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[Smiles and Cries]

is it reduce to 10% or reduce 10% of?

has to be reduce to 10 percent of or 1 out of every 10

you are left with 9 put of 10 not really doomed

 

[AniHawk]

It goes without saying it's going to take a ton of resuscitation. I'm not sure how much money Sony has to do it, and how much Microsoft is willing to invest, to make a real go at it. Nintendo of course would have to seriously get involved too.

It may be painful at first, but like you I think it is necessary. Whole legions of gamers are fleeing the market, their idiosyncratic tastes no longer catered to, while a mass of congregates sit at the center of the market, their mass market needs always met, path-of-least-resistance AAA cinematic games everywhere. I guess that's a bit melodramatic and cynical, but the picture being painted these days ain't pretty in my view. Indies have been a sort of savior for me.

the only way out is if those indies gain presence in major ways, and probably the most effective way to do so is at retail. if independent developers are gaining a following digitally, then it's a lot easier to take their offerings elsewhere, especially to games-as-service platforms like steam. physical goods get advertisements on television, and are physical products (games) to other physical products (consoles).

it's why something like the vita bombing so hard in the us is such a bad sign. it's sort of a gasping breath for these middle-tier developers who are still around. it says to me that the market consolidation around just a handful of publishers and genre has been so successful that it's pushed out the sort of people who would have made those smaller games and quirkier genres popular in the past.

it's real fuckin' neato that grim fandango will get an update. i never played it so i'm looking forward to what all the hub-bub is about. it will probably sell well for sony and review well by the end of the year. i don't think it will convince the people who have fled to mobile and the digital space to come back, and it will do nothing to resurrect the dead.

 

[Game Guru]

the only way out is if those indies gain presence in major ways, and probably the most effective way to do so is at retail. if independent developers are gaining a following digitally, then it's a lot easier to take their offerings elsewhere, especially to games-as-service platforms like steam. physical goods get advertisements on television, and are physical products (games) to other physical products (consoles).

it's why something like the vita bombing so hard in the us is such a bad sign. it's sort of a gasping breath for these middle-tier developers who are still around. it says to me that the market has consolidation around just a handful of publishers and genre has been so successful that it's pushed out the sort of people who would have made those smaller games and quirkier genres popular in the past.

I agree... Consoles cannot rely on merely digital for the revival of games below the AAA... Not when a huge majority of console gamers still buy their games at retail and when both PC and mobile are superior platforms in regards to digital. I mean many of the more ambitious digital games are $20 to $30 which was a decent price for a more budget retail release back in the PS2 era.

 

[prag16]

That's... A lot.

I think he's actually being sarcastic, and mocking Imru’ al-Qays .

 

[John Harker]

There's been some good discussions the last few pages!

 

[metalslimer]

I think a resurgence of 20-30 dollar games at retail would be great for the industry. Just look at how great something like Minecraft is doing.

 

[shinra-bansho]

So, I got curious, since we're always talking about the impact of the contraction but never really looking at specific publishers. (From memory, a while back JVM had a very good article on EA and Nintendo's systems though.)

Ubisoft is one that most people would probably agree benefited a great deal from the userbase Nintendo brought in with the Wii.

This is info I pulled and/or extrapolated from their public financials. First two rows are % sales, Wii_ is Wii or Wii U. _DS is NDS or 3DS. Rev and income are in millions of euro.

		FYE 3/11	FYE 3/12	FYE 3/13	FYE 3/14
Wii_ %		38		33		20		14
_DS %		8		4		1		0
Total Rev	1038.3		1061.3		1256.2		1007.1
Wii_ %* Rev	394.554		350.229		251.24		140.994
_DS %* Rev	83.064		42.452		12.562		0
Op. Income	29.4		56		100.3		-65.6

IIRC, they attribute the recent loss to the delay of Watch_Dogs.
Given that, there doesn't seem to be any discernible relationship here between their declining Wii based revenues and their rev/op income, although obviously they're being impacted as the loss of 100+ million euro in rev isn't anything to scoff at. So they seem to be weathering this transition/contraction okay despite having been a major beneficiary of the expansion.

Thoughts, comments?

