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3DS sold under cost since price cut, Nintendo 'hoping' to profit by March 2013
Nintendo took a big hit last year when it dropped the price of its then-nascent handheld, the 3DS, to $170 just a few months after initial launch. Such a hit, apparently, that Nintendo is selling the unit for less than it costs the company to produce, as revealed in the company's latest financial earnings. "Its hardware has been sold below cost because of its significant price cut in the fiscal year ended March 31, 2012," the financial report says.But don't count Nintendo out! The company says it "expects to cease selling it below cost by the middle of the fiscal year ending March 31, 2013." Which, in normal human terms, means Nintendo expects to start making money on the console around August of this year. So, you know, if you're really trying to stick it to Nintendo, go buy the 3DS between now and August. That'll show 'em!The 3DS currently sells for $170, down from the $250 price tag it launched with back March of 2011.Update: We've added context from financial analyst extraordinaires Michael Pachter (of Wedbush Securities) and Jesse Divnich (of EEDAR) just below the break.
'Little risk of failure': Analysts predict SWTOR will turn a healthy profit
Worried that Bobby Kotick has the right of things and that Star Wars: The Old Republic won't make bank for Electronic Arts? Market analyst Michael Pachter disagrees, saying that he not only predicts that EA will cover the costs of SWTOR's development, but come out just fine even with LucasArts taking its share. Pachter says that LucasArts will claim 35% of SWTOR's revenue: "The revenue split is around 35 percent to LucasArts after EA earns back their investment. That means EA keeps most of the revenue from disc sales (they have marketing expenses and need to staff up the server farms), so they should earn a nice profit there. Keep in mind that EA expensed the development cost when incurred, so much of the disc sales revenue will be profit." Pachter's predictions for the title are sizable yet reasonable; he thinks that SWTOR will get 1.5 million subscribers. This translates to $270 million per year in revenue, $80 million of which will be pure profit for EA after LucasArts and operating costs take their share. Even if SWTOR only draws in -- or sustains -- merely 500,000 subscribers, Pachter says the game will be sitting pretty. Other market analysts, such as EEDAR VP Jesse Divnich, support the notion of SWTOR's profitability. "Based upon user commentary and consumer surveys, the profit potential for The Old Republic is high. We see little risk of failure for The Old Republic," Divnich stated.
Analysts consider dance genre 'bubble,' Ubisoft says more 'The Experience' games possible
Ubisoft's Just Dance and its successful clones like Michael Jackson: The Experience, along with Harmonix's Dance Central, have established the dance genre as a viable market for milking. Now the industry must play the delicate game of sucking the marrow dry without creating a zombie. Gamasutra hit up go-to industry analysts Michael Pachter and Jesse Divnich for their takes on the sustainability of the genre. Both analysts essentially characterized dance games as part of a bubble that is largely unaffected by critical reception (UK hit Zumba Fitness has a 43 on Metacritic). "In short, yes, the dance category is a bubble," said Divnich, "much like most things in entertainment." That doesn't mean that the bubble is about to burst -- or that the bottle of suds is close to empty. At least, Ubisoft is planning to keep on dipping in. The publisher's Tony Key teased that Michael Jackson: The Experience is "just the first 'The Experience' brand." He added that there's no reason why "another artist can't make a great dance game under 'The Experience brand,'" but didn't pitch any bright ideas. The Smurfs, anyone?
EEDAR weighs in on NGP, speculates $299 to $349 price for Wi-Fi only model
Analysis firm EEDAR has issued a report on the debut of the NGP, speculating on several areas, including hardware and software cost as well as the NGP's likelihood of success. The firm expects Sony's upcoming handheld to "handsomely surpass sales of its predecessor, the PSP," though the report adds that success will depend upon long-term publisher support and a competitive price. Concerning the price, EEDAR predicts the Wi-Fi-only model to cost "between $299 to $349, but not to exceed $399 in the United States." Furthermore, the firm believes that some regions may not see the 3G version of the NGP at all. For comparison, the report notes EEDAR's estimate that 62 to 70 percent of iPads sold in North America are Wi-Fi-only models. Demand for a 3G model may be higher in Europe and Asia. EEDAR predicts that the NGP's 3G capabilities aren't designed to compete directly with mobile phone gaming -- clearly another area of interest for Sony -- as 3G is unsuitable for large game downloads. 3G functionality is more likely to be used for multiplayer and social functions. The report includes a few more notable tidbits. Games, both downloadable and retail, are predicted to be priced between $40 and $50. Publishers are advised to get on board early, as the report notes "EEDAR is certain that the initial 18 months will produce significant hardware and software sales to support profitability for third‐party publishers." Finally, EEDAR expects more NGP information at GDC, while the first hands-on opportunities will have to wait for E3 2010. Rest assured that Joystiq will be attending both events.
