With US (and it's just US let's not forget that) console sales numbers (estimations) about ready to come in, I thought it might be fun to take a look at what the numbers might be this month. Will the Xbox 360 outsell the PS2 for the second time this year? (that would be the 3rd time ever!) How will Halo change things? Did the PSP slim release affect sales?
Here are Michael Patcher's numbers: (who is quite a sport)
Xbox 360 - 450,000
DS - 430,000
Wii - 425,000
PSP - 252,000
PS2 - 220,000
PS3 - 150,000
GBA - 65,000
And a couple of guiding principles:
1 - Sales are usually higher in September than August as Holiday releases begin to occur
2 - Pre-Halo 3 I predicted Xbox 360 numbers at 360k (so despite now knowing the Halo 3 sales numbers I should probably stick with the old prediction, though if I were to change it, 420k sounds about right)
My guesses (Red means my number is lower, green is higher, Black is =)
Xbox 360 - 360,000
DS - 441,000
Wii - 394,000
PSP - 225,000
PS2 - 232,000
PS3 - 150,000
GBA - 70,000
Stories to watch for:
1 - Does the 360 outsell the Wii. With Halo 3, the flagship 360 title out in September, if the 360 doesn't outsell the Wii it would paint an interesting picture.
2 - Does Metroid Prime 3 sell? It was released late in August to rave reviews and pretty 'meh' sales. Perhaps it was just poorly marketed, but it is a good enough title that the mainstream gamers should be picking it up. If it isn't selling, what does it mean to the lifetime of the Wii?
3 - How many of the top 10 games are PS2 games? In August 3 of the top 10 were PS2, 1 was PS2, 2 were Xbox 360 and 4 were Wii.
4 - Will EA solve the Wii 3rd party riddle? Boogie sales were tepid, Madden were disappointing and though the Wii version of Tiger Woods outsold all other versions in the UK, it was a mere afterthought in the US. Will MySims fare better? Will the long term sales of any of the other titles make up for their poor launches?
5 - What happened to handheld gaming? Though the hardware is outselling the consoles, the games, outside of Pokemon, aren't doing much in the charts. Will Zelda's October 1 release put handheld games back on the charts?
6 - Will Guitar Hero just keep on dominating?
7 - Will Heavenly Sword drive console sales?
Monday, October 15, 2007
Monday, October 1, 2007
The Casual Threat!
With the continued success of the Casual market on the PC and the Wii thoroughly dominating console sales, the casual movement, once thought to be a nice side business, is starting to feel like a Threat to many gamers. (with a capital 'T')
What is a threat? It is the expectation of future trouble.
When gamers first started playing casual games, their numbers were few. However, as the money and audience has increased, the number of developers has also increased, often inplace of core games. The core audience has carefully eyed the casual audience's growth and the Wii becoming popular with a bit more contempt of late.
As the success of the Wii has turned the core audience from a majority into a minority, it has become the new whipping boy of the old core gamer. You can see it often in the media with even developers like Dave Perry jumping on with somewhat illogical arguments to try and fight back against what they see as taking away from their favorite pass-time.
The mainstream attack on the Wii parallels a longer attack that has happened in the PC space. Especially among the Indie crowd, which was formerly the shareware crowd, which formerly was the main money driving source in the PC gaming space.
As casual has become the key downloadable games market, Indie developers have gone to great lengths to decry the market as simplistic and pointless. A general sense of 'dumbing' down consumers and making games that don't challenge and perhaps aren't even games has become the outlook on the casual games sector.
It's kind of like an avid outdoorsman, who hikes deep into the mountains to more fully appreciate nature's beauty. In his mind, those who stop at the side of a road and take in a vista from their car are really missing out. The highway and national park system are dumbing down the experience, keeping people from what's good, and bringing in people he can't relate with to nature areas once only enjoyed by the like-minded few.
What's important to remember is that there are lots of different consumers who want different things. ...and that's a good thing.
