Last week the NPD Group released its latest estimates for the retail video game market in the United States, and for yet another month both hardware and software sales were down. For those who watch the market, this came as practically no surprise, but it was still disappointing.
In the 44 months since February 2009, when this long term contraction began, the retail software market has shown year-over-year growth in only seven of them. The last month of growth was a year ago, in November 2011.
You might recall that I thought retail had hit close to the bottom, and that the declines might moderate. It was a moment of positivity, searching for a glimmer of hope in what appears still to be a market in free-fall. I'll try not to let such reversed optimism happen again!
So, let me discuss what happened in October, really for the year so far, and use that as a lens through which we can estimate where things will end up for the year. I'll let you in on the punchline now: November and December won't turn the year around, and by practically every measure this will be the worst year for retail since 2006 (as suggested in this column from six months ago).
Hardware
The best news so far this year in hardware is that the Nintendo 3DS has outsold its total for the same period last year. Regrettably, even this isn't actually good news because the 3DS was only available for eight of those ten months last year, and since August of this year its sales have been down year-over-year on a monthly basis.
Everyone else is down for the year, including Microsoft's Xbox 360 and Sony's PlayStation 3. The figure below presents this year's hardware figures compared to last year's, shown in shadow.
While the Xbox 360 has been the lead console at retail for 15 months now, it has still seen a very steep contraction in sales this year. In absolute terms, the Xbox 360 is down more this year than is the PlayStation 3 (down 1.2 million to the PS3's 0.66 million). It's also worse in relative terms: 31 percent to the PS3's 25 percent.
Unless Microsoft's hardware and service plan really takes off in the next month, this will be the worst year for the company's console since 2009, the year prior to the introduction of Kinect.
Every hardware push that the industry has tried in the past couple of years has run its course. Sony's Move system has only token support while Kinect is simply another part of Microsoft's shrinking monthly hardware sales.
Nintendo's revamped Wii with a lower price and new bundles doesn't appear to have much traction in the market (which should come as no surprise). And Sony's handheld is just now crawling across the 800,000 unit mark and probably won't make it to a million by year's end.
With the exception of the Wii U, due out in a week, there simply isn't anything exciting consumers and bringing them out to buy new models of old systems. There are several Black Friday deals worth watching, including a PS3 bundle finally hitting $200 and a Skylanders Xbox 360 for $150 (as I've been suggesting for months), but those will only provide modest relief in November. Microsoft will also probably see a modest bump from its Halo 4 bundle, but those sales will be difficult to discern from public data amongst all the other November sales.
Looking out into the coming year it appears that the next 12 months will be just like the last 12, since Sony and Microsoft have made no public moves yet that suggest they will bring updated systems to the market any sooner than November 2013.
Software
Of course, once a company like Nintendo or Sony or Microsoft has gotten a consumer to buy a console, they fully intend to make their profits by selling that consumer as much software as they can. And, unfortunately, consumers simply aren't doing that like they used to.
The figures below show just how dire the situation has become this year at retail. First, we can look at the market in terms of revenue, and the picture looks like this:
Yes, you're reading that right. The total value of the January through October video game software market has shrunk by nearly 46 percent since 2008. For every dollar made during the heyday of the market, when Wii Play and Guitar Hero made regular appearances on the software charts, the industry is only generating fifty four cents today.
Because software sold for a slightly higher average price a couple of years ago, due in part to the higher prices of software bundled with guitars and balance boards, the decline in units is not quite as steep (only 41 percent), but it is still shocking. Just look:
The industry is just now getting to 100 million units for the year at the beginning of November, according to my estimates. In previous years that milestone was reached as early as the first week in July.
In previous generations, I believe there have been contractions in the lull before and during the launch of a sequence of new platforms. However, I don't believe that the industry has grown during a generation and then returned to its starting size at the end of that generation - until now.
It's long past the time when the industry should be asking if retail will ever rebound. It won't.
If the Wii U does well and if Microsoft and Sony both introduce successful hardware iterations next year and if those systems all continue to lean heavily on retail for software distribution, then maybe in two years the retail software industry could return to the same $10 billion level it had in 2008.
But, really, do you expect all those ifs to go the right way for that to happen? I didn't think so.
The November Singularity
Now, having looked at the January through October sales, I know what some of you are thinking: What about November and December? After all, those are the two biggest months of the year at retail.
And, yes, they are important. In fact, one interesting dynamic that I've not written about before is the increasing importance of November and the diminishing importance of December.
Going back as far as 2006, software sales in November have generally been increasing. However, starting in 2009 and the launch of Call of Duty: Modern Warfare 2, we have seen December's software sales decline year-over-year.
With the Call of Duty franchise generating 30 percent or more of the software revenue and unit sales during just the month of November, and Activision Blizzard's focus on pre-orders and day-one sales, it's no surprise that the growth of that series has helped drive up November's numbers.
The confluence of Call of Duty: Black Ops 2, Halo 4, and Assassin's Creed 3 this year could help continue that trend of increasing November retail sales, and we could see December lose its title as the biggest software month of the year, at least in terms of dollars. The figure below shows just where things have been doing for the past several years.
The twist is that I think the middle of the market has hollowed out enough that November will show a year-over-year decline. Analyst Doug Creutz of Cowen and Company recently commented that last year there were seven "core gamer (non sports) titles shipping after Labor Day that went on to sell more than 4 million units" across the U.S. and Europe. Those titles were Gears of War 3, Batman: Arkham City, Battlefield 3, Call of Duty: Modern Warfare 3, Skyrim, Assassin's Creed: Revelations, and Saints Row 3.
This year, he expects only four such titles, including Borderlands 2, Assassin's Creed 3, Halo 4, and Call of Duty: Black Ops 2.
Some of this is due to the flight of some games out of the last quarter of 2012 and into the first quarter of 2013 (for example Bioshock Infinite), but some of it is the decline in the number of titles publishers have been releasing. This phenomenon isn't new (I've written about it before) but it is ongoing and will continue to exert downward pressure on retail sales.
So even if Call of Duty: Black Ops 2 and the other top-tier releases sell up to expectations, I suspect that there won't be enough of a middle tier to push November sales higher than last year.
And when that happens, when November shows another year-over-year decline, the industry will have finally gotten a full year of uninterrupted contraction. Add a December decline on top of that, and you have the making of the retail industry's annus horribilis.
Perhaps that is what it will finally take to encourage publishers and other outlets to begin publishing digital sales figures at least in the very modest detail we get for retail. Even if digital distribution revenue isn't keeping pace with the decline at retail, it would help soften the image of a physical market in freefall.
"Even if digital distribution revenue isn't keeping pace with the decline at retail, it would help soften the image of a physical market in freefall."