EEDAR's Jesse Divnich estimates NGP will cost $300 to $350
Electronic Entertainment Design and Research analyst Jesse Divnich has a few ideas about what Sony meant by "an affordable price that's appropriate for the handheld gaming space" when talking about the NGP's launch price. Speaking with GamesIndustry, Divnich predicted that the device would retail for between $299 and $349 at launch, which ... um, seems a little high when compared to other contenders in the "handheld gaming space." Divnich says that such a price wouldn't be prohibitive to your average Joe or Jane, explaining "The market is ripe for portable high-end gaming. The NGP will be a serious threat to all forms of portable entertainment," and later adding, "After seeing the specs today, if the NGP can't succeed, it is clear that the portable gaming landscape has forever changed." Wait, you're saying the popularity of casual mobile games like Angry Birds might last forever? Forever-ever? Forever-ever?
Ars Technica takes a look at the surprising drop in retail game prices over time
When we're not spending $150 on "collector's edition" versions of games or buying $50 worth of post-launch DLC, we're spending less than ever on brand new retail copies of video games. Ars Technica explores the history of game prices in comparison to the current climate in a recent piece, astutely pointing out that when adjusted for inflation, game prices of yesteryear are vastly higher than today's Xbox 360 and PlayStation 3 games (by as much as $40). As seen in the image above, Streets of Rage 2 brand new would've run $64.99 in 1993, amounting to $98.19 in 2010 dollars. EEDAR analyst Jesse Divnich offered an explanation for the declining cost for brand new games at retail, saying the cause is the continually growing audience for video games. "Our industry continues to grow, and as such, so does the revenue, which increases competition in the market and generally results in bigger development budgets," Divnich posited. Of course, publishers are finding other ways to get our cash -- namely the aforementioned collector's/limited editions and various downloadable content. Still, though braving your local used game retailer might not be the most pleasurable experience every time, it offers another opportunity to pay less for games than ever before. As Ars says, "This is a fine time to be a gamer." [Image credit: Ars Technica]
Analysts weigh in on Panasonic's Jungle
New tech does not always equal gimme gimme -- according to several prominent analysts, Panasonic is set to engage in quite the uphill battle with its new handheld, The Jungle. Both Bill Pidgeon of M2 Research and David Cole of DFC Intelligence told IndustryGamers they believe the unit is "a non-starter." Colin Sebastian of Lazard Capital Markets said it looks like "an uphill challenge to launch a new portable gaming device unless there is some meaningful differentiation or access to proprietary content," while EEDAR's Jesse Divnich offered that its success hinges on third-party support, saying that, "with any hardware platform regardless of its quality, the absence of strong third-party support will most certainly end in failure." All valid points, but should these guys be giving the device the benefit of the doubt? As it stands right now, we don't know much about the system other than what it aims to do: give MMO players a dedicated piece of hardware so they can take their games on the go. Given how popular MMOs are (and, in turn, how much of the cash money they generate), from a business standpoint it would seem win-win; nobody else is offering something to MMO players who may want a bit of portability. But, on the other hand, the problem is -- at least according to these analysts -- that the handheld doesn't particularly fill a void that can't be filled by a netbook or laptop.
Xbox UK boss: Halo Reach will outsell Call of Duty: Black Ops
As the UK-based director of Xbox and Entertainment at Microsoft, it's Stephen McGill's job to boast about upcoming games, even ones that seem to have the whole "hype" thing in the bag. "We have huge expectations," McGill said of Halo: Reach, speaking to Eurogamer at a launch event. What are Halo's chances, a platform-exclusive game, at besting a franchise that's only increased in popularity (and earnings) with each iteration?
Roundup: Analyst commentary on Kinect pricing
Everybody has an opinion at the moment about Kinect's $150 price tag, but let's hear what the analysts who get paid for their opinions think. We've got reactions from EEDAR's Jesse Divnich, Lazard's Colin Sebastian and Wedbush Morgan's Michael Pachter, after the break.
