving Experimental Game X to DD is instantly limiting their audience and visibility.

As opposed to what? You think b&m retailers would reserve shelf space for the next Breakout clone/match the numbers on these weird dice/Monsters (Probably) Stole My Princess?

Just look at the games coming out on PSN/XBLA or god forbid DSiWare. And not just the most successful ones. The best you could hope for the majority of the lot is to land straight in the shovelware bin, and I don't see that counting as visiblity.

 

[Kusagari]

Both of which are getting sequels.

I'll believe Mirror's Edge 2 is coming when we get actual video proof.

 

[SlipperySlope]

Even without Steam and Unreal 3, Valve and Epic only work on a handful of franchises at any given time. Blizzard did so for years. Crytek has 3 ip at most in development. What a lot of the industry sees as "diversification" is really just publishers dumping their money into a large pile and setting it on fire.

The industry will contract to restore balance (as someone said above) long before it crashes.

Or was Activision supposed to finance half a dozen more Blurs hoping that Bizarre was eventually going to make that money back?

Eh, we're already in the crash. Have you seen how many studios closed in the last year?

Things will stabilize, sure, but the industry will look much different than it has in the past. The number of studios is going to drop dramatically more than it already has.

Edit - I'm beginning to doubt that this crash is related to the recession. I think it's a self-contained structural failure of the industry.

I mean, how many other industries are showing less revenues than they did last year, during the "Great Recession?" All other industries I can think of are up from last year, most to the tune of 20%+.

Games are moving opposite the economy right now.

 

[LosDaddie]

Stuff.

Thanks, but I have a good grasp on how the business world works. And yes, I own stock and know how their value is measured. That's exactly why I said the current business model needs to change. It's obviously not working. The philosophy of "Infinite Growth" is just not sustainable.

BLOPS selling more than MW2 is the exception, not the rule. Pubs & devs need to learn that just because one year has record-setting revenue, doesn't mean the next year is a bust if they fail to surpass that bar. So yes, some corporate re-structuring is needed to get back to profitability. They need to figure out why their old business model isn't working anymore. It's time to do something different, instead of the failing "Infinite Growth" strategy which has devs & pubs eternally pursuing the next AAA, multi-million-unit seller.

Personally, I'd be fine with less AAA/Blockbuster-caliber games coming out every year. But I don't get much time to game either.

 

[kame-sennin]

Thanks, but I have a good grasp on how the business world works. And yes, I own stock and know how their value is measured. That's exactly why I said the current business model needs to change. It's obviously not working. The philosophy of "Infinite Growth" is just not sustainable.

I used your post as an example, but I was not assuming you don't understand the issue. Anyway, since you do understand the problem publishers are faced with, what is your suggestion for getting away from the blockbuster model while still maintaining their margins? From my perspective, I don't see that publishers have the ability to change without taking huge losses. We can argue about what's sustainable in the long term, but executives have to deal with quarterly expectations which won't change no matter what the long term industry forecast is.

 

[jmdajr]

Looks like Vanquish will be 30 bucks soon. I wanted to support Bayonet but I should have waited. It's like 20 bucks now.

 

[bigtroyjon]

That has nothing to do with my post. My post was about the growth needs of large companies.

They need earnings/share to grow, there are many ways for this to happen and none of them involve revenues increasing by a certain percentage of their value.

 

[onipex]

Eh, we're already in the crash. Have you seen how many studios closed in the last year?

Things will stabilize, sure, but the industry will look much different than it has in the past. The number of studios is going to drop dramatically more than it already has.

Edit - I'm beginning to doubt that this crash is related to the recession. I think it's a self-contained structural failure of the industry.

I mean, how many other industries are showing less revenues than they did last year, during the "Great Recession?" All other industries I can think of are up from last year, most to the tune of 20%+.

Games are moving opposite the economy right now.

I see the game industry getting worst before it gets better. I think what this generation showed is that game companies care more about their vision than what the market wants.

