I've really enjoyed the back and forth, surfer. I come here to get assumptions challenged and to be forced to think through things thoroughly. So thanks.
Same here. I realize debate is adversarial by nature, but I hope you don't think of me as your adversary. I love arguing with people because in the end — assuming they're doing it correctly — either I get to teach them something, or I learn something myself. So no matter the outcome, everyone always walks aways a winner. \o/
Just shy of 40 3rd party games reached that threshold. I would call maybe 4, tops, of those "shovelware" which is the term you used I was referring to. Very little "shovelware" had any kind of sales success.
Yeah, like I said, I was using the term ironically, sorry. So of those ~40 though, how many were the traditional million-selling, third-party franchises? I was under the impression that the core referred to successful third-party Wii games as shovelware because it was stuff like Boom Blox or even Just Dance, rather than "real" games like BattleDuty and AssCreed. But again, I really don't pay much attention to Nintendo, so I may be entirely off base here.
Guitar Hero and Rock Band were cultural phenomena in the US. They couldn't make enough for a couple years there, then it cratered. You can see it in the chart. Instruments sold with Software in the bundles is counted as software revenues, not accessories.
Oh, wow. Then yeah, I could see that adding up pretty quickly then. So does that mean any Kinect and Move hardware that included software was being tallied as software rather than accessories? I imagine that could contribute a significant chunk to revenues as well, especially Kinect.
In that case, will PSVR headsets then counted as software revenue, assuming they're bundled with some? Then in theory, it could become "the next Rock Band," and move a bunch of hardware "disguised" as software, yes? I mean, there's no way for us to say for sure either way — just as there was no way to be certain when Rock Band was gearing up for launch — but it seems like the potential is there, as least. Or like you said, it's possible.
Oh, speaking of PSVR, I know you can't speak too freely, so just hypothetically… Sony have been indicating they plan to price the headset "like console hardware," which implies they'll be selling the hardware at or near cost, and they and their friends in retail will be profiting on the games instead. So in your considered opinion, would retail be on board with that pricing strategy, or do you think it would be more likely that they'd demand a little cut for themselves? If so, how much do you suspect they would consider a reasonable amount? $50 a unit? $100? What kind of retailer margin do you suspect would be
agreeable to all parties involved? None/nominal/significant? Just hypothetically, of course.
Oh, another thing retail will need to consider when "requesting" margins — and I'm sure you're aware of this — is the fact that especially initially, most PSVR software won't be packaged at all. The vast majority will likely be $10-$20 "experiments" on PSN from smaller devs. Ubi have indicated interest in VR, but EA said they had "no plans" to support it. It seems a bit shortsighted for them to have no plans whatsoever, but regardless, it doesn't sound like they'll be jumping in with $60 titles at launch. So while PSVR may move a good bit of software, it seems like a comparatively small amount of it would be moving through GameStop and Walmart, which may influence what they look to earn on the hardware. Again, I'm sure you're aware of this; just clarifying for anyone who may be following along.
You know I can't tell you that. It was a lot.
Sorry, I didn't, or I wouldn't have asked. Basically, I have an unlimited supply of questions, but I fully appreciate that the supply of answers — and goodwill <3 — is finite, and I'm certainly not looking to get you in to any trouble. If you're unable to respond to any of my queries, just say so, and I may be sad, but I certainly won't fault you for it.
No, handhelds were not a significant part of the spike. Same trend chart, this time console only.
Wow, that's kinda crazy. The "DS family" sold like 155M units. That's like having an entire PS2 slapped down on top of everything else that was happening at the time. I'm really surprised it didn't have more of an effect. Was the DS just not particularly popular in the US? Did it not move software? Was it just not packaged software? Again, don't follow Ninty, but I really thought the DS was a bit of a phenom. Was that not the case?
LOL, I'm not discussing the health of the console market. I keep typing this.
Yeah, fair enough. I try to really look at the whole system and how it interacts with itself to really understand what's going on with it. I know it's the NPD Thread and all, but even they make the distinction between handhelds and consoles. You said your "main point" was that we'd have more packaged sales if we went back to having more packaged releases. While I don't dispute that, I guess my main point is that handhelds — and probably rhythm games — have gone away and aren't coming back, so to include them in any talks of "rebuilding former glory" strikes me as a bit foolhardy. If we're agreed that handhelds aren't coming back, then why are we including them in our analysis? If we're going to talk about what we can
do to grow the market, it seems like we'd wanna ignore things we don't really have any control over, like fads, if that makes sense. Anyway, I guess we're just still focused on different things, for whatever reasons.
Regression to the mean is, at its most basic, is a technical way of saying things even out over time.
