video game industry. history some numbers... 65% of us households play 80k employees directly, 250k...
TRANSCRIPT
Video Game Industry
Some Numbers...
• 65% of US households play
• 80K employees directly, 250K in US
• 9 games per second
• Average player age is 35, 40% female, 60% male
• 778 titles released in 2009
• 2009=$19.6B in US ($10.5B H, $9.1B S)
• $18.5B in 2010; $76B by 2013
Compared to other Industries
• Recorded music= $17B global
• Movie ticket sales= $29.9 B global
• Book sales= $35.9 B in US
• Newspapers ad revenues= $37.85B in US
• Magazine ad revenues= $19.45B in US
• Cable Revenue= $89.9B in US
• Global video game market= $46.5B-$55B
Digital Games
• Console
• Handheld
• Computer
• Arcade
Arcade?
The Big 3
• Xbox:
– 24.3%, $58B (17% of Microsoft)
• Nintendo:
– 1889, 47.4%, $18.9B
• Playstation:
– 28.8%, $10.7B/$79 B
The Big Three Are???
• Horizontally Integrated???
• Vertically Integrated???
• Diversified???
• Synergism???
• Market IS???
Hardware
• Online Play
• More than just a game player
• Accessories/Peripheral market
• “Loss Leaders”...not Nintendo!
• Play exclusive/3rd party games
• Planned obselesence, 5-10yrs
• New hardware sales=Software demands
• Royalty Structure....
Development
• $10M for one platform, $18-28 for multiple
• Get advance, 2-3 years, 20% avg. of sales profits
• First Party: internal teams
• Second Party: publisher's concept/license/contract
• Third Party: develop and sell. Hired by publishers on contract basis. Advance/Royalty system.
• Publisher's and creative control/Franchising
• Consolidation to compete w/ Big 3 or Big 5
• Gamers As developers
Publishing
• Marketing/Promotion/Sales
• Main Investors in game/Retain IP
• Franchising/Branding... “Hit Driven”
• Product Placement or IGA...$1B, Demo???
• Licensing content
• Publishing license to console manufacturer ($5-8 per game manufactured)
• Distro= store, ship, and sales
Publishing
• Nintendo
• Activision Blizzard/ Vivendi Games $5B
• EA $4.2B
• Ubisoft $1.4B
• Take-Two Interactive $968M
• Sony #6, Microsoft #10, MTV Games #14, WB #16, Disney #17, LucasArts #20
Synergism
• Cross-industry licensing
• Super Mario
• Tomb Raider
• Harry Potter/LOR
• Star Wars/Indiana Jones Legos
• Reproduction?
• DJ Hero
Retail
• “Real Estate”
• Antagonism with Publishers/Distro
• Gamestop 21% of market, Wal-Mart, Best Buy, EB Games, Game Crazy
• $2.5B used market, most profit$
• Holiday season=50% of sales
• MDF (Marketing Development Funds)
$60 Game Cost Breakdown
• $15 to retail
• $7 to returns, “price protection” and MDF
• $4 to distro as shipping and COG
• $7 to platform royalty fee
• $27 to publisher, 10-70% paid to 3rd party developer against advance
• Every game sold $12 is lost to piracy or used games (Pub/Devel hate used games!!!)
• In-house/Vertical integration???
Intellectual Property
• Piracy: $3.5B on hard goods
– 2007, $945M Nintendo
• Royalty System
• Open Source Games/ Self Publishing
• Mergers and “Acquisitions”
• Licensing
• Essentially videogames are ALL IP!
Market
• -8% in 2009 in 3 largest markets
• “Family Entertainment” genre #1
• Console= 60%
• PC= 16%
• Mobile= 4%
• Portable= 11%
• Online Subscription= 8%
• “The ESA offers a range of services to interactive entertainment software publishers including a global anti-piracy program, business and consumer research, government relations and intellectual property protection efforts. The ESA also owns and operates the E3 Expo.”