 

[Azih]

I see the game industry getting worst before it gets better. I think what this generation showed is that game companies care more about their vision than what the market wants.

What does the market want?

 

[jmdajr]

What does the market want?

not sure..but it's not music games apparently'

But really, on any given year, no one knows what people are going to want.
Tanking economy didn't help with people being open minded either.

 

[Curufinwe]

Both of which are getting sequels.

And Dead Space sold much better than ME, so lumping them in together is odd.

 

[Owzers]

What does the market want?

Annual UFC games. Wait, annual UFC games from TWO publishers.

 

[kame-sennin]

They need earnings/share to grow, there are many ways for this to happen and none of them involve revenues increasing by a certain percentage of their value.

Right, but the size of the company determines the level of earnings needed to reach a given rate of growth.

Also, this is kind of a derail from the point of the discussion i.e., publishers can not afford to invest in small games because only blockbusters bring in enough cash to meet their growth needs.

 

[Version 3.0]

I don't see that publishers have the ability to change without taking huge losses.

Of course they do. But the simple fact is that they won't. That, too, is engrained in the corporate world: if you're not losing money (and a lot of it), then keep doing what you're doing (but more so).

But the math here is relatively simple: we're making games that have to sell X units on average, at an average price of Y, to be profitable.

But our average release only sells A units, at an average price of B.

So if A times B is less than X times Y, change something.

We hear all the time how impossible it is to lower costs, but that's demonstratably wrong. The other possible solution is to increase sales, obviously. But we see all too often that a company will believe in a game enough to make it, but not enough to market it. When a (good) game is "sent to die", I always scratch my head.

 

[MiamiWesker]

Bionic Commando sold 27k so it looks like Vanquish might have sold worse than Bionic Commando. This is not good.

I haven't found anything on Vanquish numbers. Why do you say this?

 

[ItWasMeantToBe19]

I haven't found anything on Vanquish numbers. Why do you say this?

creamsugar said Vanquish sold less than the 360 version of Enslaved which sold less than NBA Jam which sold less than 50k.

 

[Version 3.0]

Also, this is kind of a derail from the point of the discussion i.e., publishers can not afford to invest in small games because only blockbusters bring in enough cash to meet their growth needs.

Again, this is provably wrong. How much money has Brain Training made Nintendo? How profitable was Bejeweled? Or Uno?

 

[Jomjom]

I see the game industry getting worst before it gets better. I think what this generation showed is that game companies care more about their vision than what the market wants.

Umm... you may consider that getting worse before getting better, but to me I hope this never changes. The day that the industry all of us GAFers love and cherish decides to only make what the market "wants" is the day I give up gaming.

Imagine if the movie industry only made what the market "wanted". We would get nothing but blockbuster summer action flicks and romantic comedies all year round.

I am assuming that your definition of "what the market wants" is defined by the number of copies a game sells.

 

[jmdajr]

Again, this is provably wrong. How much money has Brain Training made Nintendo? How profitable was Bejeweled? Or Uno?

so I guess either go all out or spend nothing.

no room in the middle.

 

[kame-sennin]

Of course they do. But the simple fact is that they won't. That, too, is engrained in the corporate world: if you're not losing money (and a lot of it), then keep doing what you're doing (but more so).

But the math here is relatively simple: we're making games that have to sell X units on average, at an average price of Y, to be profitable.

But our average release only sells A units, at an average price of B.

So if A times B is less than X times Y, change something.

We hear all the time how impossible it is to lower costs, but that's demonstratably wrong. The other possible solution is to increase sales, obviously. But we see all too often that a company will believe in a game enough to make it, but not enough to market it. When a (good) game is "sent to die", I always scratch my head.

Yea, I understand that. My main point is that COD Black Ops made $650 million in 5 days. An executive planning to change course has to prove to her employers that her new strategy can bring in that type of money, otherwise the strategy is not going to work.

Again, this is provably wrong. How much money has Brain Training made Nintendo? How profitable was Bejeweled? Or Uno?

