Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
August 1, 2014
arrowPress Releases
August 1, 2014
PR Newswire
View All





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


Analyst: 'Serious Strategic Error' In Not Charging For Multiplayer
Analyst: 'Serious Strategic Error' In Not Charging For Multiplayer
December 6, 2010 | By Leigh Alexander

December 6, 2010 | By Leigh Alexander
Comments
    29 comments
More:



When the NPD releases its November sales results this week, look for software to grow for the second month in a row. But it's tough to view the first consecutive growth months all year as a universally positive sign, says Wedbush analyst Michael Pachter -- who says the industry has to stop giving multiplayer away for free if it wants stronger numbers and happier investors.

Look for an 8 percent rise in software sales to $1.52 billion during the month thanks to many strong releases, says Pachter; these include Call of Duty: Black Ops, Assassin's Creed: Brotherhood and Need for Speed: Hot Pursuit, and the month can also thank contributions from continuing performance from Fallout: New Vegas, Just Dance 2 and NBA 2K11.

Hardware is expected to decline, however. All units except for the Xbox 360, which Pachter estimates will sell 1.1 million units for a 31 percent increase, are likely to come in down. Pachter forecasts 975,000 Wii units sold, down 23 percent year over year and 650,000 PlayStation 3 units, down 8 percent year over year.

"Overall, we expect a 10 percent decrease in current generation hardware units, with console hardware unit sales down 3 percent and handheld hardware unit sales down 19 percent," says the analyst. "We expect strong demand for the Xbox 360 due to the successful debut this month for Kinect, and believe that Kinect console bundles sold especially well."

But as the fall-holiday season of 2009 saw a price cut for PS3, Sony's console faces a tough comparison, the analyst says, and sales for Move aren't likely to help offset the challenge much. As Nintendo relies heavily on Christmas sales for Wii, the console can be expected to see a December rebound, but weakness for its DS will struggle until the 3DS launches next year, suggests Pachter. Notably, the NPD Group classifies Kinect and Move bundle sales under "accessories", and as such they don't contribute to software sales.

"The reversal in October was a welcome surprise, following consistent sales declines for most of 2010. However, the reversal brings year-to-date software sales (including PC) to down 6.8 percent, so it is not clear to us, or to most investors, that the industry has returned to health," writes the analyst.

Publishers must start charging for multiplayer if they want to reinvigorate sales numbers, Pachter suggests. "We firmly believe that until the publishers address monetization of multiplayer, game sales will continue to be challenged by the publishersí altruistic decision to provide significantly more entertainment value per hour than ever in history," he says.

"In our view, monetization of multiplayer is one of the greatest opportunities for the publishers, and we think that it would be a serious strategic error to pass on this opportunity," he adds.


Related Jobs

Petroglyph Games
Petroglyph Games — Las Vegas, Nevada, United States
[07.31.14]

Unity Engineer
Retro Studios - Nintendo
Retro Studios - Nintendo — Austin, Texas, United States
[07.31.14]

Gameplay Engineer
Crystal Dynamics
Crystal Dynamics — Redwood City, California, United States
[07.31.14]

Producer
GREE International
GREE International — San Francisco, California, United States
[07.31.14]

Senior Software Engineer, Unity










Comments


Ujn Hunter
profile image
The analyst is obviously not taking into consideration the decrease in actual sales if multiplayer was charged for. I for one would never buy any of those games.

Matthew Mouras
profile image
+2

Ryan Zec
profile image
Wedbush should fire this "analyst". You start to charge just to be able to play online and unless you are a MMO, your total unit of sales to plummet (and I don't need to be an analyst to know that).



If publishers really want to start to monetization multi-player, then they need to start adding in useful micro-transactions. People are much more willing to spend a dollar or two here and there instead of much large amount up front or per month (and if done correctly you can probably make just as much is not more than you would by charge a higher monthly type fee).

A W
profile image
Following advice of an analyst concerning multiplayer games = Bad Idea.

Eric Geer
profile image
if they want to start charging for multiplayer--then they will have to start giving their games away for free.

Todd Boyd
profile image
THIS

Eric Geer
profile image
YES...The industry should never listen to Patcher's advice.

Luis Guimaraes
profile image
I have 4 controllers, 2 brothers, a lot of friends, an 720p wall projector and MW2... I can pretty much live outside Patcher's future.

Alan Rimkeit
profile image
I guess I will start playing less games with multiplayer then. I can have just as much fun by my self as I can with other people. Most of the games I play are single player anyways. Most games that have multiplayer suck in the single player gameplay department. All of the Modern Warfares and Call of Duties for example pretty much suck in the single player campaign. Without multiplayer they are pretty much nothing. Thus I would not buy them if multiplayer cost more cash on top of the cost of buying the game.



