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.”