But what IF publishers start to publish digital sales figures and we can see in 12 months, that these figures aren't rising, but stagnating or even falling? Then the industry would have absolutely no excuse left to explain the market collapse.
Maybe the digital figures weren't rosy 12 months ago and haven't grown much till today, this could be an explanation, why publishers shy away from releasing figures.
It seems everybody thinks publishers are dumb by not releasing these numbers and by willfully letting the industry look worse then it actually is, maybe they aren't dumb, but simply have nothing positive to show.
The top line numbers of the publishers we can see would indicate a definite drop in all forms, including digital.
I personally see this continuing until one of two things occur: 1) The industry starts making compelling games that are accessible by people other than the core demographic, or 2) the core demographic has better employment numbers.
True but tracking just retail sales is as bad as the music industry tracking just CD sales when digital stores like iTunes were taking off (and their subsequent claims that the music industry was dying when it was just changing dynamics due to digital and they make more than ever).
I haven't bought a game in a physical store since 2007-2008 but I buy lots of games. Games can be retail and digital, I suspect retail will not be the massive growth channel it always was and will play secondary to digital sales in the future (even on consoles in their stores). Digital sales have to be growing, why wouldn't you show that as 'retail', they should call this list the 'brick + mortar or physical retail'. Also we are at the end of a generation of consoles, consoles are changing but towards the end of a cycle sales are never good.
Then there is the cost of making these games for little return and other attacking channels like mobile games. Disney recently has put less emphasis on console and performed better. Maybe retail and consoles as they are are just an outdated model.
@Micheal: accessibility is definitely not the problem in the retail console space. Games are more accessible today than ever.
The most common type of traditional videogame hit was a) single player, b) challenging. What I mean is that players felt an accomplishment when the 'beat' a game. And because it was single player, they were willing to buy the next new experience. The tension and challenge, which is what great games excel at, is what hooked people.
The only hits we get today, and they are few and far between, are based on multiplayer, COD and WoW being the two big ones. Why? they still offer players challenge and tension and excitement. The problem with multiplayer games is that a person only really needs one per year. Further there is an increasing number of well crafted f2p games.
Single player development today requires eliminating challenge and frustration. In essence, games are built so everyone can win because devs are under a misapprehension that the easier they make their games, the more people will play them.
The single player games people love and are passionate about, for the most part, are those that give people experiences they cannot get elsewhere. And those experiences involve feelings of tension, excitement, and yes sometimes frustration. However, because of the imperative today that requires eliminating frustration, excitement and tension are also thrown out. Game developers try to trick the player into feeling them through grand set piecies and messianic stories, but those feelings cannot be aroused through storytelling. So, to a large extent, single player aaa games have become really bad movies.
I believe the industry also tries too hard to get people excited about games that delver nothing but empty stories and accessible gameplay. The more the hype machine is ramped up and the player is left with empty experiences, the harder it is to get gamers excited about spending $60 on the next big thing.
I think the industry will stabilize though. It is easy enough to trick the under 18 demo, cause we get a new crop of them every year. I just wish they had more cash.
@"The most common type of traditional videogame hit was a) single player, b) challenging. What I mean is that players felt an accomplishment when the 'beat' a game. And because it was single player, they were willing to buy the next new experience"
I don't think that's the case. From 2006-2008 the industry exploded, but it wasn't because of challenging single player games.
@Micheal
the thing is, those who started playing games post 2006 that helped create the boom, didnt become gamers. And by that I mean they did not become part of the core customer base. Why? I believe that the experiences they received while playing the typical modern game were not compelling enough for them to want to spend the time and money on new product. Hence the contraction.
& I believe that by making games accessible and eliminating challenge, the industry fails in attracting the passionate consumer.
One of the new games coming out is Hitman Absolution with magic xray vision & linear cut scene driven story. I'm willing to bet that that game will attract zero passionate fans. And those that do play it, will quickly forget about it. Compare that to the fanbase of HM: Blood Money.
I am very curious how many people are like me... Just this past year I finally joined the Steam bandwagon. I have had Steam since 2005, BUT I generally like buying games at Retail. Just this past year though, I have gotten sick of the massive number of games, movies, and tv shows piled up around my apartment and have moved to buying digital for everything but my very favorite stuff. Meaning most of the games I buy I have started buying on Steam. At least half my purchases this year have been digital instead of retail.
It's possible that a large number of gamers are jumping on the Steam bandwagon, since it means not having to hunt through stores, deal with pushy clerks, and such. Even Blizzard offered Digital Downloads for all of their big releases this year.
I joined this bandwagon this year as well. For movies/tv/cds for the most part---Between netflix/amazon video I have no need for DVD/Bluerays to be sitting around and have no need for cable. I've burned all of my cds and sold them. After my last move, I realized that I just don't want as much physical stuff sitting around that needs to be unloaded or packed. I buy lots of games via steam, but I still buy PS3 games physical, because I do enjoy the benefits of trading in games. I've definitely been making a shift for most of my media to digital.
1. Most of us with an internet connection have moved on to digital, except when it's a brand new game not available online or if there's a sale on at the shop. Digitial is more convenient and more importantly there tend to be more good sales online than in stores (the Steam summer sale, Green Man Gaming etc.).
2. Pretty sure I watched about 7 of the same console game trailers for different games this summer (from the major publishers).. each one swearing profusely and demonstrating amazing ways to kill, stab or shoot something. Given the gutter-level entertainment they're selling (Far Cry 3, Bioshock 3, Saints Row 12, Tomb Raider 8000 etc.) is it really that much of a surprise that the grown ups aren't going out of their way to buy all that crap any more?
3. Are we going to use this as a lame excuse to increase DRM next year? I'm actually impressed we had an article about flagging sales that didn't even mention piracy once!! ;)
Piracy is kind of an nonissue now. With Steam and GOG taking off, and a few other distribution services growing, its just easier to buy your stuff legit then it is to put up with trying to find a safe torrent and cracking DRM.
With that said, used games was the new scapegoat just a little while ago. But that's also stupid, since a company like Gamestop makes most of their money from used game and their stocks are falling and sales slowing. So used games aren't taking a bite out of new.
"...each one swearing profusely and demonstrating amazing ways to kill, stab or shoot something. Given the gutter-level entertainment they're selling (Far Cry 3, Bioshock 3, Saints Row 12, Tomb Raider 8000 etc.)"
I agree with this to an extent. I personally don't mind the gutter-level entertainment so much..but there is such an abundance of it, that none of it is really special anymore. It used to be sparse, and special when a "violent" game came out...it drew attention. Now it is the norm and the special games that don't include the violence but include great gameplay and mechanics are the better sellers.