When you go to sell your product the goal is the most sales, which means you need more people looking at it. To that end, if you are both a gamer and a businessman there is a lot of good that can from letting go of your personal aprehensions and embracing the casual group to ensure that your product is seen by the largest number of people possible. After all, you never know when someone staring out of their car window at a beautiful vista will decide to get out and walk to the other side. However, if you let your personal game tastes keep you from places, like the casual portals, when a casual gamer starting looking for something more, it will be much more difficult for them to find you.
What is a threat? It is the expectation of future trouble.
When gamers first started playing casual games, their numbers were few. However, as the money and audience has increased, the number of developers has also increased, often inplace of core games. The core audience has carefully eyed the casual audience's growth and the Wii becoming popular with a bit more contempt of late.
As the success of the Wii has turned the core audience from a majority into a minority, it has become the new whipping boy of the old core gamer. You can see it often in the media with even developers like Dave Perry jumping on with somewhat illogical arguments to try and fight back against what they see as taking away from their favorite pass-time.
The mainstream attack on the Wii parallels a longer attack that has happened in the PC space. Especially among the Indie crowd, which was formerly the shareware crowd, which formerly was the main money driving source in the PC gaming space.
As casual has become the key downloadable games market, Indie developers have gone to great lengths to decry the market as simplistic and pointless. A general sense of 'dumbing' down consumers and making games that don't challenge and perhaps aren't even games has become the outlook on the casual games sector.
It's kind of like an avid outdoorsman, who hikes deep into the mountains to more fully appreciate nature's beauty. In his mind, those who stop at the side of a road and take in a vista from their car are really missing out. The highway and national park system are dumbing down the experience, keeping people from what's good, and bringing in people he can't relate with to nature areas once only enjoyed by the like-minded few.
What's important to remember is that there are lots of different consumers who want different things. ...and that's a good thing.
When you go to sell your product the goal is the most sales, which means you need more people looking at it. To that end, if you are both a gamer and a businessman there is a lot of good that can from letting go of your personal aprehensions and embracing the casual group to ensure that your product is seen by the largest number of people possible. After all, you never know when someone staring out of their car window at a beautiful vista will decide to get out and walk to the other side. However, if you let your personal game tastes keep you from places, like the casual portals, when a casual gamer starting looking for something more, it will be much more difficult for them to find you.
Tuesday, September 25, 2007
The Casual Division
There is a strange division currently in casual games, that continually mystifies me. Answer the following questions for yourself. [I added my 'answers' in ()]
What is EA's most valuable casual property?
(You could make an argument for Pogo, though it's probably the Sims)
Who are Pogo and the Sims targeted at?
(I'd say they have the same audience, casual gamers)
Can you buy the Sims on Pogo.com?
(no)
An ever lingering question in my head is 'Why Not?'
One of the most interesting things about the new casual games industry is the disconnect it has with the mainstream game industry. There are many games that were previously released at retail that I'm convinced would sell really well to the audience that the casual game portals have assembled. Games like the Sims and Roller Coaster Tycoon.
However, when you go to Pogo.com, there is no mention of the Sims. In fact EA has the Sims in its own separate division. The original Sims is not available even from EA as a downloadable product. Roller Coaster Tycoon fairs a little better. It is available through one portal: Real Arcade. However that is the only portal through which it is availble.
The division between two kinds of casual, those that are popular on the PC at retail and those that are popular on the game portals is one of the most curious things in the gaming business. A good rule of thumb is to always distribute your games everywhere you can. That will help you to maximize your revenue.
The division probably has something to do with the roots of casual games, which was a counter movement to retail. Still, with so many hot properties, from the old Humongous Entertainment games like Freddi Fish, to current popular TV shows like Dora, and even to those silly Big Game Hunter games, the time will come that the 'casual' games that have sold well in retail stores will join those that have sold well online. When that happens, I think you'll see another big expansion in the audience that the portals take in.
