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The NPD Group just released its report on 2004 videogames sales.
My conclusion from much of the data dicussed: The videogame industry wants to be an entertainment industry, but it still works like a software industry.
I think the numbers speak for themselves.
To start, the industry, not including computer game sales, shrunk between 2003 and 2004 by a little less than a percent. The decline was due to a massive dip in hardware sales (down by about 17%) and offset a bit by increase in software sales (7.7%).
The decline in hardware sales was due to supply problems with the PS2 around the holidays and the slacking demand for hardware as gamers wait for the next generation.
This is old hat in the computer business. But the entertainment business? When was the last time Hollywood complained about overall revenue because of a shortage of Tom Cruise films? Supply shortages of this type are unique to businesses like the the computer and software industry. Not to the entertainment biz.
As for software sales, here's a snapshot of the top 10 titles of 2004:
- Grand Theft Auto: San Andreas/PS2
- Halo 2/XBX
- Madden NFL 2005/PS2
- ESPN NFL 2K5/PS2
- Need For Speed: Underground 2/PS2
- Pokemon Fire Red W/ Adapter/GBA
- NBA Live 2005/PS2
- Spider-Man: The Movie /PS2
- Halo/XBX
- ESPN NFL 2K5/XBX
Notice that only one game on this list is not a sequel? Not only that, Halo is three years old. It's on the list because it sold a bunch this year based on Halo 2 hype. So, in a backwards sort of way, Halo was sort of seen as a prequel to Halo 2. Or look at it this way, every piece of software on the top 10 list is sequel of one form or another.
What industry relies so much on sequels? Call them "versions" and you get it right--the software industry. Having a bigger version number was once so important that software manufacturers would routinely rev software just to get it to version 2 or 3 to help sales.
Not surprisingly, videogames are software first, entertainment commodities second.
So, what does this mean to the consumer? Probably not much as long as the games industry keeps clear that it's running a software business.
While EA is buying up the world and trying to become an entrainment powerhouse, they need to remember that attaching Julia Roberts or Harrison Ford to the Sims wont help it sell. But you can put your money down now that the Sims 3 will do just fine without them.
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Are games software or entertainment? Obviously both, which indicates that the industry needs to innovate a bit more in terms of approach and business models than before. Everyone loves gaming: it's a way to drag entertainment into the living room that really shows (movie and music, after all, are both already established elsewhere - DVDs and such are just aspects) and that means money, especially with all teh convergence hype going around CES this year.
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nag.blog
(http://www.nag.co.za/blog)
Binge & Purge - Fueling the Game Rant Engine
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