Time for the weekly update again! The Weekly Update includes a round up of news stories, articles and data points that have been shared by various publications, market researchers and Video Game companies over the past week. As always this update will include a short extract of each article with a link to the full article, sometimes I will add in my own thoughts if there is something of interest to add.
Sony continues to face many challenges in China, PlayStation marketing manager Takehito Soeda said at the PS4 launch “A lot rides on how rich of a software portfolio you can offer to users, so we intend to find the right blend of overseas titles and games developed in China. We are creating a console market from scratch here.”. Soeda is spot on here, the PlayStation has launched in a market where Mobile and PC is king, where the government censors cause popular overseas games to be banned and where Mobile companies are launching rival products with games that appeal to Chinese gamers tastes. Sony can’t do anything about the upfront cost of a PlayStation 4, outside of sell the console for a loss, and so they need to get their software portfolio right in order to attract gamers, this is how PC gaming became so successful.
New video game products generated $964.1 million in sales at United States retailers in March, according to industry-tracking firm The NPD Group. That is relatively flat from $968.4 million in spending during the same period in 2015. Hardware sales continue to decline in terms of currency because the average system is selling for less than it was in 2015. Gamers are instead shifting that budget into bumping up their spending on software and accessories.
The Xbox One exclusive is the publisher’s first chart topping title since Halo 5: Guardians landed in November last year. It’s an extremely tight battle for the crown as racing in just behind is Codemasters’ ‘Dirt Rally’ on Xbox One, PS4 & PC. It’s an impressive debut for the title beating launch week sales of 2012’s ‘Dirt Showdown’ by an impressive 197%. It sits in good company in Codemasters’ popular Dirt series in 3rd place behind ‘Colin McRae: Dirt 2’ and ‘Dirt 3’ for opening week sales. Ubisoft’s four week run at the top is ended with ‘Tom Clancy’s: The Division’ (-41%) dropping down to No3. Racing fans are spoiled for choice this week with the arrival of ‘MXGP 2: The Official Motocross Videogame’ from PQube, the popular bike racing title returns after just over a year at No17.
Grand Theft Auto V’s multiplayer mode GTA Online is free, but Rockstar offers optional microtransactions for players who want to speed up their progress. It turns out those microtransactions are proving wildly popular, reportedly generating half a billion dollars. “GTA Online has the potential to achieve the greatest profit margin of any game created in the GTA franchise,” reads a line from the lawsuit. This is in part because GTA Online’s microtransactions have “nearly 100 percent profit margin,” except for development costs and fees collected by storefronts.
Take-Two CEO Strauss Zelnick said in November 2015 that more than 8 million people were playing GTA Online every week. He has also described GTA Online as “the gift that keeps on giving” as it relates to the money it makes from microtransactions. As for the game itself, GTA V has shipped 60 million copies, according to the latest numbers from Take-Two. The lawsuit estimates revenue from the game alone to be in the area of $3 billion.
ZhugeEX note:This is a very interesting revelation as it shows just how successful the online component of GTAV has been. They’ve positioned this service excellently with continued updates and it’s no surprise that Grand Theft Auto V continually tops the sales charts and most played game charts nearly 3 years after the original release. Net Revenue from Grand Theft Auto products exceeded $2.5 billion for Take Two between July 2013 and December 2015. As GTA Online’s microtransactions are near to 100% profit margin (due to digital distribution) it makes sense why Take Two have focused on the online component so much and why it’s likely that GTA6 will will no doubt merge online gameplay and story into one, similar to Watch_Dogs.
Take Two have had a hit with the Grand Theft Auto franchise accounting for more than half of all net revenue between July 2013 and December 2015. Their sports games this year such as NBA 2K16 and WWE 2K16 have done better than the prior versions as well. However Take Two are aware that they cannot continue to rely on GTA, Annual Sports titles and back catalogue. They need to create new games that can replicate the model of GTAV and it looks like Battleborn is their next attempt at creating a title that will have a long life after release thanks to continued consumer engagement and spend. Evolve failed to do this last year and so far it looks like Battleborn will do better but may not be as successful as other titles in the genre like Overwatch. Take Two need to release at least 1 title per year that will have a live element (like GTA Online) and that they can rely on to generate high margins through digital add on content.