Why isn't it happening? Especially when some of the companies involved, like EA, simply need to get their right hand to talk to their left?
There is a large list of guesses why that is so. Some of it is the amount of difficulty that arises in getting something done in a HUGE company and some of it is the mainstream industry's perception of casual games. (mainstream still sees casual games as the place where formerly good execs are sent after they've outlived their usefulness)
As casual games continue to increase their profit, they are becoming less and less the red-headed step-child of the games industry, which should lead to some very interesting changes in the online portals (and big increases in their audience). It's going to happen as soon as publishers realize how much money they can make off of their old back catalogue. It's going to happen as they discover a new market for old games like SimCity 2000 and Theme Hospital. The only question is: when?
What is EA's most valuable casual property?
(You could make an argument for Pogo, though it's probably the Sims)
Who are Pogo and the Sims targeted at?
(I'd say they have the same audience, casual gamers)
Can you buy the Sims on Pogo.com?
(no)
An ever lingering question in my head is 'Why Not?'
One of the most interesting things about the new casual games industry is the disconnect it has with the mainstream game industry. There are many games that were previously released at retail that I'm convinced would sell really well to the audience that the casual game portals have assembled. Games like the Sims and Roller Coaster Tycoon.
However, when you go to Pogo.com, there is no mention of the Sims. In fact EA has the Sims in its own separate division. The original Sims is not available even from EA as a downloadable product. Roller Coaster Tycoon fairs a little better. It is available through one portal: Real Arcade. However that is the only portal through which it is availble.
The division between two kinds of casual, those that are popular on the PC at retail and those that are popular on the game portals is one of the most curious things in the gaming business. A good rule of thumb is to always distribute your games everywhere you can. That will help you to maximize your revenue.
The division probably has something to do with the roots of casual games, which was a counter movement to retail. Still, with so many hot properties, from the old Humongous Entertainment games like Freddi Fish, to current popular TV shows like Dora, and even to those silly Big Game Hunter games, the time will come that the 'casual' games that have sold well in retail stores will join those that have sold well online. When that happens, I think you'll see another big expansion in the audience that the portals take in.
Why isn't it happening? Especially when some of the companies involved, like EA, simply need to get their right hand to talk to their left?
There is a large list of guesses why that is so. Some of it is the amount of difficulty that arises in getting something done in a HUGE company and some of it is the mainstream industry's perception of casual games. (mainstream still sees casual games as the place where formerly good execs are sent after they've outlived their usefulness)
As casual games continue to increase their profit, they are becoming less and less the red-headed step-child of the games industry, which should lead to some very interesting changes in the online portals (and big increases in their audience). It's going to happen as soon as publishers realize how much money they can make off of their old back catalogue. It's going to happen as they discover a new market for old games like SimCity 2000 and Theme Hospital. The only question is: when?
Friday, September 21, 2007
How to achieve Casual Games Revenue Growth?
Gamasutra published an opinion piece today that talked around the same topic as the article yesterday, but with a different approach to making more money per user. This article focused on making more money per game with a nice slant to helping spread around more money to more developers.
The suggestions on possible areas for attack are:
1 - In-Game Ads
2 - Using social networks to directly connect with gamers
3 - Increasing the price of games
4 - Combining Approaches
I think 4 is always the winner, but am also a strong believer in doing something all the way or not at all. Combining approaches by partially doing each of the other options isn't likely to return the wanted results.
Some thoughts on each:
In-Game Ads
- This is certainly something that is becoming more popular as the early results reported back by Real and other companies shows that it can be quite a solid money maker. Reflexive is currently getting ready to launch one of our games on another portal in the ad-supported approach. We are excited to see the results.