I don't think any of the managers at Activision want to hear that Brain Training is the future of the company. No one could have predicted the success of Brain Training before it released because there were no games like it on the market. Compare that to the huge amounts of data we have for the FPS genre. Further, most games made in the vein of Brain Training have not done as well. Even Nintendo made only one sequel. That means that a new game type has to be developed in order to match the sales levels of Brain Training, which again leads to the problem of no available data. Kaijima brought up the 'packaged goods' style of management, and it's important in this context. Activision sells video games the way Dove sells soap. They do market research and look at the data available, and then invest heavily in designing a product that is tailored to the current market needs. Radical experimentation based on hypothetical demand - even at low cost - does not fit into that strategy. And even for companies that are good at it, it is not a reliable means of making the kind of earnings a company like Activision needs.

 

[wrowa]

Again, this is provably wrong. How much money has Brain Training made Nintendo? How profitable was Bejeweled? Or Uno?

Brain Training hardly was a small game. The marketing budget alone was more expensive than the development costs of many games.

 

[Warm Machine]

Mirror's Edge and Dead Space were huge sales disappointments. There, that is what happened.

Sales disappointments means that they did not meet expectations not that they were not profitable products. That year EA had to cover massive losses due to cancelled projects and certain games not making their money back. Sales of Dead Space and Mirrors Edge were probably expected to cover those losses but it isn't the fault of either game that they didn't.

 

[Mooreberg]

The GamaSutra quote that LosDaddie posted pretty much sums it up. Publishers have to stop deluding themselves that every game has the potential to be the next Call of Duty. Even if the quality is there (and for some of the games that are under performing, it is) you need brand recognition. You also have to keep in mind that competing with a time sink game is difficult. Even with great reviews and good marketing, people know that splitting their time between five shooters that have leveling systems means they won't get very far in any of them. It is probably going to take a catastrophically poor COD game for people to hop off of that bandwagon. The annual releases don't seem to be a problem for most customers.

 

[[Nintex]]

The GamaSutra quote that LosDaddie posted pretty much sums it up. Publishers have to stop deluding themselves that every game has the potential to be the next Call of Duty. Even if the quality is there (and for some of the games that are under performing, it is) you need brand recognition. You also have to keep in mind that competing with a time sink game is difficult. Even with great reviews and good marketing, people know that splitting their time between five shooters that have leveling systems means they won't get very far in any of them. It is probably going to take a catastrophically poor COD game for people to hop off of that bandwagon. The annual releases don't seem to be a problem for most customers.

They're competing with their own old games due to channel stuffing. The market is exploding right in their face because they release a sequel or spin-off every 12 months. Sega even had to pull their avalanche of shitty Sonic games from the shelves to fix this problem.:lol

 

[LosDaddie]

I Anyway, since you do understand the problem publishers are faced with, what is your suggestion for getting away from the blockbuster model while still maintaining their margins? From my perspective, I don't see that publishers have the ability to change without taking huge losses.

The huge losses are already happening. The layoffs are already happening. Yet the companies haven't changed their "Infinite Growth" business model. They are all still chasing the next CoD-level hit every year. EA and Activision are still assuming every GH and RB game will sell better than last year's game.

As far as what I'd do to get away from the current business model; I'm not sure. First, I'd have my company do projection analysis to see if lowering prices would increase sales/revenue & profit. Like, say, if EA/2K had their annual sports games priced at $40. Second, I would scale back the scope of some games. Take Bioshock 2 for example; Would the game have sold better if it was priced at $40 and didn't have an MP mode (resulting in less dev-time and smaller budget)? Third, the DR2: Case Zero experiment seemed to work great for Capcom. So, I'd look to see if my company had some IPs that could go that route.

Sales disappointments means that they did not meet expectations not that they were not profitable products. That year EA had to cover massive losses due to cancelled projects and certain games not making their money back. Sales of Dead Space and Mirrors Edge were probably expected to cover those losses but it isn't the fault of either game that they didn't.

