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Does the Holiday Crush Make Sense?
By Kris Graft
November 11, 2008
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"If this were the cinema business, this would be like five massive movies coming out in the same week: Harry Potter, Batman, James Bond, Spider-Man--all coming out at the same time. You just can't get the core gamer back into the GameStops of the world that many times in one week.”
Remember earlier this year, when Super Smash Bros., Mario Kart Wii, Grand Theft Auto IV, Metal Gear Solid 4, Wii Fit, Burnout Paradise, Devil May Cry 4 and a slew of other commercially successful games hit shelves? It almost seemed as if publishers were wising up, spreading out top-tier releases and opting not to clog the holiday retail channels with a potent concentration of desirable titles.
Here in November 2008 you can now officially scratch any previous notion that publishers have changed their holiday-crushing ways. We apologize for any insinuation otherwise.
For another year, average gamers and gift buyers are left to choose one or two games out of a wall of expensive $60 titles during the months leading up to the holidays. The games they can't buy new on day one will have to wait until they're available for cheap on the evil used market, perhaps in January or February. Cannibalization of sales also occurs.
So why haven’t game companies changed their Q4 ways? Analysts have different theories.
Mike Hickey with Janco Partners speculated, "Old habits are hard to kick. You get set in a pattern like you're still in the toy business. Look at GTA IV. It proves you can have a wider window than the three months of the holiday season. But it takes courage to think outside the box and stand by yourself. … If you release during the holiday period and sales are bad, no one’s going to blame you; you can just say too many games were on the shelf at the same time."
Industry analyzing mainstay Michael Pachter notes how the number of potential consumers virtually doubles during the holidays. “…At Christmas there are two buyers: the user and the gift giver. The rest of the year, there is only one buyer.”
Now, we’re not ones to complain about an influx of great software, but holiday 2008 would appear to be even more ridiculous than the incredible holiday 2007 in terms of must-have games. Forget global economic collapse: it’s the amount of top-tier games that require a purchase that is really going to be hurting gamers’ bank accounts.
Fallout 3, LittleBigPlanet, Fable 2, Gears of War 2, Resistance 2, Mirror’s Edge, Valkyria Chronicles, Left 4 Dead, Dead Space, Far Cry 2, Wrath of the Lich King, Call of Duty: World at War, Guitar Hero, Rock Band and more are going to be vying for consumer dollars this holiday. Just with the games mentioned here, a consumer would have to spend around $1,000 to acquire them all, and even if he could afford such a software bounty, no one with a job or a social life would be able to finish all of these games before the ball drops and drunken renditions of Auld Lang Syne commence.
"If this were the cinema business, this would be like five massive movies coming out in the same week: Harry Potter, Batman, James Bond, Spider-Man--all coming out at the same time,” said Hickey.
“You just can't get the core gamer back into the GameStops of the world that many times in one week.”
Of course, a trip to the theater is only around $10 versus $60 for a console game. Bang-for-the-buck ratio be damned, $60 is still $60. Hickey added, "Some of these games are very high-priced, too. You throw Guitar Hero World Tour out there [$189 for the band kit], and you cannibalize a lot of other game sales.”
All of this talk about the holiday games crush and the credit crisis doesn’t mean that we won’t see big sales from Q4 titles. Bethesda’s smartly-marketed October release Fallout 3 has already shipped 4.7 million units worldwide, generating $300 million in sales, so that one seems to be well in the clear. Ubisoft’s Far Cry 2 has sold through 1 million units in less than three weeks. Others holiday releases are sure-fire money makers like Call of Duty: World at War and Gears of War 2.
But didn’t Grand Theft Auto IV with its $500 million week-one sales in April prove that a game (particularly one aimed at enthusiasts) can launch in one of the other nine months of the calendar and still be a success? Surely, GTA’s clout is nearly unmatched amongst gamers, but you’d think that enthusiasts' wallets are equally receptive to Call of Duty, Gears of War or Resistance no matter what month they’re released.
Pachter still thinks, however, that GTA IV could have sold more if it made its original Q4 release date in 2007. “The Q4 strategy probably helps big games and hurts others. There is no question that GTA would have sold more at holiday than with an April release, for example. This holiday, there are too many other choices, so I expect GTA sales to be lower than a normal holiday, as it won't be on many gift lists.”
In all, analysts agree on the most obvious reason for publishers’ sometimes flawed obsession with Q4: the holiday season is when people are shopping for gifts.