I am also not interested in multiplayer that is tacked on to games that do not need it. Dead Space 2 for example will have it supposedly. Why? I am not going to play it. I just do not care.

Scott Chapman
profile image
No soup for you!

Brent Fulgham
profile image
I don't see what's wrong with the current situation: you buy a basic game with multiplayer included, then sell additional expansion packs, themes, customizations, etc., as a continuing after-purchase revenue stream.

Alan Rimkeit
profile image
I agree. DLC is the way to go for extra cash flow. I have purchased lots of DLC on the PSN. Lots of it is really worth my time and money.

Dustin Chertoff
profile image
Can we stop giving Michael Pachter air time? Seriously... This guy's predictions are rarely correct. I have to seriously doubt that he has any real knowledge of the game industry.



$DLC is a pretty good way to get more money out of a game, especially its multiplayer. You don't want a subscription service for multiplayer, because that would imply a variety of additional services should be delivered. This would include free content, free official and dedicated servers, regular game fixes, and so on. Simply look at the MMO subscription business model to see the types of services subscribers will expect.



Now, a hybrid model such as that employed in DDO/LoTRO might work, but FPSs are a different genre. FPSs have always been free for players after the initial purchase (unless they pay for a dedicated servers). With the use of P2P for hosting MP games on consoles, the expectation of free multiplayer is very strong.



Stick to $DLC to monetize multiplayer after release, or risk alienating players. I mean, people shell out 20 bucks for new mounts in WoW/LoTRO/EQ, why the hell would you stop doing that?



Seriously, the games industry needs to ignore Pachter until he demonstrates actual knowledge of the games industry. This guy has no credibility.

Sebastian Cardoso
profile image
Bump

Nick Green
profile image
Most single-player games have a fairly limited amount of content that takes on average 20 to 100 hours to complete. Adding multiplayer can significantly boost that number for a relatively small cost compared to the cost of coding content.



Adding free multiplayer is a low cost way to make the game better value for money, so more people buy it. Any attempt to monetize multiplayer - especially if other games don't - will result in a decrease in sales.



Any attempt to monetize multiplayer could also bring the game into the same category as MMOs in players' minds. That potentially raises expectations. Higher expectations leads to either lower sales when they aren't met or higher development costs in an attempt to meet them.



This analyst's advice isn't logical but it is comforting. They're telling developers that it's ok for them to be greedy which is obviously a message they'd be happy to hear. There's even some ego stroking there for good measure calling them "altruistic" for providing multiplayer when - as I've outlined - multiplayer can significantly boosts sales and profiles for relatively little additional development cost. Mmmmmm....

Jamie Mann
profile image
It's not directly comparable, but Rock Band has shown that you get far more money out of physical bundles, then you do out of selling individual songs - people may never play most of the songs on the disc, but it gives them a feeling that they've gotten value for money. I can't help but suspect that the same will be true of a "split" sales model: of the "100%" who would have bought the combined proposition, 30% will buy the single-player component, 30% will buy the multi-player component, 20% will buy both and the final 20% will spend their money on something else...

Cody Scott
profile image
I wonder if this analyst realizes that after a product has been out for a while and just about everyone has one, fewer units will be sold, then its time to upgrade to get profits coming back in.

Tim Carter
profile image
What about advertising?



If you look at traditional broadcast TV, it gives stuff away for free - and pays for it through advertising.

Tom Baird
profile image
Advertising is used already in a number of games (Skate 3 Billboards as an example, as well as iPhone apps have a giant free with ads amount of games).



The in game ads are actually really neat, and something that both works for the advertiser and doesn't detract too much from gameplay. By in game ads I mean the ones that are placed within the game world in places where those ads would make sense (think Skate 3). I would not be happy with a product that I paid for that had me wait through ads between multiplayer rounds, although I think it's because it feels like I lost something relative to the status quo.



I'm generally for DLC over advertising time, but smart advertising and ad placement in the right places (that increases awareness but doesn't make you feel forced to wait through something you don't care about) is probably going to be more and more likely.



Who knows, maybe their will be MW3 round breaks to let you know they were brought to you by the cleaning power of Tide.

Tim Carter
profile image
I think they're finding that in-game advertising doesn't really work.



I'm just wondering more about the between-round type of thing. Much like commercials between segments of a TV show.