A possible concern with in-game ads is changing the industry format. Instead of trying to convince the customer to purchase the game, games with in-game ads need to maximize advertiser dollars and please the advertiser. That shift to a different customer and approach is a little worrisome. Certainly there are some games, like Bejeweled that work well with breaks in the play in-between levels. For other games, like Virtual Villagers, the breaks may not be as natural and may feel forced. The focus on trying to get a customer to use an ad is also a a bit worrisome. To quote the article:
I worry that focusing on the advertiser as the customer, instead of the gamer as the customer could lead to a less enjoyable experience for the gamer. Certainly it is something that will need to be carefully watched and balanced as advertising becomes more prevalent in games. The current approach of making older games ad-based while keeping newer games ad-free I think is a good approach that maximizes revenue from both sides of the chain.
Social Networking/Helping Viral marketing along
In this article the social networking was tied back to a platform being sold by the author that helped to connect gamers and developers. The end-goal is to remove the middleman while maximizing sales. I think using communities to help sell games is definitely a good thing to do. Whenever you have someone who enjoys your game or business you should encourage them to be an evangelist. Your biggest fans can speak about you in persuasive ways that few others can and should be rewarded for their efforts to keep them going. It's certainly one of many methods that should be employed to increase the market-size for any business you do. It's worth stopping what you are doing right now and considering how you can easily help your fans talk about you. Can you give them a copy and paste signature for the forums they visit? Is there a widget they can plug into their CMS? Can they easily email friends about your product? (do they get something for having done so?)
Increasing the Price of Games
This is an interesting suggestion. From all the studies done, increasing prices does not seem to improve revenue. However, from your economics class you probably remember that there are different points on the sales and demand curve that produce different amounts of profit. Many of the subscription programs offered are set to maximize the access to markets who will pay varying amounts for a game. I don't know that raising the price is a good idea. However, I think offering a game at different prices is a great idea. Subscription programs are one way to do this, but it would also be interesting to offer Platinum versions of a game that have additional content. Unfortunately none of the portals are currently set-up to offer multiple versions of the same game, but with the practice succeeding on retail games it seems only a matter of time before something along the same lines is attempted in the casual sector.
Certainly some interesting thoughts and it is clear that many people are wrapping their head around the same problem, which is how to get more money out of their product. With an increasing number of casual games coming out, it is very possible (I'd say likely) that the games are increasing faster than the market is growing. That leaves us in a situation where newer games make less money than games 'used to make' even in a rapidly expanding marketplace. In such a situation, there are many approaches to try and maximize the money from any one title, and I am in total agreement with the author that a variety of methods should be tried.
The suggestions on possible areas for attack are:
1 - In-Game Ads
2 - Using social networks to directly connect with gamers
3 - Increasing the price of games
4 - Combining Approaches
I think 4 is always the winner, but am also a strong believer in doing something all the way or not at all. Combining approaches by partially doing each of the other options isn't likely to return the wanted results.
Some thoughts on each:
In-Game Ads
- This is certainly something that is becoming more popular as the early results reported back by Real and other companies shows that it can be quite a solid money maker. Reflexive is currently getting ready to launch one of our games on another portal in the ad-supported approach. We are excited to see the results.
A possible concern with in-game ads is changing the industry format. Instead of trying to convince the customer to purchase the game, games with in-game ads need to maximize advertiser dollars and please the advertiser. That shift to a different customer and approach is a little worrisome. Certainly there are some games, like Bejeweled that work well with breaks in the play in-between levels. For other games, like Virtual Villagers, the breaks may not be as natural and may feel forced. The focus on trying to get a customer to use an ad is also a a bit worrisome. To quote the article:
It wouldn’t be surprising if in-game ads soon become integral to the content of a game, offering clues, extra levels or other hidden rewards for the player who clicks through.
I worry that focusing on the advertiser as the customer, instead of the gamer as the customer could lead to a less enjoyable experience for the gamer. Certainly it is something that will need to be carefully watched and balanced as advertising becomes more prevalent in games. The current approach of making older games ad-based while keeping newer games ad-free I think is a good approach that maximizes revenue from both sides of the chain.