But the current economic condition has certainly complicated that preconception. Lazard Capital Markets’ Colin Sebastian said, “With hindsight I am sure that publishers are wishing they released more games earlier in the year, before the credit crisis, but the reality of this business and many other entertainment industries is that many more consumers are at the stores during the holiday season.”
Added Pachter, “It seems to me that all games are planned for the holiday except sports and movie games, and the ones that come out at other times are merely delayed from holiday because they aren't finished.
“It is probably more a function of Christmas being a ‘drop dead’ release date. I agree that it would make more sense to spread releases out.”
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Sorry Pachter and Thom, you're completely off the mark.
I bought three games last Christmas season. Rock Band, Mass Effect, and Orange Box. I didn't buy Assassin'c Creed, Guitar Hero 3, Ratchet & Clank, Super Mario Galaxy, or UT3.
I *DID* buy GTA4 in the spring.
This year, I sold my old RB stuff and bought RB2. Other than that, I bought Fallout 3 and Fable 2. I don't think I'll be buying Brother In Arm, Deadspace, Left4Dead, Lego Batman, Saints Row 2, Far Cry, Gears of War 2, Scene It 2, or Rise of the Argonauts.
Oh... and I'll be buying Animal Crossing. As a gift.
The point being, I don't have the time and money to buy all the games that publishers jam into a 2 or 3 month period. If there was one great game coming out every 6 weeks or so I'd be more likely to purchase more games. The "double sales" theory simply doesn't hold water. This year's glut started out in late August with Mercenaries 2 and there was pretty much one or two games every week from then til mid-December. No way I'll be buying a lot of those.
I have an ongoing joke w/ my friends about how *NO GOOD GAMES* should come out in 2009 so that we can catch up on 2007 and 2008.
The only people that the "Christmas sales" theory holds up with are the type of gift-givers who don't know all that much about what they're buying for people. Stereotypical translation: Moms.
And game developers/publishers honestly think we should care when they whine about the used game market (you know, the market that books, music, and movies have had for decades and you don't hear them whining about it).
If you don't want your great games to fill the bargain bin and the "Used Games" shelves... try releasing them in March every once in a while. See GTA and Oblivion as examples of how to do it right. Both of those games I snatched up immediately and spent a ton of time on because there wasn't really anything else coming out any time near the release date of those two games.
It's really not that complicated folks.
Always makes me laugh. But there is no other time of the year where parents are mug enough to get there little darlings a the latest kit or games and even if they don't there will be an abundance of Christmas cash from grandparents. Games Industry marketers aren't stupid, they know they have a captive audience, and so there will always be a Q4 rush.
Q4 is all about those franchises anyway. FIFA, Madden, NHL, COD, etc you guys know the list it's been happen every year since Sega and Nintendo were battle over various Christmas for supremacy. Whatever movies are popular this quarter will get a Christmas game - this year it's the new James bond, the list is long and distinguished... They'll be some equally cool stuff coming out in the New Year, but plenty to be getting on with in the meantime.
I agree that the second hand market is just a strong after Christmas with all the same kiddies already bored with the new games chop them in for the games that they asked for but didn't get.
As a mature gamer, I'll stay well away from the shops for the next 8weeks or so. I've already got the console titles I am waiting for this year; they all got released this week (Little Big Planet, Guitar Hero World Tour, Mirror's Edge and Fallout 3).
Christmas is for spending time with your family and friends, not with Mario or Sonic (circa 1992 :P), why wouldn't you want to play computer games all day and miss out on all that festive fun and the queens speech :P.
I challenge any family to go eat a huge turkey dinner with all the trimmings and then go play Wii sports all afternoon; we gave it our best shot last year, but to ill effect. Wii should have come with a public health warning, a little like eating and swimming..
The abundance of titles are but one side of the equation, the other side being the relentless/mercenary work that goes into them roughly from July to November just to get them under the Cursed Christmas Tree... The Holiday Crunch really is unhealthy and insane for the videogame industry employees and the pockets of the consumers!!! Oompa-Loompas of the World, unite!!!
Pachter's comments about "2 buyers" is right on the money. I work for an electronics retailer and I can say from first hand experience that releasing your game in Q4 is guaranteed to make a publisher more money than at any other time of the year.
Let's say a publisher puts out a big release in March; they have just lost all the extra sales they would have had from parents and relatives buying games as gifts for their family members, and in most cases when it's someone in their 30's to 50's buying the game, they are purchasing a title that the receiver either couldn't afford on his own or purchase because of his age. Not to mention, by the time Christmas rolls around that game that came out in March is not the hot item anymore, and there are other titles people will be more interested in. On top of that, there are the residual sales that filter in throughout January from all the people who received gift cards to major retailers, which they will probably have already spent by March or April.