As a somewhat separate point of interest, expenses incurred for the same periods for R&D, which I assume includes software development, and their selling expenses. Both of which have increased quite a bit.

		FYE 3/11	FYE 3/12	FYE 3/13	FYE 3/14
R&D		363.5		348.4		428.2		426.1
Marketing	212.9		238.4		304		279.3

I wonder if fiscal 13 and 14 such rises due to the advent of current gen development.

(also feel free to point out any errors or tell me this is far too simplistic a view, which it very well could be)

 

[StevieP]

I think he's actually being sarcastic, and mocking Imru’ al-Qays .

It was just sheer sarcasm, honestly. I think the term mocking is too harsh, because I don't think anyone truly thinks that previous generations didn't rely on diverse software made for a mass/wider market (ie not just shootbangstab for young males) to sell a larger amount of dedicated console devices than wouldn't have otherwise have happened with the major players in the market focusing mostly on one demographic with their packaged software.

 

[CosmicQueso]

Enough to play a significant role in those consoles' success? I doubt it.

I take it you weren't around for the PS2 launch? It was the cheapest DVD player on the market and the DVD functionality is widely recognized as being a primary driver of the initial sales and momentum. Also why the PS3 launched at premium pricing with Blu-Ray.

In any case, I guess your argument is that gaming needs diversity. I agree with you, but diversity now means mobile and PC as well as competing console platforms.

the market has grown and expanded well outside of traditional console and handheld definitions and thats been great as a whole.

 

[Smiles and Cries]

instead of fixing Japan I can see most companies focusing on making things work in China and other markets they never focused on before.

Iwata kinda hinted at a hardware made for lower tier regions

China and South America has room for growth

 

[StevieP]

There's been some good discussions the last few pages!

Feel free to chime in

 

[metalslimer]

If the loss is attributed to the delay of Watch Dogs, it seems like we need a few more years of comparisons to see how the lack of a Wii market really affects them. I mean all we can see is that the current gen caused a spike in costs and advertising and produced a loss.

 

[SwiftDeath]

Diversity? Pfff. The 18-34 year old male gamer is being catered to well already so you'll definitely see 150+ million ps4s sold over the next half decade or so. That's the only demographic that previous leading consoles relied on for success.

As your intention was purposeful hyperbole for effect I doubt accuracy is an important aspect of the post but the PS2, the only home console to sell greater than 150M, did so over ~11 years, not 5 years [half a decade].

It goes without saying it's going to take a ton of resuscitation. I'm not sure how much money Sony has to do it, and how much Microsoft is willing to invest, to make a real go at it. Nintendo of course would have to seriously get involved too.

It may be painful at first, but like you I think it is necessary. Whole legions of gamers are fleeing the market, their idiosyncratic tastes no longer catered to, while a mass of congregates sit at the center of the market, their mass market needs always met, path-of-least-resistance AAA cinematic games everywhere. I guess that's a bit melodramatic and cynical, but the picture being painted these days ain't pretty in my view. Indies have been a sort of savior for me.

We'll see. I'm hopeful that indies will produce some wonderful games and easily some of the best this generation has to offer. I am not overly optimistic on their ability to turn around current trends tbh.

 

[Amir0x]

the only way out is if those indies gain presence in major ways, and probably the most effective way to do so is at retail. if independent developers are gaining a following digitally, then it's a lot easier to take their offerings elsewhere, especially to games-as-service platforms like steam. physical goods get advertisements on television, and are physical products (games) to other physical products (consoles).

it's why something like the vita bombing so hard in the us is such a bad sign. it's sort of a gasping breath for these middle-tier developers who are still around. it says to me that the market consolidation around just a handful of publishers and genre has been so successful that it's pushed out the sort of people who would have made those smaller games and quirkier genres popular in the past.

it's real fuckin' neato that grim fandango will get an update. i never played it so i'm looking forward to what all the hub-bub is about. it will probably sell well for sony and review well by the end of the year. i don't think it will convince the people who have fled to mobile and the digital space to come back, and it will do nothing to resurrect the dead.