But even the games that you mention--such as Tomb Raider--as much as there was shooting and action in Tomb Raider previously..it was never really violent. They have taken this new one and made it extremely dark and violent, rather than sticking to what the game was known for was exploration, and puzzles. The violence was a result of areas explored, rather than the draw of the game.
^This is how I see a lot of reboots and new franchises as you have mentioned. The new techniques/mechanics are based on more amazing ways to kill rather than amazing ways to solve puzzles/platform/explore.
We're also getting overdue for a new console cycle.
That said, the 'core' demo doesn't strike me as underbuying, so why the drop? Have the inroads from wii and kinect with more casual gamers fallen down a bit?
I don't buy that hardcore is 'dying but does gaming allow for a cottage industry that caters towards hard core?
Madden had record sales, but EA also reported high losses for the time, the game was on the market and Halo 4 war released last week, not nearly long enough to say anything substantial about it's sales.
" I can't help but notice you didn't reply to anyone else but me. Hmm."
Hmmm, i can't help but noticing, that you don't seem to follow the thread very closely, otherwise you would have noticed, that I replied to several other people's posts, too. But that's fine for me, everybody sees only what he wants to see.
"Which means we are 2006, pre-Wii levels right now. Which means this level of sales might be what the core market can sustain, without an influx of casual and new gamers, such as the Wii brought in such droves."
And in 2006 there was no casual gaming market? Sing Star, Guitar Hero, Buzz didn't sold in the millions? And those people, playing casual games with their friends and families on the PS2 didn't went to the Wii after that?
Video games are a growth driven business, that's something you don't seem to understand, there is no going back to 2006, because the whole market is financed by rising revenues and profits. The whole idea of new more powerful hardware, the whole idea of better and bigger games on new hardware is only possible in a growing market, because growing costs are only possible when revenues and profits are also growing.
"I am speaking specifically of the new gamers the Wii created, which wouldn't have existed beforehand."
If that's your argument, it's a sad argument, because it means, that the console industry (the part of the games industry most affected by the retail decline) once achieved to attract new players (as I wrote earlier, players definitely needed in a growth driven business like video games), but lost these players (25% of all paying customers) over the course of a few years. If this would be the case, the situation would be dramatic for console manufacturers, because it would mean the console industry has reached it's maximum size, this would mean NO new hardware from Sony and MS and NO rising budgets for games. Within the current cost/profit structure, most companies don't achieve profits, so cost cuts were to be expected.
The main argument for this scenario is, that the casual gamers left the Wii business and went on to other platforms (mobile, social).
But the situation seems to be different, as it seems, the whole industry is loosing players:
(http://www.gamasutra.com/view/news/177176/Americas_gamer_populati on_is_shrinking .php#.UKJR5Wf2R6Y)
I that's the case the sitation is much more grave, it means people are abandoning games at all.
2013 will be worse for everything commerce. It's the market, it's globalization and for game development there's a degree of technology disruption with mobile games and smart tvs. I think we're in a decline toward a valley of zero growth in sales numbers for games, then things will begin to pick up when the overall quality improves for casual games and the weak holders aren't able to sustain themselves financially. But I agree with Jeff, there's too much of the same violent games being produced by major publishers. People need cultural and artistic diversity to remain entertained.
I would think once digital revenue is factored in, YOY is nowhere near a 25% decline. It continues to astonish me however that some in this industry think the greater macro economic factors somehow dont effect gaming.
I think there has been a lot of fads driving sales this gen. I dont mean that in a bad way. The Wii brought in a bunch of non typical gamers, then the rock band/guitar hero pulled in more casaul gamers, kinect and also the dance games. Basically all these fads have past and nothing new in terms of innovation plus the iphone ipad effect. Nothing really suprising I cant make a case to buy these systems, i think the market is pretty much saturated.
I suspect this decline is caused by a number of reasons combining. Possible contributing factors could be:
1) The recession is still hard on a lot of people, so they are cutting back on what they buy this Christmas.
2) The existing console market could be reaching user saturation point and new consoles were helping to drive extra software sales as people wanted new games for their shiny new consoles.
3) All the free to play games are together using up a lot of players time, without earning as much money *in total* as all retail sales of all games. So the free-to-plays are earning money, but not as much to make up for the looses at retail. (Free-to-play are also a race to zero to give more and more away to attract user numbers to their game and its also a race to flood the market with more free-to-play games and so diminishing returns as more games compete with free stuff).
4) Mobile gaming on phones are also using up a lot of gamers time and on Android they are almost all advert funded, so all of these also won't show up in retail figures.
5) We also don't have enough digital sales figures to make a clear estimate of how much digital sales are impacting retail.
6) Plus shops like Game closing in the UK haven't helped retail sales, as fewer retail outlets.
Its very likely some combination of these kind of factors. The question is what we do about it as an industry? Where will the growth come from?
On 3 and 4. Neither of those are reported as retail sales regardless of how they make money. I don't think online sales are either.
That's a serious oversight imo. Consider that a game like League of Legends has 30 million monthly active users and is growing. I'm sure Riot would have a different view of the "declining" video game market.
I'm going to give my reason why I haven't bought a single game in months after Dark Souls.
Because there is no game to challenge my age group/ experience. In addition, there is no game to make up for my lack of games I use to like, such as Donkey Kong 64, banjo Kazooie, you know, the games I grew up with. I also grew up with the good games of Final Fantasy and the mana series. Seeing the direction Square took with those games has pretty much made my experience in continuing to play them gone. The same is for what happened with Kingdom Hearts 2. There was no 3, so nothing else for me to continue off of. I chose to not touch the spin offs.
I, and likely others of my generation, are hungry for the same-ole experiences we had when we were growing up, no matter the genre or gameplay. But because the industry caters so much to the curren generation, we're actually left out and only left to compromise for the experiences of today. Mario, Zelda, Final Fantasy, and a few others did not grow up with us. We grew up, but those game experiences either remained at child level or did something different. What the industry lacks is a scaling factor to keep adults entertained. CoD and games like that are easy to keep an adult's attention: it's simple and offers a burst of entertainment. But after that, you get nothing.
Then came something like Dark Souls and Yakuza 4. These games really captured my interests hard, which shows that I still crave video games, but ones more catered to my more mature mind. I don't want a click and play experience like Heavy Rain, but something...it's hard to say. I hope someone else understands where I am coming from.
I completely understand where you're coming from, but I think I'd put it in a simpler, more pessimistic way: the game market is gradually becoming more homogenized, and there are fewer and fewer good games being made. And by "good" I mean stuff that seems new or fresh or interesting. Dark Souls was one of the few recent games that wasn't afraid to break the mold and offer gamers a new experience. Yakuza also offers a unique experience.
We need more stuff like that, but it feels like all the money from triple A budgets can't afford to buy any creativity.