Divnich makes E3 predictions, expo to be 'inflection point' for game industry
In his latest Divnich Debrief column at IndustryGamers, EEDAR analyst Jesse Divnich has made some predictions for E3 2010. Divnich sees this year's expo as a pivotal one for the industry, noting that new technologies like PlayStation Move, Project Natal and the 3DS must make a big splash. Otherwise, says Divnich, we may see industry funding driven toward sectors like MMOs and social gaming. Divnich sees the expo as an "inflection point" in gaming history, saying, "Either E3 2010 acts as a positive catalyst and boosts industry confidence, or it reinforces the negative notions about the long-term viability of traditional gaming." Divnich makes a few predictions about the show, notably that Rockstar may reveal Grand Theft Auto 5, though it won't announce any hard street date if it does. Divnich believes, however, that you can expect a new teaser for Agent. Nintendo, meanwhile, will announce the official name of the 3DS and announce plans to launch the device in "at least two regions" this November. He also expects the unit will sell 5 million units by March 2011. Furthermore, Nintendo may finally show off its Vitality Sensor in more detail. Beyond that, the show will likely revolve around Move, Project Natal and the 3DS. "Whatever the outcome or your own personal opinion, one thing is for certain," says Divnich, "E3 2010 is a must attend event for anyone with any vested interest in the video game space."
Analysts discuss impact of EA Sports Online Pass
Over at IndustryGamers, several analysts have chimed in on EA's latest assault on used game sales: The EA Sports Online Pass. The pass will offer players access to online features -- up to and possibly including online multiplayer -- on all future EA Sports titles starting with Tiger Woods PGA Tour 11. Should someone buy a game used, additional passes can be purchased for $10. The overall consensus among analysts: It's a good thing and a smart move on EA's part. According to Wedbush Morgan's Michael Pachter, it only makes sense that EA should be compensated for rendering online services. He noted that EA "currently does not get paid" by those who purchase used games and that the pass "is ensuring that second-hand purchasers will pay something for the maintenance of the server network and for access to premium content." The majority of analysts agreed with Pachter, with EEDAR's Jesse Divnich noting that games now extend far beyond their own physical media. "Seven years ago, when you purchased Grand Theft Auto for $50, the entire experience was encapsulated on a DVD," said Divnich, "in 2010 that is no longer the case." He added that it is "perfectly reasonable" for EA to expect payment for features that aren't included directly on the disc. Also, DFC Intelligence's David Cole expects more companies to pursue similar programs in the future. Meanwhile, Lazard Capital Markets' Cole Sebastian referred to the program as "a double-edged sword for publishers." While it may lower used sales, said Sebastian, it also diminishes the resale value of games that customers would trade in to purchase new ones.
Analyst ponders impact of MW2 'Stimulus Package' pricing and success
On IndustryGamers, EEDAR analyst Jesse Divnich examines the economic impact of Modern Warfare 2's "Stimulus Package" on consumers, business and the future of DLC. He notes that "as an economist" he's glad a publisher tested the boundaries of DLC pricing, as millions of consumers (around 25 percent of MW2 owners) proved willing to drop $15 on the map pack. He points out that "if consumers deem it unfair for companies to overcharge their products, it is similarly unfair for businesses to unknowingly under-price their products." However, Divnich wonders about the long-term implications of continued high-priced MW2 DLC, should Activision go that route. He suggests that consumers could leave the Call of Duty "circle" for games like Battlefield: Bad Company 2, where the cost for new content over time appears to be lower. He also posits that "consumers could avoid the next iteration of the Call of Duty franchise, since again, cost of dedicated ownership is now much higher." Divnich explains that the current "situation" between Infinity Ward and Activision may cloud core consumer purchases of future DLC and the franchise, as well, compared to if everything had remained -- on the surface, at least -- hunky-dory.
GDC 2010: EEDAR on Achievements, user behavior
EEDAR hosted a two part panel at GDC this year. In the second half of the panel -- you can read about the first half here -- Jesse Divnich presented the results of an Xbox Live Achievement study the firm recently conducted. The info was pulled from a pool of 32 million data points -- provided by MyGamerCard.net -- and centered on a random sampling of 100 different Xbox 360 games. Probably the most interesting statistic that Divnich dropped: An average of only 4 percent of Xbox gamers actually managed to earn all of the achievements in any given game. When focusing only on major, "AAA" titles, that number drops to 2 percent. Meanwhile, less than 10 percent of consumers get more than 80 percent of Achievements. Furthermore, Divnich noted that only 27 percent of users manage to unlock more than 50 percent of Achievements. Divnich concluded his talk by saying that developers should learn as much as possible from Achievements. He advised studios to use them as motivational tool for users noting that the number of unlocked Achievements tends to drop off at around 30 percent. He added that gamers who manage to unlock at least 80 percent of Achievements are typically motivated to unlock the remaining 20 percent. Finally, Divnich stated that developers can use Achievements as a form of direct user feedback. By observing which Achievements are unlocked, developers can see the parts of a game that players enjoy. This, in turn, can help developers decide what to focus on in the sequel. Beyond that, Achievement monitoring could even help them decide whether to make a sequel at all.