Disrupting the Console Space with Free-to-Play – Wargaming
An excellent presentation by TJ Wagner of WarGaming on the challenges the company faced on bringing World of Tanks to console as well as just how successful they’ve been and where they plan to go from here. It’s an excellent read on the state of free to play on console and how the market for F2P on console is set to grow.
A presentation from GameStop and their shift away from traditional gaming. This presentation talks about how GameStop are creating two new Billion dollar businesses, Digital and Collectables, and also talks about what GameStop are doing in the traditional console space by driving pre-owned sales and introducing new gaming products such as VR in store.
The company set a goal to earn more than 50% of its revenue from outside of the physical games business by 2019. Tech brands are expected to bring in about $1.6B by 2019. Management says GameStop will also aim to increase its relevancy in the mobile and consumer electronics space.
On March 1st, Supercell launched Clash Royale, its fourth mobile title. Several days later it revealed 2015 revenues of $2.3 billion, up 35% year on year. Achieving success in both Asia and the West, Clash Royale became the top grossing mobile game in the world in March, with revenues of more than $80 million across iOS and Android. Based on its performance in March alone, Clash Royale could be a new billion-dollar-a-year franchise for the Finnish developer. Worth noting is this $80 million does not include the 30% cut given to the Google and Apple app stores. In other words, consumers spent more than $110 million worldwide while trying out the new title. The majority of this revenue came from iOS as the game awaits its launch on Android in China.
According to findings in the Nielsen 360° Gaming Report, mobile/tablet gaming is just as appealing to women as it is to men compared to other forms of gaming (51% of men and 49% of women 13+ game on mobile/tablet devices). Comparatively, 65% of 8th generation console gamers are men. Mobile gamers also skew older than console players. The average mobile gamer is 36 years old, whereas the average 7th and 8th generation console gamers are 34 and 31 years old, respectively.
The other factor to consider when it comes to mobile gaming is penetration and availability. As almost every U.S. household owns some sort of mobile or tablet device, both casual and hardcore gamers find themselves gaming on these devices because of their accessibility, range of other uses and affordability.
Shovel Knight has sold 1.2 million units total! 200,000 of those units are physical retail sales. We’re still in a bit of shock here! Previously, a successful game in our portfolio would barely break 50k copies sold.
Some interesting facts about our sales trends:
- In general, the game sales are still very strong. In November 2015 we actually sold more units digitally on Nintendo Wii U, Nintendo 3DS, and Steam in North America (our initial release platforms) than we did in the same month the previous year, November 2014.
- Contrarily to the previous point, March 2016 was our worst sales month since our initial release. Oh no!
- The first 6 months of sales on all Sony platforms are equivalent to the total first 6 months on just the Nintendo Wii U. On Nintendo 3DS we sold about 50% more than Sony. Alternatively, Microsoft is 50% of Sony.
- We typically average 25k-35k units a month.
- Steam is our best seller, but it’s also benefited the most from discounted sales. In an average month, Nintendo 3DS almost sells twice as much as Steam.
Yup, there you go. More games released on STEAM during Q1 2016 than in the entirety of 2013
Can you say saturation? pic.twitter.com/SWEUqRa7yH
— ZhugeEX (@ZhugeEX) April 12, 2016
Killer Instinct now has more than 6 million unique users. Congrats to the team on that huge number. pic.twitter.com/75ldOkoYva
— ZhugeEX (@ZhugeEX) April 14, 2016
Been tracking number of E3 exhibitors for a while.
Only just gone over 100 now, compared to nearly 300 last year. pic.twitter.com/4XpIXG41cp
— ZhugeEX (@ZhugeEX) April 11, 2016
Sony is partnering with GameStop on PlayStation VR to launch in stores.
– In Store Trial
– All physical games pic.twitter.com/BEhSPx665r
— ZhugeEX (@ZhugeEX) April 15, 2016