I think the production levels for making a game are out of control on the computer / console front. I would think that tech on the graphic level has gone so far that a developer could place a good cap, develop a game at a reasonable production level, and sell it for a modest to hefty gain in revenue. What seems to have happen though is that the bigger better strategy has enveloped the merits of what a good game is and how good it looks should merit if it sells well. But as we see with big AAA developers this is not the case, and so creativity becomes too risky. With that risk we see studios becoming financially unstable and eventually closing up shop.
Another 83' like video game crash, and it's about time!
The all controlling publisher model, putting out nothing but the same game every year is terribly broken. To continue making video games with these kind of budgets new models of publishing, and new studio models are going to be needed. We've tried carrying over a similar business model for the past ten years even as game's budgets skyrocketed. The business just hasn't adapted.
But it can adapt! Hollywood makes as much and more money, on bigger budget projects every year. And they don't have people quitting in disgust, or tales of gross abuse, and rarely have producer barging in and screwing something up. Heck producers often save more projects than they ruin in Hollywood. If they can do it, so can video games, but a new model is desperately needed. One where untouchable producers can't bully around the people who are actually supposed to be the ones talented at making the games, and where talent isn't chewed up like a sponge to be spit out to different careers for the sake of short term stock prices.
Have you been on a film set? I hate to generalize, but producers often times run films into the ground and alienate their staff. The difference is film has a distribution model that allows movies several chances to make repeat profit even if the product isn't that good: theatrical, DVD/Bluray sales, Rental, Netflix, paid cable, regular cable (supplemented by ads), bargain bin, re-release with new footage etc... They also know how to reach a wider audience with genres. Not every film is an $80 million endeavor; they also have the low-budget rom-com that can bring in a different audience. The video game industry isn't very creative when it comes to audience diversification, although it's done better this generation with Wii etc... They also need to look at entry price ($60); it is too high for a mass audience when a young family of four can enjoy a Shrek DVD for $10.
Usually in these kind of discussions you hear people saying that "we must have digital sales figures!" This data is mainly about the console business and I think we all know that PSN and XBLA is a very small part of that. Pre-owned is a much more interesting statistic. Since people don't / can't buy console games online the only means of acquiring them is to buy them new or pre-owned. The data clearly shows that people are much less interested in that compared to a couple of years ago. I think a VERY small percentage have moved over to buy things on Steam instead. That said Steam has of course grown but I don't think its turnover is big enough to offset the decline in console game sales by a long shot.
Sure if you factor in casual games and mobile games you might not see as big decline, but that just tells us that for now the experiences offered by core games are just not attractive enough to most consumers.
The argument that we need new hardware is also interesting, if that indeed does increase sales a lot, what does this tell us? It tells us that the games industry is not dependent on the creative output of the game creators but works to some degree as a gadget industry. This is also something that is a bit worrisome since we can't expect to invent new gadgets all the time, we need to be able to create compelling experiences that is independent of technology to be truly sustainable long term. I can't see how the next generation consoles will offer greatly enhanced possibilities of creative output compared to the possibilities of the current generation. Therefore I think it could be foolish to believe that everything will change with the arrival of new consoles.
Again with this doomsday narrative. Still ignoring the last two year's vast diversification in revenue streams, I see.
Honestly, since you CANNOT get an even remotely accurate picture of this industry through retail sales, why do you continue to focus your reporting on it? Why not try to analyse the publisher's revenues, for example, since everyone but Valve is public and you dont have their sales number anyway.
The industry has moved on, but Gamasutra is hanging fast to retail numbers like a newspaper publisher that refuses to acknowledge the internet's existence.
" Why not try to analyse the publisher's revenues, for example"
Ubisoft loss, Nintendo loss, EA loss, Square Enix loss, THQ loss, Take 2 loss, Sony loss, Microsoft (console business) loss, Activision profit. I think the picture is clear.
"The industry has moved on, but Gamasutra is hanging fast to retail numbers like a newspaper publisher that refuses to acknowledge the internet's existence. "
Tell me, when the industry found a way to digitally transmit console hardware directly to it's customers, until then, retail will be central part of the industry. Digital distribtution matters only on mobile and PC platforms, but the first isn't interesting, when it comes to traditional video games and the second isn't generating revenues interesting to anyone outside the MMORPG space.
First, I wrote revenues, not profitability. Revenues would tell us a better picture of global sales, including revenues from digital and microtransactions.
And at least Ubisoft and EA in your list are currently profitable, so check your facts a bit please. Not to mention Apple. Dont know if you heard of the IPhone, its this new thing, they sells game for it.
"Digital distribtution matters only on mobile and PC platforms, but the first isn't interesting, when it comes to traditional video games and the second isn't generating revenues interesting to anyone outside the MMORPG space. "
If you think PC isnt generating interesting revenues outside of MMORPG, you are behind the news, sir. God just look at Steam.
"You're quick to forget the angry birds, cut the rope, sword and sorcery and the likes. "
All the profits of these games combined don't make up the losses EA reported for the last 3 months, these games don't nearly make up the retail decline.
"Apple is making huge profits on its appstore. You can't deny that there's a big part of the industry that "shifted" to mobile development. "
Apple is making profits on the Appstore (huge is overexagerated, in june 2011, the profit was an estimated $292 million since launch of the store - http://articles.businessinsider.com/2011-07-11/tech/29964545_1_app-store- gene-mu nster-apple), but not every app in the appstore is a game, so you have to substract all the profits from non gaming apps.
Those articles report losses during the dead, summer quarter, where money is spent making games that are sold in the fall/winter quarter. In a seasonal industry like this one you can't just look at one quarter, you have to look at the annual numbers.
@ Matthieu
"Those articles report losses during the dead, summer quarter, where money is spent making games that are sold in the fall/winter quarter."
The Ubisoft losses are 6 months losses and the EA losses include the period when they released their 2 best selling franchises Madden and Fifa. By the way, quote from the EA article on Gamasutra:
" the company disappointed analysts by projecting lower-than-expected revenues for the holiday season."
First link is dead, so I dont know, but 4 months or 6 months, its still the dead summer time. If you want to cherry-pick like that , second article also says EA's revenues are up YTY for that quarter.
We could go on all day so Im gonna let it go with a big "anyway".
Matt, Gamasutra could use a new angle on its business reporting, thats all I think.
"First link is dead, so I dont know, but 4 months or 6 months, its still the dead summer time."
Link works fine, just remember that the gamasutra site adds spaces in the links. But what you call "the dead summer" time is the time, were the industry once was profitable and now isn't profitable any more, why should it be different in the holiday quarter? I don't remember, EA's or Ubisoft's last profitable fiscal year, do you?
What are you trying to say, that it's ok for a company not to make profits and loose money year after year?