Great point. Were DS' and ME's sales disappointing because of the actual number of sales, or because the sales weren't enough to offset losses in other parts of EA? The actual game(s) could've been profitable.

 

[dolemite]

Looks like Vanquish will be 30 bucks soon. I wanted to support Bayonet but I should have waited. It's like 20 bucks now.

Enslaved is already officially at $40 and the game is only 1 month old. Competition is good for the gamers, but bad for the publishers.

 

[Warm Machine]

Enslaved is already officially at $40 and the game is only 1 month old. Competition is good for the gamers, but bad for the publishers.

Things that are bad for publishers end up being bad for gamers. While Enslaved may not have been a game this forum loved the same lack of sales hit Vanquish and the forum loves the game. We lose on both counts as a follow up to either is unlikely and games with those sorts of original ideas are unlikely to be made at that production quality level again.

 

[Ecotic]

I think the overall slowdown the industry is experiencing is because gaming is moving in the complete opposite direction that society is.

Everything is becoming smaller, simpler, and faster to suit the public's low attention span. Laptops are becoming mobile devices, computer programs are becoming apps, phones are replaced every 3 months, t.v. programs now operate on our schedule, etc.

Meanwhile games are becoming bigger, more expensive, more complicated, and more time-consuming. Consoles come in 5 different versions and are too expensive. Games cost more and more, the game systems themselves require more accessories, more connections, more firmware updates, more, more, more. The consoles themselves start up as slow as a laptop. Achievements and leveling up require dedication. There's so many features on my 360 that I don't even know them all.

In an age where everything is about a lack of commitment, games are asking you for a relationship, and it is turning people away.

 

[teruterubozu]

October GAF: We're living in the Golden Age of gaming!

November GAF: We're DOOMED!

 

[Ceebs]

The industry will be fine once it figures out what the market actually wants. Devs & pubs are, unfortunately, still finding this out, IMO. The business philosophy of "Infinite Growth" is just not sustainable.

I think Gamasutra hit the nail on the head:



The business model needs to change (obviously). Every game cannot be projected (on a budgetary basis) to have multi-million unit sales, or else it's a bust. That's unreasonable and financially unhealthy. Just because $60 is the standard doesn't mean every game needs to be that price. DLC has been nice, but I think it's time publishers start experimenting with pricing as well. Let's see how a movie-licensed game fares at $40 initially, or maybe how an annual game, like NCAA Football, performs at $40 too.

The market has expanded to the point where having smaller teams develop smaller games for XBLA/PSN/MobileDevices can be profitable. Again, the business philosophy of "Infinite Growth" is just not sustainable. Not every game is going to be a AAA / blockbuster game with CoD/Halo-level sales.

I really feel that the PC market has really figured out where a sweet spot is in terms of budgets matching expecting sales. You have your Blizzard and Valve games that will sell truckloads so budget is not an issue there. Everything else is budgeted to be profitable despite selling under 500K. You do not get the production values of your typical 50 million dollar console game, but the hardcore playerbase has seemingly gotten on board with the style of PC exclusives being made today.

 

[Zachack]

I disagree. small teams can still have big hits on the App Store with unique titles. and there's still new stuff coming out. Heck, Cut The Rope is a good example. there's all sorts of swiping, tapping and unique interaction models in that game that we hadn't seen combined before.

I didn't say it was dead, I said the heyday was over. And I'm not sure Cut The Rope is a particularly good example of experimentation; I'm about 2/3 done with it and only rarely has it actually combined puzzle concepts from other games instead of just replicating them.

just because EA and id are now in the game, doesn't mean that unique titles aren't being made (and discovered)

Again, I'm just saying that it's slowed down. Scrolling through the top 25-50 paid games doesn't reveal a lot of serious innovation or experimentation. Or games selling for more than $5.

edit: and, expanding the scope further, you responded to a post that said that ALL handhelds have some experimental titles. not just iOS stuff. i think that's certainly true. The DS has some really unique retail titles.