No, but I think games like Wild and Tomorrow's Children and No Man's Sky and Rime and Abzu are steps in the right direction, as are games like Below and Cuphead and Ori for Microsoft. It's not going to be one game, or even five or ten games, but a long term, persistent investment that carries on for years to engage players and bring them back into the fold.

It may be too late to change the trajectory, I'd say it's more likely that is the case. But to me this is the last best chance.

 

[John Harker]

Feel free to chime in

I was going to, but it's moving so fast. I don't really like making long winded replies, ha, though if someone boils down the debate to the key points I can add my two cents...

 

[Linearskillz]

I would be interested in a study of people who owned a Wii + PS360 last generation and compare that to those who have not bought a Wii U this generation.

I would not be surprised to find that a contributing factor to why there is less hardware overall is that fewer people are buying multiple systems, perhaps because the Wii U is simply a less attractive offering.

Hypothesis: Last generation everyone bought a Wii: Nintendo Fan, Regular Joe Gamer, and the Flighty "Fad Chaser" Demographic that's being discussed. This wide-ranging appeal contributed heavily to its overall sales. This generation it's only Nintendo Fan that is buying Wii Us, while Fad Chaser has moved to mobile/elsewhere and Regular Joe Gamer has decided that PS4/XB1/PC is enough for them.

I would put forth that software sales, not hardware, are a better measure of the industry's growth or decline. I would also like to put forth that not including PC sales (and digital!) is skewing the data more each day. While PC is still smaller than either Playstation or Xbox, it's a market that seemingly continues to grow and should not be ignored. Publishers would not release their games on PC if it was not to their benefit.

Anyway, it's all very interesting. I'm still not really sold on the "gaming in decline" narrative, it's just adapting as AAA budgets having been increasing much faster than the user base.

 

[Amir0x]

I was going to, but it's moving so fast. I don't really like making long winded replies, ha, though if someone boils down the debate to the key points I can add my two cents...

Just write what you feel about the current downward trend in this industry, and what you think can potentially reverse the trend!

 

[rokkerkory]

I keep checking OP for guesstimates on PS4, X1, etc h/w. =/

 

[SwiftDeath]

-----------------------------
July Hardware Monthly Sales
-----------------------------

PS4 ~ 187k
XB1 ~ 131k
3DS ~ 108k
Wii U ~ 80.5k
360 ~ 54k
PS3 ~ 32.5k
PSV ~ 16k
Wii ~ 14k

-----------------------------
Hardware US LTD's as of August 2nd, 2014
-----------------------------

PS4 ~ 3760k
XB1 ~ 3047k
WIU ~ 2628.5k
Vita ~ 1856k

-----------------------------
July Software Sales
-----------------------------

The Last of US [PS4] ~270k [PS3] ~15k
Mario Kart 8 [WIU] 133k
Minecraft [360] >100k [PS3] >100k

-----------------------------
LTD Software Sales as of August 2nd, 2014
-----------------------------

Mario Kart 8 [WIU] 887K Retail Standalone, >= 1019k Total

-----------------------------
US Console SW Tie Ratio as of August 2nd, 2014
-----------------------------

[PS4] 2.7
[XB1] 3.2

 

[Speevy]

edit

 

[Y2Kev]

dumb speevy

 

[Speevy]

dumb speevy

I just spent 12 hours at school. Leave me alone.

 

[Mory Dunz]

[PS4] 187k
[XB1] 131k
[3DS] 108k
[WIU] 80.5k
[360] 54k
[PS3] 32.5k
[PSV] 16k
[WII] 14k

I should really make a summary post somewhere. Actually I think I'll edit this one into a summary post. Not much this month though

But isn't that 3ds number just GAF averages? Or was there a hint?

 

[SwiftDeath]

But isn't that 3ds number just GAF averages? Or was there a hint?

It was bestowed upon us by one of the chosen few

 

[Imru’ al-Qays]

I was going to, but it's moving so fast. I don't really like making long winded replies, ha, though if someone boils down the debate to the key points I can add my two cents...

