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 Call of Duty 's longterm sales effect may be diminishing, says analyst
Call of Duty's longterm sales effect may be diminishing, says analyst
April 11, 2012 | By Eric Caoili

April 11, 2012 | By Eric Caoili
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The lack of huge hits isn't the only culprit for low game sales at retail recently -- Call of Duty's "shortened tail" has also been a key factor, says PiperJaffray analyst Michael Olson.

He forecasts that Call of Duty: Modern Warfare 3, the most recent entry from Activision's popular multiplatform first-person shooter franchise, isn't maintaining the same long tail with sales that 2010's Call of Duty: Black Ops enjoyed.

Olson says that while Black Ops was the fifth largest selling title in March 2011 (four months after shipping), Modern Warfare 3 will likely be the eighth largest selling game in March 2012, and will sell less than half of what its predecessor pushed a year ago.

"We believe big name titles are no longer able to sustain 'fat tails.'" says the PiperJaffray analyst. "This 'thinning tail' phenomenon is driven by 1) casual gamers leaving the market, 2) a steeper pre-sale and up-front curve, and 3) cannibalization from the pre-owned market."

Due to the shortened and thinned tail of Call of Duty, among other factors, Olson agrees with fellow analysts that The NPD Group will report a significant drop in software revenues at U.S. retail on Thursday, when it releases sales data for March 2012.

He predicts that software revenues fell by 26 percent year-over-year in March 2012 to $545 million -- Wedbush's Michael Pachter expects a 23 percent drop, Cowen and Co.'s Doug Creutz expects a 22 percent drop, and Sterne Agee's Arvind Bhatia expects a 25 to 30 percent drop.

All of the mentioned analysts concur that last month's releases, which include Mass Effect 3 and Street Fighter X Tekken, were weaker than the titles shipped in March 2011 (e.g. Pokemon Black/White, Dragon Age II), resulting in significantly lower software revenues from retail in March 2011.

If the analysts' predictions are correct, the game industry will have suffered four consecutive months of declining software revenues. Sterne Agee believes game sales will continue to endure a double-digit decline in April, but will improve in May thanks to big releases like Max Payne 3 and Diablo III.


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Comments


David Ramos de la Fuente
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Another example of how clueless market analysts are about the current games market and what's driving its sales. Or how they try to manipulate the market for their customers' (publishers, investors) interest:

"This 'thinning tail' phenomenon is driven by 1) casual gamers leaving the market, 2) a steeper pre-sale and up-front curve, and 3) cannibalization from the pre-owned market."

1) Have casual gamers ever been a public for those kind of games? Are their seriously suggesting Angry Birds is replacing Call of Duty for anyone?
2) Don't really understand this. Has this really changed from previous big titles releases?
3) Yeah, this is a totally new phenomenon. Oh wait, actually, it was there already for COD:MW2 and COD:BO

I don't claim I have the answer for why the sales are dropping, but these analysis sound like total BS to me.

k s
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CoD players are casual gamers, that's about all they ever play.

Bob Johnson
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The console market has always hits a lull late in cycles. ANd when you give customers the same thing every year, year after year, eventually they get bored and their interest wanes.

Nicholas Bellerophon
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Well let's see... the three Pillars of Activision: Guitar Hero, Modern Warfare, World of Warcraft.

Guitar Hero died because Activision thought they could push new releases of essentially the same game season after season at $50 - $60 and... oh wait, they couldn't, people revolted, what could have had a ten year tail instead was played out in two.

Now, Modern Warfare. Hmm. What shall we do with that? I know! Let's destroy the studio that made it great and kept it fresh, keep pumping out new releases of essentially the same game season after season, charging a high price each time, and oh I KNOW, let's release a bunch of what are, to be fair, map packs for, again, absurd prices, and and and...

Two pillars down, Activision. One left. But you know what? Blizzard isn't going to let you mess them up, they're too smart for you. They took your money, but soon (already?) they'll be all you have left, and then they'll decide they don't need you anymore and you'll be a memory, a Wikipedia article read only by game historians.

=P

Mark Ludlow
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It's interesting to compare an analysis like this with the latest "research" doing the rounds that suggests gamers actually want sequels more than anything else. Hopefully publishers will start getting a bit of a wake up call soon and begin investing a little more in new IP.

wes bogdan
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With how expensive AAA level games are to make when one has a homerun the easy money is in "let'$ do that again,again" until it becomes the last new thing.

I'd much rather see :ico,rouge galaxy,stranger,journey,skullgirls,snatcher or escape plan. Originality should be paramount not they did a great game clone n out the door.

Yearly sequels are bad because even with cycling dev teams so you can get 1 per year released just runs it into the ground faster.

The best games have 2-3+ years between sequels :bioshock,batman,halo,lbp,killzone and uncharted wouldn't ever release a new game within 12 months of the last expierence but i guess that's the difference between a rushed game and a game expierence that will stay with you and get talked about for years like 8-bit zelda or metroid because we'd never seen their like before.

Remember xenoblade on wii is more important than faceless sequelxxxiiivvv in a soon to be dead series.

Vince Taroc
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I play a lot of Modern Warfare 3 and I know in game, it gets a lot of unsatisfied customers because of the lag compensation and internet disparity built into the system. The word of mouth has been spreading amongst first-person-shooter gamers and long time Call of Duty fans are moving on to something more enjoyable where they feel they can have a fair gaming experience.

David Serrano
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I think the stat that will ultimately determine the health of the COD franchise is the percentage of players who participate in multiplayer.

Shortly after Black Ops was released, David Vonderhaar disclosed that according to Activision research, 40 percent of the people who have purchased COD titles have never participated in multiplayer. So if you're attempting to gauge if long term sales will decrease, use the multiplayer participation rate as a barometer. Because for the people who are not participating, there's little to no value in purchasing a $60 title that only contains a 6 hour or less single player campaign. If Activision can't find a way to get more players actively involved in multiplayer, they won't be able to maintain the number of copies sold per release. Which doesn't mean they still won't make a boat load of money, it just means they'll make a smaller boat load each time out.


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