I guess you haven't looked at the financial reports of Ubisoft or EA during the last 3 years, otherwise you wouldn't try to explain the ongoing money bleeding of these companies by R&D, acquisitions or one time investments.
It may surprise you Christian, but "profit" and "making money" are not the same. If a business re-invest its revenues to grow its value and future revenues, its "many money" (positive cash flow, notably) but not always profit. If a business sell its assets to stay afloat, it can be profitable, but its not making money. Corporate financials is insanely intricated.
But this is ALL completely, entirely besides the point of the discussion. Mr. Matthews says in his report that retail sales are down, and implicate that the industry is in trouble because people arent spending as much money on gaming as they used to. Since we cannot get a good picture of total sales, including digital, micro and others, I suggested looking directly at the revenues of the businesses that form the industry - still an imperfect picture, I admit-. Now when trying to determine if people still spend as much money on gaming, what those businesses do with their revenues is completely besides the point.
@ Matthieu
" if people still spend as much money on gaming, what those businesses do with their revenues is completely besides the point. "
Wrong, for example, just take Tim Sweeeney's recent notes on possible next gen games on the Unreal Engine 4, he says:
"We are hoping costs at the start of the next generation to only be double the cost of the start of the previous generation."
This means, even if people would spend as much on games (which they clearly aren't doing, hardware sales are down, which is a clear indication for this), the rising costs would lead to an unhealthy market, unless a) people spend more money on games or b) more people spend money on games.
Apart from this, the number of publishers and studios that died during this generation clearly show, that you can't run a company on losses.
I liked how you completely failed to acknowledge the connection, that exists between revenues and profits. Once the industry had higher revenues (at least in retail) and the companies were profitable, now we have lower revenues in retail and the companies are reporting losses. Do you think this is simply coincidental?
Looking at revenues of a company is only interesting, when you are looking at the profit/loss at the same time. What you call a "careful, patient explanation" was to tell me, "If a business sell its assets to stay afloat, it can be profitable, but its not making money". This is not true, if a company sells it's assets, it is part of their earnings report and if they sell assets higher then the losses their products or services are generating, this company is reporting a pofit, not a loss.
What I really liked, how you constantly ignored the fact, that EA and Ubisoft are reporting losses for several years now, which makes your whole argument about re-investment useless.
Besides, your whole argument about revenues has several flaws, the biggest is, Matt Matthews looks at the US market, but no company reports revenues for the US market alone.
@Christian: You are painting with too broad strokes. Revenue is an accurate representation of sales. Profit isn't really a great measure of anything when viewed in isolation. It only becomes interesting when paired with investment, costs, and revenue.
Your argument through this comment and it's reply is essentially making a bunch of straw men in a circle. You started by saying major publishers all made losses during the summer (despite revenues being the clear point of the original commenter), then you changed to arguing about whether a seasonal industries worst quarter is representative of the entire year, then you changed to arguing that investment in RnD/Capital shouldn't be factored into a company's financial health, then you argue that development costs are more important than any other cost. If I were to guess you are about to say that revenue isn't an important indicator of company health and that profit is all that matters again.
Pick an argument for people to properly rebut and stick with it.
I am surprised, how anybody can still think I am talking about the summer, a weak quarter or something like that, I replied to Mathieu's original comment, that the article is a "doomsday narrative" and that we don't have an "accurate picture of this industry through retail sales", by saying, why I think the retail sales of 2012 (which are the subject of the article) are giving an accurate picture of the state of the industry.
I pictured these arguments with the recently posted earning reports from EA and Ubisoft. The Ubisoft numbers were for the first 2 quarters of 2012, not the last quarter, as you seem to think and the EA numbers were for the last quarter. But can you tell me what difference it would have made to take in consideration the last 12 months? The last 24 months? Neither Ubisoft nor EA were profitable in this period.
Which brings us to the argument you and Mathieu and Zirani are bringing up again and again, that you can't look at profits and losses alone, that you have to look at the whole picture, look at investments, R&D, etc.
I repeat myself, but EA and Ubisoft haven't made a profit in recent years, neither has Sony nor Microsoft (with it's console business) and lately Nintendo went into the red too. Talk about digital sales all the way you want, but it remains a fact, that the key players in this business are bleeding money for several years right now and it doesn't look, like their finances will rebound in the near future.
You and other people in this industry seem to have decided to ignore this, but the number of video game companies lying dead on the road is increasing by every mile this industry moves forward, right now it seems, that THQ will be the next to drop dead.
To me this is a sign of an extremely dangerous crisis, to you and Mathieu and Zirani it's a "doomsday narrative".
I would love to see the yearly graph with overlays for data from rentals, used game sales, DLC sales, digital sales, MMO revenue, mobile game revenue, social game revenue, F2P revenue.
I understand that it would be hard to untangle exact numbers, but to not even *mention* Apple is bizarre. Hello! Digital distribution aside (which the comments have tackled), a lot of the money that would have been spent on consoles is going to iPhones, iPads, and iPod Touches, which also offer games (whether they're good or not is a whole other discussion).
All the current generation of consoles are 7+ years old, the mobile devices are coming out with a new version every 6 months. Why is the casual gamer going to pay out $60 for a core game when they are just as happy with a 99 cent angry birds.
The console boys better start putting out new hardware every 3 years not every 7.
I'm not as happy with angry birds as skyrim, but I'd be about as happy with angry birds as warrioware. I spent many times more money on Skyrim than Gamedev Story, but to date I have many more hours in Gamedev Story than Skyrim.
Do Amazon sales count toward retail, or is it only physical purchases at brick and mortar stores? I've heard some people talk about Amazon cutting into retail, even though they sell physical boxed games. I personally have purchased 95% of my physical boxed gaming products from Amazon over the last five years and every PC purchases I've made has been on Steam. Sad to think that none of my economic input is being calculated in these sales numbers.
DUH DUH DUH! I've been saying this for YEARS! That $60 price tag in a failing global economy is poison. Retail isn't adapting, it's dying. The game industry is adapting and it'll leave this relic called outdated thinking behind.
Wait till the Wii U year one game sales come in. They won't be good. Why? $60 is poison. The sooner you learn that the sooner you can see real sales.
I agree. A 60 dollar blanket pricing strategy does not work anymore. Different games bring different experiences. Take Skyrim for example, the game is huge and gives users 30-100 hours of gaming experience depending on how much they want out of it. I would argue that this game is definitely worth 60 bucks, as is GTA and COD to the people who like that type of experience. But what about games that take less than 10 hours to run through the core experience? If you buy enough of these games you start to see that they do not compare in value to the big releases. Sure the developers of these titles try to add things to increase value like hidden items, online MP, and DLC, but many people do not care about that and put the game down for good once they have finished it to their level of satisfaction.
The industry needs to recognize that different games offer different value to customers and need to start marketing them as such. Shorter core game should = lower price.