Here are a few issues for discussion I can think of:

Is the console market in decline?
Is the console market being cannibalized by the mobile market?
Is the Wii's collapse specific to it, or is it an augur of a wider decline to come?
Is the solution to this decline to attract the Wii's market of nontraditional gamers, or is that a fool's errand?
Have nontraditional gamers been essential to successes in the console market in the past?
Even if the console market is simply stagnating, will the industry be able to adjust to higher development costs, or shrink development costs, quickly enough to halt a serious contraction of profits and therefore of output?

 

[AniHawk]

No, but I think games like Wild and Tomorrow's Children and No Man's Sky and Rime and Abzu are steps in the right direction, as are games like Below and Cuphead and Ori for Microsoft. It's not going to be one game, or even five or ten games, but a long term, persistent investment that carries on for years to engage players and bring them back into the fold.

It may be too late to change the trajectory, I'd say it's more likely that is the case. But to me this is the last best chance.

i was thinking about something like wild in particular. and it seems like a game lost in time. it isn't the sort of 'art game' a lot of the indie games stem from, nor is it a retro game the other huge portion of indie games appear to be either. it's the sort of thing made by really one of the few auteur game directors in the industry, and while it's beholden to current trends (specifically this mmo gen we seem to be getting into, it's not yet another thing where you have a gun or you're in a car, and it's kind of like a fantastical version of real life. there's some actual fantasy in there, some stuff appeal to my imagination, something that i feel like i haven't seen before. like other games i've loved on these kinds of machines like mirror's edge or beyond good & evil, it probably won't sell very well, but it's nice to see that being highlighted in particular.

 

[John Harker]

Holy smokes, that's like a month of lecturing worth of topics! Probably a whole semester, haha.

You have to give more context. Hardware is up YoY and being adoptated faster than the previous cycle. I think it's too early to make any judgement calls where the ceiling is at this point. Content drives hardware and there hasn't been any real games yet that leverage this gen, and sales have still been fast. I wouldn't judge anything by June - it's what, 5% of industry revenue on a year basis? It's a shitty month to draw too many conclusions.

I'm pretty optimistic about the future.
Last year was tough since the bottom fell out way faster than we all predicted on previous gen software no one forecasted for, but next gen sales have been brisk. Software is really what you should look at- no one makes money on hardware.

As far as the industry as a whole, what decline? It's become more fragmented then ever and consolidation will happen again as well as an adoption of new and emerging revenue streams but there's a lot of people playing these days... More than ever. I'm more worried about commodization (like what happened to music, what a bloodbath) and devaluing of quality software than anything else long term.

 

[Drac84]

Does anyone think there's a possibility of any of the upcoming Indie games like Rime, No Man's Sky, Ori and the Blind Forest to be given a retail release? Would they do well at retail, priced at say $30? Would either Sony or MS be willing to take the risk?

I think if marketed properly, No Man's Sky especially could make a decent go of things at retail.

 

[SwiftDeath]

Does anyone think there's a possibility of any of the upcoming Indie games like Rime, No Man's Sky, Ori and the Blind Forest to be given a retail release? Would they do well at retail, priced at say $30? Would either Sony or MS be willing to take the risk?

I think if marketed properly, No Man's Sky especially could make a decent go of things at retail.

I would imagine it would take the thatgamecompany/Sony/Minecraft approach to it where you offer the game digitally only at first and if it does well enough you then roll it out into some type of retail release

 

[heidern]

The console market is in a decline but it's not too severe in the west. COD being down 30% is a sign of how things stand. Watchdogs however does show there is enough for things to be viable for at least another generation after this. It might have to be heavily consolidated even more than now and very narrow but there will be a viable AAA market. In that sense I don't see growth returning due to software for Sony/MS, hardware innovation is their best chance.

Nintendo are Nintendo and they have a very efficient business so aren't going anywhere. Don't expect new AAA IP attempts from them though. They'll be looking to sidestep spiralling development costs and go for inventive games like Splatoon by small teams. If they can condition their market to accept modest efforts(maybe even get a breakout hit) then that would be good for them in the long term. Of course Nintendo also innovate with hardware and in that sense all bets are off, but they have a core audience that is reliable and enables them to take risks.

 

[LOCK]

Another thing to look at is Hardware vs. Software:



As you can see, so far this year software revenue is almost equal to hardware revenue. Software is doing terrible. Hardware increased in 2013 over 2012 thanks to the PS4 and XB1 launch, which added 700+million in revenue YOY in November and December compared to 2012. Hardware will increase in 2014 over 2013. Software is just worrying.