Ujn Hunter
profile image
Apparently EA already has unskippable Trailers in their latest game... this will also lead to people not buying their products. I know I won't. The problem is that developers/publishers want more and more and they aren't interested in one or the other... they'd want money from in game ads or between round ads PLUS more money from the customer.

George Petras
profile image
Activision has not pulled the trigger on multiplayer monetization yet. I think that is interesting considering the guy who runs Activision brags about having taken the fun out of making games (so he could make more money). I think the reason is that Activision is actually talking to their audience and know that you can't just start charging for something that was previously included in the sale price. I think for Activision to start monetizing multiplayer, they will have to figure out a value-add.

Alan Rimkeit
profile image
If multiplayer came with free DLC on a regular basis as well as other downloads then MAYBE they could charge for it.

Cody Scott
profile image
or they could just not charge at all but make really good map packs (as in more then just 3 or 4 mediocre maps).

Duong Nguyen
profile image
How would paid multiplayer workout within a market saturated with similar games? It's not like FPS gamers have a lack of alternative free content to play online. Unlike WOW which pretty much monopolizes the MMO space and can charge a hefty monthly fee, FPS games have way too much competition. Unless your Microsoft and have a captive market or is the only viable choice within your genre, charging for multiplayer is a tough sell.



However even with that said, there is nothing preventing you from monetizing the multiplayer experience.. You want that care package? Thats $1 dollar US!

david paradis
profile image
Hmmmmmm,



I wonder if this is the analyst kotick uses?

Victor Gont
profile image
Think I got on the wrong site here. I feel compelled to throw in a 'hai guise wats goin on' just to be in line with most of the comments.



Look, it's the man's job to, you know, analyze stuff, and that's the conclusion he reached. To be honest, I kind of agree with it. Think about it like this for a moment: the current gen's multiplayer behemoths are usually triple A titles still anchored in a bunch of old tropes. Let's look closer at Black Ops, because I'm guessing that's what people play right now (sorry, Halo fans); so a title in a well established game franchise, with a huge development AND marketing budget (don't know the numbers, don't really want to hear them). The game offers a heavily scripted single player campaign that lasts 5-6 hrs, a zombie mode, an Easter-egg and a few scenarios.



And the multiplayer that everyone is talking about, everyone is playing and I daresay is the reason the game sold that much. With such big initial sale numbers, the game's online component can be maintained for a long time, plus additional income can be generated in the form of DLC map packs (that to be honest are mandatory to buy if you still want to play with the guys in your friend-list). Look at this and honestly tell me it's not an awkward business model. I know people's love of DLC, the empowering sensation that you get thinking "hey, I could choose to skip that, but I'll buy it to support the game I love'. I'm not disputing that. What looks extremely weird to me is the whole package. Why do publishers still hold the single player aficionados and the competitive multiplayer jocks under the same roof? Why not give every one of them what he wants at the price point fit for each part.



Letís say I only got Medal of Honor to play the single player campaign (I, uhÖactually did that). Thatís fine, but I feel that paying a full price for the 12 hours of gameplay I got out of it is too expensive. Iíd much rather paid only 30$ for the part of the game I enjoyed.



I also got this Black Ops thingie to play the multi-player, I only talk about this module of the game with my friends, and completely ignored the rest; itís like a MMO of sorts for me. But I paid the initial 60$ mark, and will have to buy the DLC packs for 20$ each when they release. Iíd much rather pay a subscription, buy game time, or buy some premium items for the game, and feel I paid only for what I actually use and am interested in.



This is what jars me. Why are two actually different games packaged and sold as one? EA did two games with two developers for Medal of Honor then tried to patch them together and sell them a single, unified experience (it wasnít). SCEA got it right for MAG. Activision threw a lot of money at Treyarch to make a single player mode that everyone overlooked or only criticized in a review. This is just my two cents, feel free to ignore or troll; itís not like Iím an analyst or something.



Also, I would have developed this in a blog post, but I fear itíd only feed the flames.

Jose Resines
profile image
So, can we pay a fee to avoid getting Pachter in our news?. I would seriously consider that!.

steve roger
profile image
Publishers must start charging for multiplayer if they want to reinvigorate sales numbers, Pachter suggests. "We firmly believe that until the publishers address monetization of multiplayer, game sales will continue to be challenged by the publishersí altruistic decision to provide significantly more entertainment value per hour than ever in history," he says.



I just don't get what he is saying. Doesn't he realize that the cost of developing and maintain a game is paid for by the sales price. For example, Black Ops. The game features a single player portion and a multiplayer portion. When the customer pays $59.99 they know they are getting both parts.



Where in the world is this guy getting that the multiplayer part is free to the customer?


none
 
Comment: