TRANSITION? WHAT TRANSITION? - February 2001
| By now, we’ve all seen the
headline figures which prove that all the bleating and excuses from loss-making publishers
about 2000 being a(nother) "transition year" are a load of old tosh. Both unit
sales and sales by value actually rose in 2000 (by 15% and 2% respectively), making 2000
officially the games industry’s best and most lucrative year of all time. If your
company lost a fortune, it’s because it’s run by incompetent idiots, okay? But
of course, headlines don’t tell the whole story, so for the benefit of those of you
sane enough not to have waded through the entire annual figures yourselves, today
we’ll be taking a look through some of the more interesting and exciting highlights. The first thing is, as with all stats, it’s difficult to know quite what to believe. For example, according to Chart-Track’s Annual Software Report, a total of 324,594 PS2 games were sold in 2000. On the other hand, according to Chart-Track’s Annual Hardware Report, a very substantially different 493,447 (over 52% higher, in fact) is the PS2-software total for the same year. For the sake of consistency, then, we’ll stick with the Software Report for the duration of this feature, but bear in mind that if any of the numbers here conflict wildly with your own figures, then it’s almost certainly not my fault, so shut up. Now, on with the show.
FIGHTING WITH MYSELF Total full-price unit sales by format: 1. Playstation – 7 million 2. Game Boy Color – 1.67 million 3. Game Boy – 1.22 million 4. Dreamcast – 1.02 million 5. N64 – 975,000 6. PS2 – 324,594 WHAT DOES IT ALL MEAN? Well, firstly that it must be terribly galling for Sega to see the entire combined Dreamcast market being outsold by a single game on a ten-year-old black-and-white handheld (Pokemon accounting for around 99% of those GB sales). But also, these figures suggest that Nintendo must be very nervous about introducing the Game Boy Advance this summer, with the GBC seemingly at the height of its powers. Remember, the GBC figures don’t include any of the "normal" Pokemon titles - only the comparatively modest sales of Pokemon Pinball and Trading Card Game - so topping the DC, N64 and Pokemon-assisted mono GB is really a hell of an achievement. Throw in the fact that GBC games are far cheaper to develop than titles for "grown-up" consoles, and are remarkably discount-resistant into the bargain, and you begin to see why more and more developers are finding the little handheld an inviting proposition. With this in mind, it seems very risky to be putting out the follow-up so early in the GBC’s life and risking bringing it to a premature end. But then, given Nintendo’s history with handhelds, you’ll just have to assume that in this area at least, they know what they’re doing. Certainly, having come back from the brink of death, 2000 was their year, and 2001 looks very much like heading the same way.
POKEMON INC. Total full-price Nintendo software sales: 2,564,559 Number of those sales which were Pokemon games: 1,621,680 (63.2%) WHAT DOES IT ALL MEAN? And staying with Nintendo… People used to accuse Eidos of being a one-trick pony with the Tomb Raider series, but the UK firm never saw a single franchise dominate its entire business to anything like this extent, and it’s unlikely that anyone else ever has either. (Though THQ made a good stab at it in 2000, deriving around 90% of all their sales from WWF and Rugrats games.) It’s no exaggeration to say that without the little pocket monsters, Nintendo would have ended 2000 in at least as much trouble as Sega, if not more – indeed, it’s very hard to believe that the Gamecube would still be on the release schedules at all if not for the colossal coffer-swelling capers of Pikachu and his Pikachums. Pokemon has already outlasted most kiddie crazes by a considerable distance, and as yet there’s no sign of it fading away. This may even be why we’re seeing such uncharacteristic haste from the Big N to meet release deadlines for its two new bits of hardware – should the Pokebubble burst before the new machines make it to market, Nintendo could find itself more exposed than Jo Guest on a Loaded photoshoot at the top of Ben Nevis.
CAPTAIN, I CANNAE BUDGET Console full-price sales by value (£): 1999: 311,595,713 2000: 359,647,349 Change: Up 15.4% Console budget sales by value (£): 1999: 103,856,800 2000: 82,189,039 Change: Down 26.4% WHAT DOES IT ALL MEAN? This is perhaps the most surprising anomaly thrown up by the 2000 statistics. You’d expect, what with it being a "transitional year" and all that, that even if the market managed to show growth overall, it’d be due to an increase in the budget sector compensating for lower full-price sales, especially in the Playstation market (since the PC is supposedly immune to the cyclical nature of the console business). And yet, the 2000 figures show a significant fall in PS budget sales, accompanied by a substantial rise in full-price units. The implications of this are twofold – firstly, that, as some of us have been saying since about 1992, lower software prices really do result in significant increases in both unit sales AND income, and secondly, that the software industry, in its indecent haste to abandon the PS1 for its much-hyped offspring, may have made one of the biggest mistakes in its history. Demand for new full-price PS1 titles is higher than ever, yet the triple-A release schedules for 2000 were thin indeed, and those for 2001 are positively anorexic. Yet publishers insist on spending much higher sums developing games for a market a tiny fraction of the size. What are they, stupid or something?
ALL YOUR PLACE ARE BELONG TO US An oft-overlooked section of the Annual Software Report is the Market Profile By Region chapter. Where else would you find out, for example, that Londoners accounted for a whopping 36% of all Neo Geo Pocket Colour software sold in 2000, and a stunning 69% of all Apple Mac CD games? Or that the country’s biggest Sega Saturn fans live in the Southern England region (accounting for a full 24.7% of the Saturn software business, the only category in which London doesn’t take the biggest share)? Bizarrely, Easterners’ very favourite console format is "Others", with 28.7% of the total market for the category - but head just a few short miles up to the North-East region and you’ll flog just 1.5% of the total number of these elusive and mysterious items. The inexpensive Gameboy is still Central Scotland’s favourite machine of all, and Ulster Says "No" to the Playstation, which sells a smaller proportion there than any of the other main platforms, but most impressively of all, those hardy souls in the Grampians appear to have constructed their very own format – in the Home Computer full-price category, twice as many of the dour Northern stoics plumped for "Others" as for any of PC-CD, PC floppy, DVD or Apple Mac software. Clearly the Atari ST is still big in Aberdeen, at least.