The current Software:Hardware ratio is 1.05:1
The average yearly ratio since 2006 is 1.4:1
The average Jan.-July ratio is 1.7:1 !!!!

Software does better compared to hardware throughout the year compared to the holiday season. This year is the lowest on record for the Jan-July period since 2006 (that's how far my data goes). However, 2007 has a rather low software-hardware ratio with a 1.2:1. 2007 was also a transition year much like 2014. Hopefully software sales start to improve for the remainder of the year.

Now the question to be asked is why is software revenues so low this year? Less releases? Less interest? Less quality of titles?

 

[SwiftDeath]

I'd go with less releases personally

 

[SparkTR]

We end up with the same market we've had since the PS1 days, more or less

With out of control development budgets and more viable alternate gaming platforms I don't think that'll be the case, the market will be wildly different.

 

[donny2112]

-----------------------------
US Console SW Tie Ratio as of August 2nd, 2014
-----------------------------

[PS4] 2.7
[XB1] 3.2

Oh, cool! Missed that we got new tie ratio updates.

Edit:

Is the console market in decline?

The Nintendo console market: Definitely.
The Non-Nintendo console market: TBD

Is the console market being cannibalized by the mobile market?

Time is the limited resource, and the more things competing for that time, the less time will be available for console gaming. It may not be the mobile gaming market, but social site time is definitely eating into overall time spent, and that's mostly done on phones these days. So, yes, but maybe not necessary flappy birds.

Is the Wii's collapse specific to it, or is it an augur of a wider decline to come?

It's never a good thing when a major player is having such decline that there's significant talk about them bowing out. Gaming lost a great publisher when SEGA went the 3rd-party route, as they started focusing on just the brands that sell instead of all the quirky stuff they'd normally do to raise interest in their console, and necessarily by extension, the gaming-space. Whether Nintendo's home console shortcomings is prescient for the wider market is tough to say at this point, but it's not good for gaming, that's for sure.

Is the solution to this decline to attract the Wii's market of nontraditional gamers, or is that a fool's errand?

Attracting new consumers to replace natural churn in the userbase is paramount, and being able to grow the consumer base is a hallmark of a growing industry. Attracting back Wii's audience may or may not be the way to go, but attracting new consumers is an absolute must for the console industry to survive.

Have nontraditional gamers been essential to successes in the console market in the past?

Of course. See above about attracting new consumers. All traditional consumers used to be non-traditional consumers. *insert P-A comic about the SNES to PSX transition bringing in non-traditional gamers*

Even if the console market is simply stagnating, will the industry be able to adjust to higher development costs, or shrink development costs, quickly enough to halt a serious contraction of profits and therefore of output?

Adapt or die. The big companies will either figure out how to make it work, or they'll die and the talent will live on with smaller startups forced to do more with less. That's not necessarily a terrible thing for consumers, though. That environment is also a breeding ground of creativity and innovation, even if it is a lot more rocky an existence for the creators.

 

[SwiftDeath]

Oh, cool! Missed that we got new tie ratio updates.

Thanks Donny, seeing SW sales like that is quite interesting.

For all the PR about consoles outsellling the predecessors hardware wise they certainly don't appear to be punching at that higher level on the software side too. I suppose the Day 1 Digital availability combined with FTP offerings and PS+/GWG will have some detrimental effect on retail software sales but with hardware being up 78% or so, you'd still think there'd be a noticeable improvement

 

[Aquamarine]

But isn't that 3ds number just GAF averages? Or was there a hint?

I guarantee you that 3DS is undoubtedly -28% YOY as was previously said.

The hard number you see is the conclusion from that.

 

[goomba]

Oh, cool! Missed that we got new tie ratio updates.

Edit:


The Nintendo console market: Definitely.
The Non-Nintendo console market: TBD



Time is the limited resource, and the more things competing for that time, the less time will be available for console gaming. It may not be the mobile gaming market, but social site time is definitely eating into overall time spent, and that's mostly done on phones these days. So, yes, but maybe not necessary flappy birds.