Look at the 1993 to 2006 trend in that chart. Some bumps in the road, but generally, you can throw a line in there and have a pretty good chance of being close to any particular year's performance.
But then 2007 comes along, huge spike. Kotick says "games are recession proof" people go nuts thinking that video games will grow forever and hundreds and hundreds of games are made, shovelware and not. But then, in 2009, you start seeing the regression to the long term average, which we again hit in 2012.
And what happened in 2012? People were screaming that the death of consoles was here, no one would buy PS4 or Xbox One, Mobile was king blah blah blah. Companies stopped investing as much in developing games.
But since then? Well, we've come down even farther below the mean, but signs are that sales should now grow back to the old average trend... back to regressing to the mean. But this can only happen if there's a normal distribution of content available. Which there isn't. Which is my whole and only point.
So basically, you think there aren't "enough" games being released at retail these days — even when we consider the fact that handhelds and rhythm games have died out — because pubs are gun shy? So you think retail is being underserved at the supply end? Do you disagree that smaller games have been shifting to digital-only or digital-first distribution, or is it more that you disagree about whether they
should be doing so? (As in, that's what's happening, but you think it's a bad move.)
I don't think so. But agree to disagree.
Oh, uh, see above. lol
Meaningless as in the substitutional buyers are more than made up for by the buyers who wouldn't have bought anyways.
Meaningless in the math, not meaningless as in unimportant.
Let's try coming at this a different way. Of our 2M digital Star Wars buyers, how many would you estimate were incremental buyers, and how many substitutional?
Couple really good points you make here. Yes, digital has a long tail but like you say ONLY when those titles are promoted. Discover-ability of catalog in digital is a huge challenge. When you go to Walmart or GameStop, you look at the shelf, and EVERYTHING is there, right? You look around, see some old game you remember wanting to play and you might pick it up.
On digital it's much more challenging because people have to seek out catalog, unless that catalog is promoted on a storefront page or through a sale.
Okay, then I think I'm even more confused. lol You seem to be agreeing that it's tough to get a good tail on a digital release, mostly because the consumer can only see a handful of apps at any given time on a digital storefront. Older releases just sorta sell themselves at GameStop, but you gotta work for it on PSN, right?
But I thought you were initially saying that the reason digital is able to increment sales by a whopping 25% is because they effectively had a lot more foot traffic, so they had more people wandering in and buying whatever.
But how can both things be true? If 35% of your day-one sales are digital, and the ratio just drops from there, then digital is even more front-loaded than physical, which makes sense, given the discoverability issues of catalog on the digital storefront, right? So if 90% of our 2M digital Star Wars sales come on day one, how can you seriously argue that a "meaningless" number substituted? 2M people — give or take — had no real interest in the game and only bought the game because they happened to be in the store at just the right time, and these happenstance digital buyers all wander in on launch day, every single time? That seems a bit far-fetched.
There are some mental barriers for some people that if a title is digital only on the Consoles, that it somehow cannot be worth $60. Or that people want the ability to sell/trade a game once it's priced higher than $20. And far too many people are disc based buyers. To try and make a big budget, $60, AAA type game digital only in 2015 is not feasible. Perhaps in 10 years it will be.
Yeah, again, you just seem a little more focused than I am. You're talking about "big budget, $60, AAA-type games," and I'm talking about "games." You're right — and I conceded previously — and there is no reason whatsoever for BattleDuty to skip a physical release. That would be ridiculous.
But I'm not
only talking about BattleDuty. I'm talking about
video games, collectively. When I say a
game might find more success by skipping physical release, I'm talking about games like Yakuza 5. A game like that may only have a
potential audience of 300k in the entire US. If they determine they can pass 95% of those users with a digital release, doing a physical release to reach those last 15k users may not seem so appealing or even necessary. Another thing to consider is that the digital release is being priced at $40, which puts $28 in Sega's pocket,
about the same or maybe a bit more than they'd pocket on a $60 physical release. So by not including physical, they keep the end price point for the user down, which makes their product that much more appealing, while retaining the same margins for themselves. That means even though they've limited themselves to 95% of their total users, a lot more of that 95% are likely to bite, so they'd probably end up with more, equally-profitable sales when it's all said and done.
Which actually raises another interesting point. So, $PUBLISHER can price their digital offering at $40 and net the same money as a $60 physical release, yet they price the digital release at $60 anyway. Now, conventional wisdom holds that $PUBLISHER does this because they're a bunch of greedy motherfuckers, but you and I know that $RETAILER plays a vital role in contemporary distribution. Personally, I would imagine that $RETAILER may not be too pleased if the more convenient option also had a significant price advantage, so I would also imagine that there exists non-insignificant pressure from $RETAILER upon $PUBLISHER to keep digital prices near MSRP, allowing $RETAILER a fair chance to compete. Would you agree that this is likely to be another situation where the conventional wisdom is off target, at least when it comes to the ultimate cause of digital prices?
