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Gaming Economics 101

by on March 29, 2013
 

Lara-Croft-Attack-the-Mac-App-Store-with-Tomb-Raider-II1

Innovation can only take you so far. It’s why reboots and remakes are created, to further breath life into a franchise that’s in need of gaining attention of the newer generation, and honestly if it’s done well enough-like Tomb Raider was-it’s absolutely acceptable. But even innovation can become a crutch. There’s a problem the current generation of gamers face and that’s this: If games stay the same as their predecessors, they get attacked for being “the same thing we’ve seen over and over again” and yet if a game tries to change things up they get attacked for “ruining an otherwise good series” or “trying to be too much like (insert similar title here)”. Why am I bringing this up? I’ll come back to it.

First, I’d like to discuss how Tomb Raider sold 3.4 million units and was STILL deemed a financial failure. Explain to me how that’s possible. I can tell you a few reasons. Games have WAY too much money poured into them these days, sure, but even worse than that, the bean counters at these companies are so obsessed with dollar signs that they fail to understand simple economics, which is ironic given their profession. A few years ago, if a game sold 1 million units it was a thankful thing, but now 3.4 million in under a month and it’s deemed a failure? That’s just unacceptable logic. I’m sorry, but you’re wrong. Tomb Raider was extremely well received, and rightfully so as it was an INCREDIBLE game, and sold that many units and you’re STILL going to be-for lack of a better word-STUPID enough to call that a failure? Here’s why it doesn’t make sense. Because these people, the ones who run the financials at these companies, are comparing their units sold to that of movie tickets and how much a movie makes in an opening weekend. That’s not right. You shouldn’t do that purely because it makes for wacky, unintelligent conclusions. Not only has the cost of living raised so dramatically, but compare the price of a game to the price of a movie ticket. Also compare the fact that except R rated movies-as most theaters will let you into PG13 even without a parent-everyone can go see a movie but to buy an M rated game, they have to have their parents there. There’s an INCREDIBLE disconnect in these peoples arguments over what “success” is.

Tomb-Raider

Games cost 65 dollars a disc, and that’s without all the extra stuff now. Season passes, or strategy guides or DLC or in some cases not only do you have to buy the expansion pack for WoW but PAY MONTHLY to use it, as you do with Xbox Live, games cost a LOT of money, and in this economy with the cost of living being what it is, 65 dollars is a hefty price to pay when you compare it to the 7.95 or so that a movie ticket costs. By this logic, it’s understandable why movies make so much money in their opening weekends and why games are lucky to break 1 million sales by the end of the 1st month. Comparing your game sales to that of a movies opening weekend is just plain idiotic. People are more inclined to go see movies than than they are to pay for games, purely because of the cost difference. It’s a big reason why so many are against the idea of not letting used games be available for the next gen systems of the Xbox, because you’re losing an ENTIRE group of your core audience. A lot of people just can’t afford 65 dollars to be dropped every few months on a single disc, I’m sorry, they CAN’T. You take away the one thing they have-used games-and you’ve lost a LOT of players. So hopefully Microsoft realizes this and those “no used games” rumors are just that; rumors.

So, why did I bring up all this stuff about money? Because as I said at the start of this article, games have too much money poured into the PROMOTION of them, more than the game themselves. That’s wrong too. Not only are you failing to realize that by marketing a product only a few select handfuls can pay full price for, you’re already overshooting your idea of what success is. Tomb Raiders sales are NOT a failure. Therefore, the only solution to this problem is to create and market new IP’s. But because companies today that are well established, say Bioware or EA or Capcom, already have these million dollar franchises, they know the next installment will sell well as it is, so a new IP is considered a bit of a gamble as they don’t know if they will make their money back. And according to their wacky mathematics with this Tomb Raider sales thing, they’re “right”. But they’re not. The marketing dollars spent on games that are already well established could be spent on creating and marketing new IPs to get of the ground. You already know the next installment of an already super popular franchise will sell well. How?

Call of Duty: Black Ops

Because it’s the NEXT INSTALLMENT OF AN ALREADY SUPER POPULAR FRANCHISE.

Clearly this thing has sold well enough to BECOME a franchise, which makes the product ITSELF the marketing tool. There’s no reason to spend millions upon millions of dollars marketing a franchise you’re 8 freakin gams deep into when you KNOW it’s going to make a ton of money as it is. Call of Duty or Halo are PERFECT examples of this. Put that marketing money to try and make new IPs and maybe THEN you can turn those IPs into big selling franchises too. The more IPs you have, the better chance you have at making more money. It is simple economics. Sure, you can go the movie sequel frame of thinking and say, “Well people already liked this one, they’ll want more, let’s just make more!” And yes, it makes some sort of sense. OR you could make more money by creating 4 different franchises with the marketing money you would’ve spent on ONE game and then make sequels to each of THOSE franchises. It takes money to make money. Simple. Economics. 101.

Tomb Raider was NOT a failure, and if your companies financial department are seeing it that way, then you must’ve failed math. Like, really easy math. Like 3rd grade math. Go back to school.

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