I'm having a hard time thinking of a lot of recent experimental titles on the DS, at least in the US. I would certainly hesitate to argue that the DS/PSP hold any particular grasp on innovation over the various DD services.

 

[Blast Processing]

I don't know if it's fair game to post here or not, but @creamsugar tweeted what looks like some interesting sales rankings, and if I'm reading it correctly, Castlevania did pretty well amongst the bomba division.

 

[dolemite]

I don't know if it's fair game to post here or not, but @creamsugar tweeted what looks like some interesting sales rankings, and if I'm reading it correctly, Castlevania did pretty well amongst the bomba division.

Looks like Enslaved did slightly better than Vanquish.

 

[Spiegel]

I don't know if it's fair game to post here or not, but @creamsugar tweeted what looks like some interesting sales rankings, and if I'm reading it correctly, Castlevania did pretty well amongst the bomba division.

It seems so. Probably between 200k and 224k?

I hope Konami will let MercurySteam do the sequel. The game was made by a small team (by HD gaming standards) and outsourcing it here in Spain must have been cheaper.

 

[Chris1964]

creamsugar twitter

cps3>nps3>wp>wk>c360>n360>rb360>rbps3>eps3>wnj>pesps3>e360>vps3>wf11>v360>wrb>pse360

^^^

Castlevania PS3>Naruto PS3>Wii Party>Kirby Wii>Castlevania 360>Naruto 360>Rock Band 360>Rock Band PS3>Enslaved PS3>NBA Jam Wii>Pro Evolution Soccer PS3>Enslaved 360>Vanquish PS3>FIFA 11 Wii>Vanquish 360>Rock Band Wii>Pro Evolution Soccer 360

 

[mugurumakensei]

It seems so. Probably between 200k and 224k?

I hope Konami will let MercurySteam do the sequel. The game was made by a small team (by HD gaming standards) and outsourcing it here in Spain must have been cheaper.

The voice actors probably cost Konami quite a bit.

 

[ghst]

creamsugar twitter

cps3>nps3>wp>wk>c360>n360>rb360>rbps3>eps3>wnj>pesps3>e360>vps3>wf11>v360>wrb>pse360

^^^

Castlevania PS3>Naruto PS3>Wii Party>Kirby Wii>Castlevania 360>Naruto 360>Rock Band 360>Rock Band PS3>Enslaved PS3>NBA Jam Wii>Pro Evolution Soccer PS3>Enslaved 360>Vanquish PS3>FIFA 11 Wii>Vanquish 360>Rock Band Wii>Pro Evolution Soccer 360

so what's that put vanquish at, 60k or something combined?

 

[mugurumakensei]

so what's that put vanquish at, 60k or something combined?

VPS3 + V360 < 50k

 

[iammeiam]

creamsugar twitter

cps3>nps3>wp>wk>c360>n360>rb360>rbps3>eps3>wnj>pesps3>e360>vps3>wf11>v360>wrb>pse360

^^^

Castlevania PS3>Naruto PS3>Wii Party>Kirby Wii>Castlevania 360>Naruto 360>Rock Band 360>Rock Band PS3>Enslaved PS3>NBA Jam Wii>Pro Evolution Soccer PS3>Enslaved 360>Vanquish PS3>FIFA 11 Wii>Vanquish 360>Rock Band Wii>Pro Evolution Soccer 360

Is PS3 outselling 360 on multiplat titles a common thing now? I thought it usually went the other way, but here it's PS3 on top for Castlevania, Enslaved, PES, Naruto, and Vanquish.

 

[ghst]

VPS3 + V360 < 50k

shame. for a maximum console third-person 'em up, it didn't seem entirely without merit.

kinda made me feel like i was playing on a ps3, as in the mythical ps3 that was a like-for-like ps2 replacement and continued its success, nurturing the same user-base and creative opportunities.