Social Networking/Helping Viral marketing along
In this article the social networking was tied back to a platform being sold by the author that helped to connect gamers and developers. The end-goal is to remove the middleman while maximizing sales. I think using communities to help sell games is definitely a good thing to do. Whenever you have someone who enjoys your game or business you should encourage them to be an evangelist. Your biggest fans can speak about you in persuasive ways that few others can and should be rewarded for their efforts to keep them going. It's certainly one of many methods that should be employed to increase the market-size for any business you do. It's worth stopping what you are doing right now and considering how you can easily help your fans talk about you. Can you give them a copy and paste signature for the forums they visit? Is there a widget they can plug into their CMS? Can they easily email friends about your product? (do they get something for having done so?)
Increasing the Price of Games
This is an interesting suggestion. From all the studies done, increasing prices does not seem to improve revenue. However, from your economics class you probably remember that there are different points on the sales and demand curve that produce different amounts of profit. Many of the subscription programs offered are set to maximize the access to markets who will pay varying amounts for a game. I don't know that raising the price is a good idea. However, I think offering a game at different prices is a great idea. Subscription programs are one way to do this, but it would also be interesting to offer Platinum versions of a game that have additional content. Unfortunately none of the portals are currently set-up to offer multiple versions of the same game, but with the practice succeeding on retail games it seems only a matter of time before something along the same lines is attempted in the casual sector.
Certainly some interesting thoughts and it is clear that many people are wrapping their head around the same problem, which is how to get more money out of their product. With an increasing number of casual games coming out, it is very possible (I'd say likely) that the games are increasing faster than the market is growing. That leaves us in a situation where newer games make less money than games 'used to make' even in a rapidly expanding marketplace. In such a situation, there are many approaches to try and maximize the money from any one title, and I am in total agreement with the author that a variety of methods should be tried.
Thursday, September 20, 2007
Is 1% Conversion Rate a problem?
GameDaily Biz had an interesting (and unfortunately difficult to read) article today on the Conversion Rate within the casual games industry being too low.
I've written before at length on Gamasutra on going beyond Conversion Rate to increase sales, and I don't want to repeat that discussion here, but I do want to consider the numbers from the GameDaily article, which if representative of the casual games market are interesting, and not in the way that the writer expected.
The article puts forth the common thought that free demo downloads, when connected to a low conversion rate are a threat to the industry.
Here is the data that is used to support the point quoted above.
1 - 20% of Internet users between 12-64 downloaded a game last year
2 - 8% of Internet users between 12-64 downloaded a try before you buy game
3 - 64% of that 8% bought a minimum of one game last year
4 - 32 % said they were likely or very likely to buy one game in the coming year
5 - Conversion ratio is estimated to be 1-2%
(unfortunately a games sold / person breakdown isn't given)
I'm a big fan of "Try before you buy" game downloads. I believe it opens up the games to more people, which increases sales. I believe increasing sales is more important than increasing conversion. I think of it like a Lemonade stand. If I have a stand on my street the number of lemonades I will sell per passerby will be much higher than the number that I would have per passerby if my lemonade was on a shelf in Walmart (my neighborhood knows me and are predisposed towards me, most Walmart shoppers don't go there for lemonade). However, being in Walmart stores across the country will sell more of my lemonade than I could ever do on my street! As your audience becomes wider and less targeted, CR goes down. However, that pales in the face of how many more sales you can achieve with an expanded audience.
So a couple of points/questions to consider.
- 64% of an audience purchasing games is a fantastic number!
- If they hadn't had Try Before You Buy downloads, would 64% of the audience have bought a game?
- Considering all the numbers reported above, what number would you try to increase first in order to increase sales?
For me, I expect conversion ratio (CR) to continue to decrease. I expect CR to continue to go down as casual games gain audience. CR is definitely something to try and work on increasing, but it isn't the number that intrigues me most out of the report.