It may put a strain on people's wallets, but every game that comes out in Q4 sells more than it otherwise would have no matter how crowded the market.
If they released earlier in the year then knocked 10 bux off the price for christmas it would be win-win.
This is especially relevant for gift givers because they are (relatively) uneducated and walk into a store and see a cheaper price and grab it.
it is bad news for me when so many great games come out in such a short space of time...i like to try and get the most out of every game by getting as much achievements as i can on the 360 and exploring every part of the map in an rpg clocking in over 140hrs even although finishing the main story only takes 30-40hrs otherwise i never feel like the game is quite finished..hell ive still got about four great titles(mass effect being one of them) from last year that "i'll get round to playing" if i didnt work full time this would be possible..but as it is i just cant keep up..in a strange sort of way im glad some of the big up and coming games turn out to be average and not as good as anticipated (ie infinite undiscovery ,too human) at least then i dont have to add them to my expanding list of AAA games "i'll get round to playing"
I was actually thinking about this the other day. I think its stupid to release all the best titles, at the same time. If they were to be released at different times, like say, COD5 in Q2 and Gears of war in Q4, then more people will buy those games because there is nothing else that can compete with them.
If you examine the drought that always occurs from March to August, it is primed for release city. Metal Gear Solid and Grand Theft Auto IV proved it in 2008 while Bioshock proved it in 2007. I hate the fact that great games all come out during the holiday. RPGs and games that require more play time should release in the "dry" months, keeping gamers busy.
It also removes this title from the crowded release window and often will elevate a game from A to AA or AAA. Bioshock and Dead Space are great games in their own right but recieved even more attention because these games hogged the spotlight. It's easy to be "The Best" one when you're "The Only" one.
I guarantee you that Resident Evil 5 (Fri. March 13), Star Ocean 4: The Last Hope (Tues. Mar. 3) and Ghostbusters (summer 2009) will all sell pretty well because the competition is pretty slim. The God of War franchise has recognized this by releasing in March each year. Again, if your game is good, it will sell. Why not let it shine by itself?
Sometimes aspects of the games industry continue to surprise me. As is pointed out in this article, games are no longer toys - they are a huge form of entertainment media. It doesn't make sense to saturate the market over the space of a couple of months. To take me as an example of an average gamer who buys something like a game every month/2 months on average, I didn't buy anything between GTA4 and Dead Space a couple of weeks back because there was nothing that appealed to me. There are now loads of titles that I am desperate to play but I don't have the time to invest in anything other than Fallout 3 until the NY. During the year any of Fable 2 / CoD / Gears (next on the list obviously) / Far Cry 2 / Pro Ev would have had my money. Maybe its just a really good year for my personal taste as a gamer.
It seems to me that this kind of approach will just make the industry more cutthroat resulting in developers taking fewer and fewer risks. Games cost more and are more time consuming to make and yet presumably only a certain number will shift as many units as they should this Xmas. I may be wrong, but I suspect that the games with an established IP (Gears, Fallout) will sell while those that don't won't.
Totally agree. I invested close to 200 hours into Obvlivion because there wasn't much else to play at the time. I picked up Fallout but am quickly realizing with the other AAA games I have that take maybe 8-15 hours to finish, it may be a while before I could put in the time and devotion into a title like Fallout. I can play 3-4 good games in the amount of time it'll take me to finish fallout. I guess it'll have to wait. What, 6-8 blockbuster games have come out in just the last couple months with a couple more still to come? This holiday is looking even better (and more crowded) than last year's strong holiday.
Just how many AUD$110 games do industry pundits think I will buy/receive this Christmas?
One has to agree with the theory that Q4 is the best time to release any entertainment product; parents are out shopping for gifts for their kids, mates are looking for fun things to buy each other, girlfriends go out armed with cash and the belief that an explosive video game is the best way into their darling's' hearts... not to mention the core gamers who will continue buying games for themselves throughout the holiday season.
In theory.
In practice their are lots of gamers out there who would have bought such big releases at any time of the year. I know that I'm missing out on numerous titles that I would have otherwise bought simply because it's Christmas and my finances are stretched. Fallout 3, for example - had it been released a couple of months earlier I'd have snapped it up, but it's too late now, my money is going towards socks and chocolates. While sales might not be as fast during a mid-year release, they'll build up admirably and more gamers would probably invest in more games as a result. Not least because they'll actually have time to play them all...