80/20 VISION Total full-price sales on all formats (units): 19,607,513 Sales of the top 10 full-price games (units): 4,199,018 * Total full-price console all-formats sales (units): 12,348,243 Sales of the top 50 full-price console games (units): 8,636,805 * Including Pokemon Red, Blue and Yellow as one, since they are. We should probably do the same with WWF Smackdown 1 and 2, but haven’t. WHAT DOES IT ALL MEAN? It’s long been said for all leisure industries that 80% of all revenue will be brought in by only the best-selling 20% of releases. However, with the games industry not being a true mass-market business, our situation is very much more unbalanced than that. According to Chart-Track’s quarterly reports, fractionally under 3,000 new titles were released in 2000. (While some of those were budget games, the numbers are balanced up by the large number of games released before 2000 which were still selling in that year - most notably, of course, the first two Pokemon titles.) What we see, then, is a whopping 21.4% of all game sales being accounted for by a microscopic 0.33% of releases. Stepping up the sample size, in the full-price console charts a stunning 70% of sales are accounted for by just the top 3.3% of titles, and in the all-formats top 100 it’s around 63% of revenue coming from 3.3% of onsale titles. (Remember, the figures are actually even worse than this, on account of all the games that don’t even manage to make Chart-Track’s final listings – see next paragraph - but do contribute to total sales.) For further illustration of the industry’s imbalance, if you stick to those full-price releases which actually make the published Chart-Track chart listings (restricted to the top 100 best sellers for Dreamcast and N64, 300 for PS etc), there are 2,300 individual full-price titles listed in the Annual Software Report. Dividing the total full-price sales between them gives you an "average" sale of 8,525 copies. The total number of games selling more than that "average" figure – and 8,525 is hardly a demanding target - is just 394 (or 17%), leaving almost 2,000 of last year’s listed full-price games fighting over the meagre pickings you get from shifting fewer than 8,525 units. Every year we see that lower prices mean a wider spread of revenue and a healthier, less volatile business, and every year we do precisely fuck-all about it. Hey ho.
LAST THOUGHT Well, we’re all pretty tired after that long trawl through endless, dizzying statistics expressed down to two decimal points. So just for a bit of fun, let’s think about something in much less precise terms. Let’s assume for a moment that the average game-development budget is £1 million. Let’s assume, generously, that a publisher’s clear profit on every unit sold, after VAT, retail discount, marketing, overheads, huge management bonuses etc is, ooh, £4. And let’s assume, also generously, that total worldwide sales of your game will be six times that of the UK alone. Where would all that assumption lead us? Well, it leads to this sobering fact: currently, with development costs about to skyrocket, you need to sell 41,667 copies of a full-price game in the UK just to break even. And how many games, out of 3,000 releases, in the industry’s most successful and lucrative year of all time, managed this feat in the space year 2000? Fewer than 90. Which gives your next game - assuming you keep those dev costs down, and don’t miss the release date, and picked the right format to publish on - precisely a 97% chance of losing you money. Pleasant dreams. |
|
|
| SHARE AND SHARE UNALIKE Market share (all software) by label (units): 1. Nintendo – 8.4% 2. Eidos – 7.1% 3. Platinum – 7% 4. EA Sports – 4.1% 5. THQ – 4.1% 6. Sony – 3.5% WHAT DOES IT ALL MEAN? If any more evidence was needed of the top-heavy nature of the games market, it’s provided by this chart. Every one of the top five non-budget publishers are those relying heavily, if not exclusively, on a single franchise for by far the largest part of their income. Whether it’s Pokemon, WWTBAM, FIFA, WWF or GT, this chart shows that finding that one monster hit is what makes the difference between success and failure in today’s software industry. And if you doubt these firms’ reliance on single bandwagons, note that between them, the five companies can only account for five other titles in the all-formats top 30 – all of which, as it happens, also come from long-established and tiring franchises themselves. (Incidentally, it’s more alarming still to note that of the five monster franchises, only two were actually originated here in the games business, the other three all being licensed exploitations of someone else’s property, with all the financial implications that carries.) Should the gaming public finally grow weary of endless sequels of the same handful of games (which it’s certainly showing signs of doing in the case of FIFA, F1 and Tomb Raider – TR5 was outsold in 2000 by BOTH of its immediate predecessors - and it’s difficult to see new Millionaire and Gran Turismo games repeating the success of the earlier games), we’ll REALLY be in trouble. |
||
|
||
| NOW I’VE GOT YOU IN MY SIGHTS An interesting little quirk pops up in the All-Formats Top 100. Side by side at No.23 and No.24 we find Tomorrow Never Dies and Perfect Dark, the two "alternative" unofficial follow-ups to the classic Goldeneye (still, incidentally, at No.13 in 2000’s N64 chart, more than four years after release). EA’s astonishingly bad PS Bond game, now a £10 cheapie, does battle with Rare’s glorious non-Bond interpretation of "Goldeneye 2", and tragically evil triumphs, by just 594 sales. (Though the margin is really much higher, since the N64 title’s figures, bizarrely, also include a contribution of 29,000 from the Game Boy Color version.) But since the N64 game is five times as expensive, it mounts a heroic last-minute escape, skies down the revenue mountainside and shoots the grotesque EA villain right between the eyes with a crossbow, pausing only to quip "You must be Yesterday, then". Yay! |
||
|