It's never a good thing when a major player is having such decline that there's significant talk about them bowing out. Gaming lost a great publisher when SEGA went the 3rd-party route, as they started focusing on just the brands that sell instead of all the quirky stuff they'd normally do to raise interest in their console, and necessarily by extension, the gaming-space. Whether Nintendo's home console shortcomings is prescient for the wider market is tough to say at this point, but it's not good for gaming, that's for sure.



Attracting new consumers to replace natural churn in the userbase is paramount, and being able to grow the consumer base is a hallmark of a growing industry. Attracting back Wii's audience may or may not be the way to go, but attracting new consumers is an absolute must for the console industry to survive.



Of course. See above about attracting new consumers. All traditional consumers used to be non-traditional consumers. *insert P-A comic about the SNES to PSX transition bringing in non-traditional gamers*



Adapt or die. The big companies will either figure out how to make it work, or they'll die and the talent will live on with smaller startups forced to do more with less. That's not necessarily a terrible thing for consumers, though. That environment is also a breeding ground of creativity and innovation, even if it is a lot more rocky an existence for the creators.

What if you add in the WIi and Wii u to those US software charts so the whole console market for each gen is represented?

 

[CosmicQueso]

Now the question to be asked is why is software revenues so low this year? Less releases? Less interest? Less quality of titles?

Compared to start of last gen it's fewer releases and lower quality. I did the math.

 

[John Harker]

Compared to start of last gen it's fewer releases and lower quality. I did the math.

Yah that's my point. Nothings been released yet, and hardware is still being adopted at a brisk pace. Once software finally releases that actually makes conversion seem worthwhile, that's expected to mitigate the steep declines in software sales from previous gen and maintain steady hardware adoption.

There literally hasn't been any games yet... Save Watch Dogs, and it did very well in an off period.

And we have some stiff competition this go around, which will help drive down prices faster and increase investments from multiple parties which is good - higher visibility means longer sustained conversion. Fosters innovation and risk, which really suffered the last few years.

And a lot more indie titles! Gotta fill those dry months with better ROI projects, since the middle market dried up and we haven't had one the last few years of last gen, digital will finally make an attractive alternative for creators publishers and investors to curate content without Walmart wanting a ton of cash to get store merchandizing/placement or being bitchy and not ordering stock. And you no longer have to buy studios or IPs to plug holes in your portfolio since smaller studios are finding financial success on their own now, it's cheaper to curate (buying was the old strategy as a long term cost savings endeavor... Which turned out to not be sustainable during console transitions with bloated team sizes and new technologies and the training and infrastructure it took wasn't cost effective since retail was a dry well for nonfranchised games at $60, all those layoffs...)

Gotta build attractive software offerings with an easy path to purchase that maintains a somewhat premium value, outside of the vice grip of Steam... The $10,$15 games absolutely need to exist and console is the best place right now, the low end market is saturated on iOS and Android. Even Nintendo sees this and is trying to make strides. I think it's great. It will be a bit of time still till everything rebalances, but a lot of the pipeline is in place (its crazy how much off this is just having a simple Path to Purchase! One could write a whole book on digital merchandizing these days).

There's a lot of potential for the next year or so.
Let's see If consumers are willing to roll with the changes.
Or continue to see gaming devalued to unsustainable price points, and alternative revenue models really become the norm like ftp.

 

[ZSaberLink]

Btw, speaking of digital titles that have gone retail, other than Minecraft, how have any of the others did?

I saw Child of Light had a physical release, as did Ducktales Remastered. Teslagrad is also getting a retail release of some sort later this year.

How did Ducktales retail do anyways? I kind of assumed it did fairly badly, although I'd be happy to be proven wrong.

What other titles do you think could be good fits for this? Shovel Knight? Valiant Hearts? Wild?

 

[vinnygambini]

I should do a podcast.

I'd listen

Spoiler

Or be a celebrity guest lolz

 

[AdventureRacing]

Yah that's my point. Nothings been released yet, and hardware is still being adopted at a brisk pace. Once software finally releases that actually makes conversion seem worthwhile, that's expected to mitigate the steep declines in software sales from previous gen and maintain steady hardware adoption.