But what IF publishers start to publish digital sales figures and we can see in 12 months, that these figures aren't rising, but stagnating or even falling? Then the industry would have absolutely no excuse left to explain the market collapse.
Maybe the digital figures weren't rosy 12 months ago and haven't grown much till today, this could be an explanation, why publishers shy away from releasing figures.
It seems everybody thinks publishers are dumb by not releasing these numbers and by willfully letting the industry look worse then it actually is, maybe they aren't dumb, but simply have nothing positive to show.
I personally see this continuing until one of two things occur: 1) The industry starts making compelling games that are accessible by people other than the core demographic, or 2) the core demographic has better employment numbers.
I haven't bought a game in a physical store since 2007-2008 but I buy lots of games. Games can be retail and digital, I suspect retail will not be the massive growth channel it always was and will play secondary to digital sales in the future (even on consoles in their stores). Digital sales have to be growing, why wouldn't you show that as 'retail', they should call this list the 'brick + mortar or physical retail'. Also we are at the end of a generation of consoles, consoles are changing but towards the end of a cycle sales are never good.
Then there is the cost of making these games for little return and other attacking channels like mobile games. Disney recently has put less emphasis on console and performed better. Maybe retail and consoles as they are are just an outdated model.
The most common type of traditional videogame hit was a) single player, b) challenging. What I mean is that players felt an accomplishment when the 'beat' a game. And because it was single player, they were willing to buy the next new experience. The tension and challenge, which is what great games excel at, is what hooked people.
The only hits we get today, and they are few and far between, are based on multiplayer, COD and WoW being the two big ones. Why? they still offer players challenge and tension and excitement. The problem with multiplayer games is that a person only really needs one per year. Further there is an increasing number of well crafted f2p games.
Single player development today requires eliminating challenge and frustration. In essence, games are built so everyone can win because devs are under a misapprehension that the easier they make their games, the more people will play them.
The single player games people love and are passionate about, for the most part, are those that give people experiences they cannot get elsewhere. And those experiences involve feelings of tension, excitement, and yes sometimes frustration. However, because of the imperative today that requires eliminating frustration, excitement and tension are also thrown out. Game developers try to trick the player into feeling them through grand set piecies and messianic stories, but those feelings cannot be aroused through storytelling. So, to a large extent, single player aaa games have become really bad movies.
I believe the industry also tries too hard to get people excited about games that delver nothing but empty stories and accessible gameplay. The more the hype machine is ramped up and the player is left with empty experiences, the harder it is to get gamers excited about spending $60 on the next big thing.
I think the industry will stabilize though. It is easy enough to trick the under 18 demo, cause we get a new crop of them every year. I just wish they had more cash.
I don't think that's the case. From 2006-2008 the industry exploded, but it wasn't because of challenging single player games.
http://www.1up.com/news/madden-nfl-proves-selling-game
http://www.1up.com/news/npd-fallout-selling-games-2007
http://www.1up.com/news/wii-play-selling-game-2008
The only one that really stands out is GTA by your criteria.
the thing is, those who started playing games post 2006 that helped create the boom, didnt become gamers. And by that I mean they did not become part of the core customer base. Why? I believe that the experiences they received while playing the typical modern game were not compelling enough for them to want to spend the time and money on new product. Hence the contraction.
& I believe that by making games accessible and eliminating challenge, the industry fails in attracting the passionate consumer.
One of the new games coming out is Hitman Absolution with magic xray vision & linear cut scene driven story. I'm willing to bet that that game will attract zero passionate fans. And those that do play it, will quickly forget about it. Compare that to the fanbase of HM: Blood Money.
I disagreee completely.
It's possible that a large number of gamers are jumping on the Steam bandwagon, since it means not having to hunt through stores, deal with pushy clerks, and such. Even Blizzard offered Digital Downloads for all of their big releases this year.
2. Pretty sure I watched about 7 of the same console game trailers for different games this summer (from the major publishers).. each one swearing profusely and demonstrating amazing ways to kill, stab or shoot something. Given the gutter-level entertainment they're selling (Far Cry 3, Bioshock 3, Saints Row 12, Tomb Raider 8000 etc.) is it really that much of a surprise that the grown ups aren't going out of their way to buy all that crap any more?
3. Are we going to use this as a lame excuse to increase DRM next year? I'm actually impressed we had an article about flagging sales that didn't even mention piracy once!! ;)
With that said, used games was the new scapegoat just a little while ago. But that's also stupid, since a company like Gamestop makes most of their money from used game and their stocks are falling and sales slowing. So used games aren't taking a bite out of new.
I agree with this to an extent. I personally don't mind the gutter-level entertainment so much..but there is such an abundance of it, that none of it is really special anymore. It used to be sparse, and special when a "violent" game came out...it drew attention. Now it is the norm and the special games that don't include the violence but include great gameplay and mechanics are the better sellers.
But even the games that you mention--such as Tomb Raider--as much as there was shooting and action in Tomb Raider previously..it was never really violent. They have taken this new one and made it extremely dark and violent, rather than sticking to what the game was known for was exploration, and puzzles. The violence was a result of areas explored, rather than the draw of the game.
^This is how I see a lot of reboots and new franchises as you have mentioned. The new techniques/mechanics are based on more amazing ways to kill rather than amazing ways to solve puzzles/platform/explore.
I never thought to ask before, but your software numbers include used sales, correct? Simply ALL software reported at retail?
That said, the 'core' demo doesn't strike me as underbuying, so why the drop? Have the inroads from wii and kinect with more casual gamers fallen down a bit?
I don't buy that hardcore is 'dying but does gaming allow for a cottage industry that caters towards hard core?
Sure, because Core games are performing extraordinary good right now
Madden had record sales, but EA also reported high losses for the time, the game was on the market and Halo 4 war released last week, not nearly long enough to say anything substantial about it's sales.
Hmmm, i can't help but noticing, that you don't seem to follow the thread very closely, otherwise you would have noticed, that I replied to several other people's posts, too. But that's fine for me, everybody sees only what he wants to see.
"Which means we are 2006, pre-Wii levels right now. Which means this level of sales might be what the core market can sustain, without an influx of casual and new gamers, such as the Wii brought in such droves."
And in 2006 there was no casual gaming market? Sing Star, Guitar Hero, Buzz didn't sold in the millions? And those people, playing casual games with their friends and families on the PS2 didn't went to the Wii after that?
Video games are a growth driven business, that's something you don't seem to understand, there is no going back to 2006, because the whole market is financed by rising revenues and profits. The whole idea of new more powerful hardware, the whole idea of better and bigger games on new hardware is only possible in a growing market, because growing costs are only possible when revenues and profits are also growing.