64% is a number that intrigues me. When people use the 1% CR, they often state that 99% of the customers aren't paying. According to the article, only 36% of the customers aren't buying games. Most of the customers are buying at least one game. By trying to increase CR, you're really trying to increase the number of games sold per customer, which is a great goal, but with 64% of the audience already buying games, it's not likely to increase the number of paying customers very much.
8% is the number I would focus on increasing. If 20% download games, but only 8% download try before you buy games, there is a lot of potential market available. 8% is a low number with a lot of room for growth. It may be easier to get that number to 9% than it would be to get your already paying audience to buy more games per download.
What would have been really interesting would have been the number of game purchases per customer and the frequency of purchases. I do agree there may be room for growth there. However, the numbers in the article don't give us any information in that regards, which can only leave us guessing as to the potential for multiple game sales in increasing the market size.
For the casual games market to get really big I believe it needs what every other market needs. More customers! Increasing that 8% to 9% will definitely increase customers, and more customers would definitely make the casual games market bigger :).
I've written before at length on Gamasutra on going beyond Conversion Rate to increase sales, and I don't want to repeat that discussion here, but I do want to consider the numbers from the GameDaily article, which if representative of the casual games market are interesting, and not in the way that the writer expected.
The article puts forth the common thought that free demo downloads, when connected to a low conversion rate are a threat to the industry.
Consumers are willing to play the free trials and very occasionally buy a game. But for this industry to be really big, gamers will need to more regularly purchase new downloads...
Here is the data that is used to support the point quoted above.
1 - 20% of Internet users between 12-64 downloaded a game last year
2 - 8% of Internet users between 12-64 downloaded a try before you buy game
3 - 64% of that 8% bought a minimum of one game last year
4 - 32 % said they were likely or very likely to buy one game in the coming year
5 - Conversion ratio is estimated to be 1-2%
(unfortunately a games sold / person breakdown isn't given)
I'm a big fan of "Try before you buy" game downloads. I believe it opens up the games to more people, which increases sales. I believe increasing sales is more important than increasing conversion. I think of it like a Lemonade stand. If I have a stand on my street the number of lemonades I will sell per passerby will be much higher than the number that I would have per passerby if my lemonade was on a shelf in Walmart (my neighborhood knows me and are predisposed towards me, most Walmart shoppers don't go there for lemonade). However, being in Walmart stores across the country will sell more of my lemonade than I could ever do on my street! As your audience becomes wider and less targeted, CR goes down. However, that pales in the face of how many more sales you can achieve with an expanded audience.
So a couple of points/questions to consider.
- 64% of an audience purchasing games is a fantastic number!
- If they hadn't had Try Before You Buy downloads, would 64% of the audience have bought a game?
- Considering all the numbers reported above, what number would you try to increase first in order to increase sales?
For me, I expect conversion ratio (CR) to continue to decrease. I expect CR to continue to go down as casual games gain audience. CR is definitely something to try and work on increasing, but it isn't the number that intrigues me most out of the report.
64% is a number that intrigues me. When people use the 1% CR, they often state that 99% of the customers aren't paying. According to the article, only 36% of the customers aren't buying games. Most of the customers are buying at least one game. By trying to increase CR, you're really trying to increase the number of games sold per customer, which is a great goal, but with 64% of the audience already buying games, it's not likely to increase the number of paying customers very much.
8% is the number I would focus on increasing. If 20% download games, but only 8% download try before you buy games, there is a lot of potential market available. 8% is a low number with a lot of room for growth. It may be easier to get that number to 9% than it would be to get your already paying audience to buy more games per download.
What would have been really interesting would have been the number of game purchases per customer and the frequency of purchases. I do agree there may be room for growth there. However, the numbers in the article don't give us any information in that regards, which can only leave us guessing as to the potential for multiple game sales in increasing the market size.
For the casual games market to get really big I believe it needs what every other market needs. More customers! Increasing that 8% to 9% will definitely increase customers, and more customers would definitely make the casual games market bigger :).
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