There literally hasn't been any games yet... Save Watch Dogs, and it did very well in an off period.

And we have some stiff competition this go around, which will help drive down prices faster and increase investments from multiple parties which is good - higher visibility means longer sustained conversion. Fosters innovation and risk, which really suffered the last few years.

And a lot more indie titles! Gotta fill those dry months with better ROI projects, since the middle market dried up and we haven't had one the last few years of last gen, digital will finally make an attractive alternative for creators publishers and investors to curate content without Walmart wanting a ton of cash to get store merchandizing/placement or being bitchy and not ordering stock. And you no longer have to buy studios or IPs to plug holes in your portfolio since smaller studios are finding financial success on their own now, it's cheaper to curate (buying was the old strategy as a long term cost savings endeavor... Which turned out to not be sustainable during console transitions with bloated team sizes and new technologies and the training and infrastructure it took wasn't cost effective since retail was a dry well for nonfranchised games at $60, all those layoffs...)

Gotta build attractive software offerings with an easy path to purchase that maintains a somewhat premium value, outside of the vice grip of Steam... The $10,$15 games absolutely need to exist and console is the best place right now, the low end market is saturated on iOS and Android. Even Nintendo sees this and is trying to make strides. I think it's great. It will be a bit of time still till everything rebalances, but a lot of the pipeline is in place (its crazy how much off this is just having a simple Path to Purchase! One could write a whole book on digital merchandizing these days).

There's a lot of potential for the next year or so.
Let's see If consumers are willing to roll with the changes.

I should do a podcast.

I would have said PC was the best place but i agree that consoles should see more of those games as well.

 

[John Harker]

I would have said PC was the best place but i agree that consoles should see more of those games as well.

Its incredibly hard to merchandize on PC.
I'd argue I have a much higher chance of getting visibility to costumers on consoles now. Waaaaay less competition, and MS Sony and Nintendo need you more to succeed than Valve does, so are more willing to promote you... See that yacht club interviews, sitting next to Mario on the eShop is a huge advantage Nintendo is willing to work with you on.

Far more games fail on PC and iOS than the ones that go viral or sell for $1 on PC. Also I'm talking in terms of revenue and risk, not units sold.

Small guys can and should play there but the bigger you are the harder it makes to justify a business model on a risk like that. If you can afford to do all, you should. If you have to pick your platforms, see whose willing to play ball

 

[MesserWolf]

Another thing to look at is Hardware vs. Software:



As you can see, so far this year software revenue is almost equal to hardware revenue. Software is doing terrible. Hardware increased in 2013 over 2012 thanks to the PS4 and XB1 launch, which added 700+million in revenue YOY in November and December compared to 2012. Hardware will increase in 2014 over 2013. Software is just worrying.

The current Software:Hardware ratio is 1.05:1
The average yearly ratio since 2006 is 1.4:1
The average Jan.-July ratio is 1.7:1 !!!!

Software does better compared to hardware throughout the year compared to the holiday season. This year is the lowest on record for the Jan-July period since 2006 (that's how far my data goes). However, 2007 has a rather low software-hardware ratio with a 1.2:1. 2007 was also a transition year much like 2014. Hopefully software sales start to improve for the remainder of the year.

Now the question to be asked is why is software revenues so low this year? Less releases? Less interest? Less quality of titles?

You said it yourself ... It is a transitional year and we are before the holiday season. That in my opinion is the foremost reason.

Then it is also true that console now have more competition for our free time than in the past. To relax half an hour it is easier to take your tablet / cellphone and play / browse than to go to the console and play

 

[OneEyeTwoHead]

Boggles my mind that Xbox One sales DOUBLED and still couldn't come close to the PS4.

 

[1st Course]

Another thing to look at is Hardware vs. Software:



As you can see, so far this year software revenue is almost equal to hardware revenue. Software is doing terrible. Hardware increased in 2013 over 2012 thanks to the PS4 and XB1 launch, which added 700+million in revenue YOY in November and December compared to 2012. Hardware will increase in 2014 over 2013. Software is just worrying.