Analysts: No cause for concern over reported unpaid Modern Warfare 2 bonuses
Following the departures of two Infinity Ward executives, a related story has gained significant traction and deserves some attention. BingeGamer reports that the development studio "has yet to be paid a single dime in royalties for Modern Warfare 2," ostensibly to be paid by publisher Activision. As Infinity Ward is a wholly-owned Activision studio, we turned to some leading industry analysts to explain what appears to be a private contractual matter. EEDAR analyst Jesse Divnich tells Joystiq, "I couldn't speak to what the royalty agreement between Activision and Infinity Ward is. If royalties haven't been paid out yet, I wouldn't consider that too alarming. The game has only been out for a little over 90 days. Additionally, it is common to see royalty agreements based upon factors such as hitting release date, review scores (a.k.a. 'Metacritic Clauses') or revenue milestones. I think if you just replace the word 'royalties' with 'bonus' it should make some more sense." Wedbush Morgan's Michael Pachter explains, "I don't know the nature of [Infinity Ward's] contract, but my bonus is paid after year-end (in February), and theirs is likely the same. The idea that they haven't been paid 'yet' is not all that surprising. The year just closed, and the final SEC documents were filed yesterday." He continues, "IW sold itself to Activision back in 2004, Activision owns the [Call of Duty] IP, and the guys leaving were employees under some kind of contract. Activision appears to believe that they have breached this contract, and may or may not be justified in withholding bonuses." Check out Pachter and Divnich's full analyses after the break. [Editor's note: This post has been altered to reflect updates in the Infinity Ward leadership shakeup.]
EEDAR: Mass Effect 2 best-selling January release ever
EEDAR vice president and analyst Jesse Divnich has sent out some surprising facts about game sales during the month of January. Well, okay -- it isn't exactly chart shattering that a crapton (that's 572,000) of Mass Effect 2 units were sold last month, but, according to EEDAR's calculations, the game managed to become the best-selling January release of all time in just six days of retail availability. Even with such a small window to achieve the record, Mass Effect 2 completely destroyed the previous record-holder: Poor, poor NFL Street for PS2 (with 325,000 units in sales, for the old record). Though Mass Effect 2 certainly set a high bar for the quarter, Divnich's report suggests that game sales aren't likely to decline with blockbusters like Final Fantasy XIII and God of War III just around the corner. His firm also promises to closely watch sales of Dante's Inferno -- if the game can can beat its expected sales target of 500,000 units over the next three months, it means that those outlandish PR stunts were effective and we can look forward to more cake arms and $200 checks once Purgatorio is inevitably announced. Awesome.
We got our wish: New console IP up 106% since 2007
If we've learned anything from the latest "Divnich Debrief" on IndustryGamers, it's to be careful what we wish for. Video game anthropologist analyst Jesse Divnich has crunched the numbers and formed a surprising statistic: 106 percent -- the percentage increase in the number of new console game properties introduced from 2007 to 2009 (61 new IPs in 2007 compared to 126 in 2009). One hundred and twenty-six! Surprised? We are, considering that we've pined for new game experiences, as we've stocked our shelves with sequels these past few years; all those 2s, 3s and 4s -- heck, we've got a spot reserved for a "13" in March. Still, we'd like to think our collections owe more to exquisite taste than a compulsive habit to collect them all. After all, as Divnich points out, of those 126 new properties introduced last year, not one received an aggregate review score of over 90 percent. The lesson, as Divnich tells it, is that publishers are barbarians (see, the image does make sense). In other words, when we the consumers stop buying properties worn barren by those plundering publishers, they turn to mass-producing new IP, in search of a hit, which is then quickly ravaged (think: sequel, sequel, sequel -- in short succession) as the cycle repeats itself. The solution, Divnich poses? Simple -- for publishers to consider Blizzard's calm approach (at least it's worked on the PC platform) and farm their prize properties with sustainability in mind. We suppose that makes it our job to suffer excruciatingly long droughts, while keeping the faith. Who wants to join us for the seasonal StarCraft Dance?