If that's your argument, it's a sad argument, because it means, that the console industry (the part of the games industry most affected by the retail decline) once achieved to attract new players (as I wrote earlier, players definitely needed in a growth driven business like video games), but lost these players (25% of all paying customers) over the course of a few years. If this would be the case, the situation would be dramatic for console manufacturers, because it would mean the console industry has reached it's maximum size, this would mean NO new hardware from Sony and MS and NO rising budgets for games. Within the current cost/profit structure, most companies don't achieve profits, so cost cuts were to be expected.
The main argument for this scenario is, that the casual gamers left the Wii business and went on to other platforms (mobile, social).
But the situation seems to be different, as it seems, the whole industry is loosing players:
(http://www.gamasutra.com/view/news/177176/Americas_gamer_populati on_is_shrinking
.php#.UKJR5Wf2R6Y)
I that's the case the sitation is much more grave, it means people are abandoning games at all.
It would be interesting to see that YoY result for social, digital sales including iOS games.
1) The recession is still hard on a lot of people, so they are cutting back on what they buy this Christmas.
2) The existing console market could be reaching user saturation point and new consoles were helping to drive extra software sales as people wanted new games for their shiny new consoles.
3) All the free to play games are together using up a lot of players time, without earning as much money *in total* as all retail sales of all games. So the free-to-plays are earning money, but not as much to make up for the looses at retail. (Free-to-play are also a race to zero to give more and more away to attract user numbers to their game and its also a race to flood the market with more free-to-play games and so diminishing returns as more games compete with free stuff).
4) Mobile gaming on phones are also using up a lot of gamers time and on Android they are almost all advert funded, so all of these also won't show up in retail figures.
5) We also don't have enough digital sales figures to make a clear estimate of how much digital sales are impacting retail.
6) Plus shops like Game closing in the UK haven't helped retail sales, as fewer retail outlets.
Its very likely some combination of these kind of factors. The question is what we do about it as an industry? Where will the growth come from?
That's a serious oversight imo. Consider that a game like League of Legends has 30 million monthly active users and is growing. I'm sure Riot would have a different view of the "declining" video game market.
http://ca.ign.com/articles/2012/10/15/riot-games-releases-awesome- league-of-lege
nds-infographic
Because there is no game to challenge my age group/ experience. In addition, there is no game to make up for my lack of games I use to like, such as Donkey Kong 64, banjo Kazooie, you know, the games I grew up with. I also grew up with the good games of Final Fantasy and the mana series. Seeing the direction Square took with those games has pretty much made my experience in continuing to play them gone. The same is for what happened with Kingdom Hearts 2. There was no 3, so nothing else for me to continue off of. I chose to not touch the spin offs.
I, and likely others of my generation, are hungry for the same-ole experiences we had when we were growing up, no matter the genre or gameplay. But because the industry caters so much to the curren generation, we're actually left out and only left to compromise for the experiences of today. Mario, Zelda, Final Fantasy, and a few others did not grow up with us. We grew up, but those game experiences either remained at child level or did something different. What the industry lacks is a scaling factor to keep adults entertained. CoD and games like that are easy to keep an adult's attention: it's simple and offers a burst of entertainment. But after that, you get nothing.
Then came something like Dark Souls and Yakuza 4. These games really captured my interests hard, which shows that I still crave video games, but ones more catered to my more mature mind. I don't want a click and play experience like Heavy Rain, but something...it's hard to say. I hope someone else understands where I am coming from.
We need more stuff like that, but it feels like all the money from triple A budgets can't afford to buy any creativity.
The all controlling publisher model, putting out nothing but the same game every year is terribly broken. To continue making video games with these kind of budgets new models of publishing, and new studio models are going to be needed. We've tried carrying over a similar business model for the past ten years even as game's budgets skyrocketed. The business just hasn't adapted.
But it can adapt! Hollywood makes as much and more money, on bigger budget projects every year. And they don't have people quitting in disgust, or tales of gross abuse, and rarely have producer barging in and screwing something up. Heck producers often save more projects than they ruin in Hollywood. If they can do it, so can video games, but a new model is desperately needed. One where untouchable producers can't bully around the people who are actually supposed to be the ones talented at making the games, and where talent isn't chewed up like a sponge to be spit out to different careers for the sake of short term stock prices.
Sure if you factor in casual games and mobile games you might not see as big decline, but that just tells us that for now the experiences offered by core games are just not attractive enough to most consumers.
The argument that we need new hardware is also interesting, if that indeed does increase sales a lot, what does this tell us? It tells us that the games industry is not dependent on the creative output of the game creators but works to some degree as a gadget industry. This is also something that is a bit worrisome since we can't expect to invent new gadgets all the time, we need to be able to create compelling experiences that is independent of technology to be truly sustainable long term. I can't see how the next generation consoles will offer greatly enhanced possibilities of creative output compared to the possibilities of the current generation. Therefore I think it could be foolish to believe that everything will change with the arrival of new consoles.
Honestly, since you CANNOT get an even remotely accurate picture of this industry through retail sales, why do you continue to focus your reporting on it? Why not try to analyse the publisher's revenues, for example, since everyone but Valve is public and you dont have their sales number anyway.
The industry has moved on, but Gamasutra is hanging fast to retail numbers like a newspaper publisher that refuses to acknowledge the internet's existence.
And, I believe if you read the last part of my column, you'll see that I'm encouraging more public disclosure of the ex-retail sales figures.
And, finally, I have written several times about what we know about ex-retail sales.
Ubisoft loss, Nintendo loss, EA loss, Square Enix loss, THQ loss, Take 2 loss, Sony loss, Microsoft (console business) loss, Activision profit. I think the picture is clear.
"The industry has moved on, but Gamasutra is hanging fast to retail numbers like a newspaper publisher that refuses to acknowledge the internet's existence. "
Tell me, when the industry found a way to digitally transmit console hardware directly to it's customers, until then, retail will be central part of the industry. Digital distribtution matters only on mobile and PC platforms, but the first isn't interesting, when it comes to traditional video games and the second isn't generating revenues interesting to anyone outside the MMORPG space.
And at least Ubisoft and EA in your list are currently profitable, so check your facts a bit please. Not to mention Apple. Dont know if you heard of the IPhone, its this new thing, they sells game for it.
"Digital distribtution matters only on mobile and PC platforms, but the first isn't interesting, when it comes to traditional video games and the second isn't generating revenues interesting to anyone outside the MMORPG space. "
If you think PC isnt generating interesting revenues outside of MMORPG, you are behind the news, sir. God just look at Steam.
"the first isn't interesting"
You're quick to forget the angry birds, cut the rope, sword and sorcery and the likes.
Angry birds alone made $67.6m profit in 2011. http://goo.gl/VTjjY
Apple is making huge profits on its appstore. You can't deny that there's a big part of the industry that "shifted" to mobile development.