The current Software:Hardware ratio is 1.05:1
The average yearly ratio since 2006 is 1.4:1
The average Jan.-July ratio is 1.7:1 !!!!

Software does better compared to hardware throughout the year compared to the holiday season. This year is the lowest on record for the Jan-July period since 2006 (that's how far my data goes). However, 2007 has a rather low software-hardware ratio with a 1.2:1. 2007 was also a transition year much like 2014. Hopefully software sales start to improve for the remainder of the year.

Now the question to be asked is why is software revenues so low this year? Less releases? Less interest? Less quality of titles?

Thanks.

Seems like another bad year for packaged games.

 

[Mpl90]

Yeah, while the surge of digital games is great, it would be even better if the most popular could come out on actual shelves. At reduced prices, which also mean we need more price system's flexibility: having the vast majority of games at 59.99 / 39.99 (depending on home/handheld) makes almost impossible for lower budgeted efforts to shine. Who's ever gonna buy a game called "RocketPanda and the Quest for the Metal Diamond Bambù" with little advertising campaign if it's at 59.99 and on the same shelves as Mario, COD, Pokémon, etc.etc.? You could be interested, but the price would scare you. If it were 44.99/39.99? It'd be much more reasonable to buy it. Minecraft selling as it is still right now, on PS3 too, demonstrates this. The market NEEDS more 20/30 $ games.

Unfortunately, not every inde developer can find a way through retailers: only those with big companies support (like Minecraft itself, Journey, DuckTales, Child of Light, etc.etc. ). Unless the industry finds a way to sell download codes for indie games as well: we see Nintendo doing this in Japan, and it started selling them in Gamestop's and Game's stores, but indie devs...I don't think we've seen them yet.

Another thing this industry needs is to have digital SKUs of retail games being priced lower than the boxed ones. I know that retailers are the main reason for that not happening, but we need to find a way to do that without harming retailers. A few months ago, I opened a thread about how amiibos could become also a way to sell games (and to position them even in difficult times)

http://neogaf.com/forum/showthread.php?t=840221

IMHO, that could be a good way to have retailers not afraid to sell games which can be priced lower on digital stores, since they'd still sell a physical good attractive to the customer, but there could be other ways to try to change the price systems, without forcing the change too much. Opinions?

 

[Yoshi]

Oh, cool! Missed that we got new tie ratio updates.

What's the meaning of this graph? Does it add Xbox 360's first month to PS3's first month and compares this to November 2013 (and continuing that for the months thereafter)? Does it start when PS3 gets released (and ignores the months before for 360)? Does it start when 360 gets released (and adds PS3 later down the road)?

 

[zhao3gold_2]

-----------------------------
July Hardware Monthly Sales
-----------------------------

PS4 ~ 187k
XB1 ~ 131k
3DS ~ 108k
Wii U ~ 80.5k
360 ~ 54k
PS3 ~ 32.5k
PSV ~ 16k
Wii ~ 14k

-----------------------------
Hardware US LTD's as of August 2nd, 2014
-----------------------------

PS4 ~ 3760k
XB1 ~ 3047k
WIU ~ 2628.5k
Vita ~ 1856k

-----------------------------
July Software Sales
-----------------------------

The Last of US [PS4] ~270k [PS3] ~15k
Mario Kart 8 [WIU] >100k
Minecraft [360] >100k [PS3] >100k

-----------------------------
US Console SW Tie Ratio as of August 2nd, 2014
-----------------------------

[PS4] 2.7
[XB1] 3.2

Thanks for the data. But are they solid data from any leak?

 

[LOCK]

Compared to start of last gen it's fewer releases and lower quality. I did the math.

That is awesome work!

Btw, speaking of digital titles that have gone retail, other than Minecraft, how have any of the others did?

I saw Child of Light had a physical release, as did Ducktales Remastered. Teslagrad is also getting a retail release of some sort later this year.

How did Ducktales retail do anyways? I kind of assumed it did fairly badly, although I'd be happy to be proven wrong.

What other titles do you think could be good fits for this? Shovel Knight? Valiant Hearts? Wild?

I think this should happen more.

Nintendo for example should have released Shovel Knight at retail for $20. It puts games on their shelves and highlights variety in the library. But alas...