 

[nextgeneration]

I'll comment on Rock Band and Star Wars here:

For reference, the very first Rock Band on 360 alone, an unproven title/franchise in 2007 at
the time, sold 312k units in its debut month, besting Rock Band 3's 140k combined 4 platform total. Another very significant thing to note here - Rock Band on 360 sold to a userbase of just 7.86 million at that time. Rock Band 3's 140k unit output sold to a userbase of a whopping 109.7 million! Despite the mammoth userbase Rock Band 3 sold to, the 360 sku from 2007 on a userbase of just 7.86 mil managed to outsell Rock Band 3 by 123%!

It looks like Star Wars the Force Unleashed II only managed to sell between 315k and 580k units across 5 platforms - 360, ps3, wii, pc, ds. If you go back and look up the sales numbers of the first one from two years ago, the 360 sku alone (610k) outsold the sequel's combined 5 platform output. And again, similar to the Rock Band scenario above, the
360 sku from 2 years ago sold to a 360 userbase of just 11.2 mil and the sequel's output for October sold to a userbase of 109.7 million (excluding pc).

Music genre is dead. Time to move along, people.

 

[Dr. Zoidberg]

Is PS3 outselling 360 on multiplat titles a common thing now? I thought it usually went the other way, but here it's PS3 on top for Castlevania, Enslaved, PES, Naruto, and Vanquish.

It was widely known that the PS3 version of CV was the superior version. When the two versions are equal (i.e. no performance problems or exclusive stuff) or 360 is superior, the 360 version usually comes out on top.

EDIT - Maybe the other examples are due to the lack of compelling PS3 exclusives in this period.

 

[Mindlog]

I really feel that the PC market has really figured out where a sweet spot is in terms of budgets matching expecting sales. You have your Blizzard and Valve games that will sell truckloads so budget is not an issue there. Everything else is budgeted to be profitable despite selling under 500K. You do not get the production values of your typical 50 million dollar console game, but the hardcore playerbase has seemingly gotten on board with the style of PC exclusives being made today.

Exactly. Console publishers just can't seem to swallow the opportunity cost of not chasing the blockbuster dream. It's the same discussion that was had concerning Microsoft's hypothetical exit from the XBOX business.

I also attribute a meaningful portion of the 'slowdown' to the Wii and music big boxed bundle bubble bursting. Every instance of abnormal growth is accepted as the new norm and expectations get set accordingly. Does someone have numbers comparing the combined install base of Wii/PS3/360 to the combined installed base of previous generations?

 

[Zoe]

It was widely known that the PS3 version of CV was the superior version. When the two versions are equal (i.e. no performance problems or exclusive stuff) or 360 is superior, the 360 version usually comes out on top.

Was it? I was under the impression that they were fairly similar.

anyway, I just figured people have shifted to the PS3 for the J-games. And who in the US wants to play soccer anyway.

 

[Pooya]

To make it more useful:
Castlevania PS3
Naruto PS3
Wii Party ~150k
Kirby Wii ~100k
Castlevania 360
Naruto 360
Rock Band 360
Rock Band PS3
Enslaved PS3
NBA Jam Wii ~50k
Pro Evolution Soccer PS3
Enslaved 360
Vanquish PS3
FIFA 11 Wii
Vanquish 360
Rock Band Wii
Pro Evolution Soccer 360

Combined SKU
10. WWE 225k
XX. ????
XX.Casltevania
XX.Naruto
XX.Wii Party ~150k
15. Rockband 3 140k
XX. Kirby 100k


Some conclusions:

Naruto > RockBand 3 = 140k

Castlevania PS3 > 100k
150k <Castlevania < 225k (#10 on chart)
Castlevania 360 > 50k

 

[Rainier]

This last page was why I joined neoGAF. Great discussion.

 

[Dreams-Visions]

WHERE IS MY CHROMEHOUNDS SEQUEL.

qq

 

[legend166]

So Vanquish is a super mega bomba.