EEDAR predicts DS2 will be announced this year
In a recent report, EEDAR analyst Jesse Divnich has predicted that Nintendo will announce its next handheld -- let's call it the DS2 -- within the next eight months. Furthermore, Divnich believes that the product will be released within fifteen months. "one of the biggest reasons for Nintendo's success in the handheld market is their ability to remove opportunity gaps for competitors to enter," says Divnich, citing the early release of the DS, which effectively stymied the chances for the PSP a year later. Other reasons to release new hardware include the increasing threat of piracy and the specter of declining support from publishers (Ubisoft, for example, has announced plans to scale back support for Nintendo platforms). Frankly, the DS hardware is getting a little long in the tooth; as such, it's not too hard to imagine Nintendo ramping up for the release of its inevitable successor. Hell, even Nintendo President Satoru Iwata has been talking about it. Or has he?
More games released in 2009 than in 2008, barely
Some people have decried the current calendar year for being light on high-quality games -- but they can't frown upon the quantity of titles released in 2009. According to Gamespot, the latest EEDAR GamePulse report reveals that 1,099 games were released to retail outlets throughout the year -- a slight increase over the 1,092 games which hit the market in 2008. That's not exactly good news -- according to the report, more games (such as Modern Warfare 2) are becoming permanent staples on store shelves, limiting the amount of free space for other new titles. Also, the amount of expendable cash folks have to spend on these games is dwindling. But ... but let's not think about that, okay? It's Christmas. Happy thoughts, you guys.
EEDAR: 2010 delays smart decision for game publishers
With so many publishers intentionally pushing games out of the holiday season, Q1 2010 is shaping up to be one of the most competitive release windows in the history of gaming. Bayonetta, Army of Two, Dark Void, MAG, BioShock 2, Dante's Inferno, Lost Planet 2, Heavy Rain, Aliens Vs Predator, Final Fantasy XIII, Battlefield: Bad Company 2, God of War III, Mass Effect 2, Splinter Cell Conviction, No More Heroes 2, and Red Steel 2 are just some of the games to come out in the first three months of 2010. Doesn't it seem as though the industry is preparing for yet another cannibalistic quarter, akin to the holiday? EEDAR's Jesse Divnich doesn't necessarily think so. He argues that "publishers who purposely diverted their AAA holiday titles into 2010 made the proper decision and will likely realize stronger sales with a post-holiday release than a holiday release." And the reasoning? The combination of Mario, Modern Warfare 2 and Assassin's Creed 2 predictably impacted the sales of all other games. "High quality games are selling less units in the 2009 holiday season compared to 2008," Divinich noted by analyzing the sales of games with Metacritic scores of 80 and above. Still, we can't help but look at the first paragraph with awe. Can our wallets even survive an onslaught of that magnitude? We have an easy solution for publishers: there's an entire "summer" season to consider when releasing games.
Divnich: Wii can't help but win this generation
Though it's always risky to call a winner before the race is over, EEDAR analyst Jesse Divnich figures there's basically no chance that the best-selling home console of this generation will be anything but the Nintendo Wii -- even if Nintendo were to suffer an unusually bad few years, and its competitors were to enjoy unusually good years. Here's Divnich's "worst-case scenario": "For the Wii, let us assume a 25% decline in sales next year," he postulates, "followed by two years of 30% declines, and a 50% decline in 2013. For the Xbox 360, we'll assume a 10% increase through 2012, and a 30% decline in 2013. For the PlayStation 3, a 25% increase next year, followed by two years of 10% increases and a 30% decline in 2013." Even with those unlikely numbers, Divnich says, the Wii comes out selling about as much as the PS2 has, and claims victory over the Xbox 360 and PS3. The reality will, of course, be much more complicated than the projection. Divnich notes that Nintendo is likely to release some kind of new hardware, either in the form of a bundle or an upgraded system, that will affect sales; "Additionally, we know that Sony plans to support the PS3 through 2016, which means there are three additional years where Sony could gain a tremendous amount of ground on the Wii and Xbox 360 by being able to offer an affordable Blu-ray player to consumers (very similar to the late success the PS2 had by being able to offer consumers an incredibly cheap video game system/DVD player)." Still, it seems that the only chance for a second-place Wii is for the DS to eventually become large enough to count as a home console.