"And at least Ubisoft and EA in your list are currently profitable, so check your facts a bit please"
What are you talking about?
http://www.mcvuk.com/news/read/ubisoft-reports-six-month-loss-of-4 1m-but-expecti
ng-big-q3/0105926
http://www.gamasutra.com/view/news/179502/Sports_games_carry_EA_th ough_Q2_though
_holiday_projections_miss_their_mark.php#.UKJT42f2R6Y
"If you think PC isnt generating interesting revenues outside of MMORPG, you are behind the news, sir. God just look at Steam. "
Mind to tell me, where you got information about the revenues generated by Steam? As far as I know, Valve isn't sharing them with anyone.
"You're quick to forget the angry birds, cut the rope, sword and sorcery and the likes. "
All the profits of these games combined don't make up the losses EA reported for the last 3 months, these games don't nearly make up the retail decline.
"Apple is making huge profits on its appstore. You can't deny that there's a big part of the industry that "shifted" to mobile development. "
Apple is making profits on the Appstore (huge is overexagerated, in june 2011, the profit was an estimated $292 million since launch of the store - http://articles.businessinsider.com/2011-07-11/tech/29964545_1_app-store- gene-mu
nster-apple), but not every app in the appstore is a game, so you have to substract all the profits from non gaming apps.
Those articles report losses during the dead, summer quarter, where money is spent making games that are sold in the fall/winter quarter. In a seasonal industry like this one you can't just look at one quarter, you have to look at the annual numbers.
"Those articles report losses during the dead, summer quarter, where money is spent making games that are sold in the fall/winter quarter."
The Ubisoft losses are 6 months losses and the EA losses include the period when they released their 2 best selling franchises Madden and Fifa. By the way, quote from the EA article on Gamasutra:
" the company disappointed analysts by projecting lower-than-expected revenues for the holiday season."
We could go on all day so Im gonna let it go with a big "anyway".
Matt, Gamasutra could use a new angle on its business reporting, thats all I think.
"First link is dead, so I dont know, but 4 months or 6 months, its still the dead summer time."
Link works fine, just remember that the gamasutra site adds spaces in the links. But what you call "the dead summer" time is the time, were the industry once was profitable and now isn't profitable any more, why should it be different in the holiday quarter? I don't remember, EA's or Ubisoft's last profitable fiscal year, do you?
See, profits can be offset by investment. Starting a new studio, acquisition, R&D all that cost money.
Ubisoft & EA have some solid business/franchises.
What are you trying to say, that it's ok for a company not to make profits and loose money year after year?
I guess you haven't looked at the financial reports of Ubisoft or EA during the last 3 years, otherwise you wouldn't try to explain the ongoing money bleeding of these companies by R&D, acquisitions or one time investments.
But this is ALL completely, entirely besides the point of the discussion. Mr. Matthews says in his report that retail sales are down, and implicate that the industry is in trouble because people arent spending as much money on gaming as they used to. Since we cannot get a good picture of total sales, including digital, micro and others, I suggested looking directly at the revenues of the businesses that form the industry - still an imperfect picture, I admit-. Now when trying to determine if people still spend as much money on gaming, what those businesses do with their revenues is completely besides the point.
" if people still spend as much money on gaming, what those businesses do with their revenues is completely besides the point. "
Wrong, for example, just take Tim Sweeeney's recent notes on possible next gen games on the Unreal Engine 4, he says:
"We are hoping costs at the start of the next generation to only be double the cost of the start of the previous generation."
This means, even if people would spend as much on games (which they clearly aren't doing, hardware sales are down, which is a clear indication for this), the rising costs would lead to an unhealthy market, unless a) people spend more money on games or b) more people spend money on games.
Apart from this, the number of publishers and studios that died during this generation clearly show, that you can't run a company on losses.
Looking at revenues of a company is only interesting, when you are looking at the profit/loss at the same time. What you call a "careful, patient explanation" was to tell me, "If a business sell its assets to stay afloat, it can be profitable, but its not making money". This is not true, if a company sells it's assets, it is part of their earnings report and if they sell assets higher then the losses their products or services are generating, this company is reporting a pofit, not a loss.
What I really liked, how you constantly ignored the fact, that EA and Ubisoft are reporting losses for several years now, which makes your whole argument about re-investment useless.
Besides, your whole argument about revenues has several flaws, the biggest is, Matt Matthews looks at the US market, but no company reports revenues for the US market alone.
Your argument through this comment and it's reply is essentially making a bunch of straw men in a circle. You started by saying major publishers all made losses during the summer (despite revenues being the clear point of the original commenter), then you changed to arguing about whether a seasonal industries worst quarter is representative of the entire year, then you changed to arguing that investment in RnD/Capital shouldn't be factored into a company's financial health, then you argue that development costs are more important than any other cost. If I were to guess you are about to say that revenue isn't an important indicator of company health and that profit is all that matters again.
Pick an argument for people to properly rebut and stick with it.
I am surprised, how anybody can still think I am talking about the summer, a weak quarter or something like that, I replied to Mathieu's original comment, that the article is a "doomsday narrative" and that we don't have an "accurate picture of this industry through retail sales", by saying, why I think the retail sales of 2012 (which are the subject of the article) are giving an accurate picture of the state of the industry.
I pictured these arguments with the recently posted earning reports from EA and Ubisoft. The Ubisoft numbers were for the first 2 quarters of 2012, not the last quarter, as you seem to think and the EA numbers were for the last quarter. But can you tell me what difference it would have made to take in consideration the last 12 months? The last 24 months? Neither Ubisoft nor EA were profitable in this period.
Which brings us to the argument you and Mathieu and Zirani are bringing up again and again, that you can't look at profits and losses alone, that you have to look at the whole picture, look at investments, R&D, etc.
I repeat myself, but EA and Ubisoft haven't made a profit in recent years, neither has Sony nor Microsoft (with it's console business) and lately Nintendo went into the red too. Talk about digital sales all the way you want, but it remains a fact, that the key players in this business are bleeding money for several years right now and it doesn't look, like their finances will rebound in the near future.
You and other people in this industry seem to have decided to ignore this, but the number of video game companies lying dead on the road is increasing by every mile this industry moves forward, right now it seems, that THQ will be the next to drop dead.
To me this is a sign of an extremely dangerous crisis, to you and Mathieu and Zirani it's a "doomsday narrative".
The console boys better start putting out new hardware every 3 years not every 7.
Jussayin.
Wait till the Wii U year one game sales come in. They won't be good. Why? $60 is poison. The sooner you learn that the sooner you can see real sales.
The industry needs to recognize that different games offer different value to customers and need to start marketing them as such. Shorter core game should = lower price.