I do not think that it is fair to assume that average sales grow over time (which is why there's a very strong correlation between release count and total sales. If average sales grew over time, the correlation would be lessened).
Fair enough. Growth is hoped for, but I guess it's unreasonable to "expect" it.
But what I really hear you saying is that digital distribution is INCREMENTAL to the Packaged sales and growing the overall pie? Hmmm, where did I hear that before lol. Told you we agree.
Well, I'm saying that digital sales are both incremental
and substitutional, and that if either type of sale was occurring at such a low rate as to be "meaningless within the data," I would've guessed it to be the incremental sales.
Incremental - Increasing or adding on. "A "fuckton" of additional sales" = Incremental sales. We're saying the same thing.
Miscommunication. lol When I say a "fuckton" of additional sales, I mean, "far too many to be chalked up almost entirely to incremental growth." It's very difficult for me to imagine that a significant number of those 2M digital Star Wars buyers were previously saying, "No, seriously, I'm
not getting up. Fuck that game, and fuck Amazon too!" IMO, those are the "incremental" sales that were
created by the digital option. All of the non-hermits merely
substituted for digital. At least, that's what makes the most sense to me linguistically. Is there a jargon file I can reference? lol
Not at all. They are meaningful. But I'm saying more of those are additive to the pie than substitutive.
Yeah, we're just not communicating here. Again, what incremental/substitutional split would you assign to the 20% of sales that come digitally? When you say "substitution is meaningless within the data," I hear, "Like, 99.99% of those two million sales wouldn't have existed at all if not for the digital option." What do you
really mean? What's a meaningless value here? 1%? 10%? 90%?
I do not think 40% will be achieved this cycle. As for the future, it depends on what offerings are made for the next gen and what consumer choose. I do not dispute the 20%.
Cool. Thanks for clarifying.
Ehhh, if you have a bad game, nothing will save you. The development costs absolutely dwarf packaged distribution costs. If you're going to lose money, you're going to lose money regardless of a packaged version.
Well, sure, but with packaged, you'll lose that much more.
My real point is that adding a physical release sets the break-even point on your project "higher," and the higher price points that seem to come along with a retail release can serve to make your product less appealing overall.
I think you might be overstating the costs of Packaged distribution by a significant factor.
I think we're mostly just talking about different games when assigning significance, but since you mention it, are you able to share anything on what a minimum print runs actually costs up front in terms of dollars, and how many copies that buys you?
Kind of. The addressable audience is certainly bigger when doing a Packaged release. You also get more press coverage and only with a disc will a portion of the game buying audience consider your game to be a "real game". Best you can do is tailor your offerings to multiple consumer segments.
Oh, I'd certainly agree with that, and indeed, I
thought that's what I'd been arguing for. lol In many situations, a physical release totally makes sense and you should definitely do it, but in other situations, a physical release may represent significant effort to collect some fairly high-hanging fruit. Yes, more physical releases means more physical sales and more sales overall, but you wouldn't seriously argue that
every indy game out there would be better off launching physically day and date, would you?
That's what I meant by games being able to find more success by skipping physical, at least at launch.
I disagree for the simple reason that their November last year was inflated by sales that should have occured in October '14.
There was a reason why their October was so low then (about 160k), they announced a killer $399 bundle for early November (ACU+ ACBF for free) as early as mid October 14, and then during the last week of October they announced the $50 price drop, effective on that bundle.
Sony sorta did the same this year, no? They announced a cut on three "big" bundles at the beginning of October, but the only one that was actually
available in October was the Uncharted collection. That should be perfectly appealing, but in fact, they "only" sold 130k of them at the reduced price point. So during that same month they sold another 140k consoles bundled with TLoU at $350 or Taken King at $400. (I'm pretty sure on those price points; right?) So that tells me that only offering bundles limits the appeal of your console fairly effectively.
Anyway, my point is that Sony are likely getting some delayed gratification this year, because they effectively said that all of the
good bundles would be discounted
next month.
Your analogy is terrible.
Everything considered it indicates to me that the success of the Microsoft gaming division is no longer based on the sales of a single device. Nadella wants Phil to focus on growing Xbox as a service and has set goals in place to measure the success of that effort, which aligns with everything they've said about wanting to evolve the brand to allow customers to play their games on multiple (Windows 10) devices.
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PR works, ladies and gentlemen.
And how!