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MMO subscription dollars in decline for the first time since 2002
With all of the free-to-play MMOs coming onto the market and the F2P conversion of formerly subscription-only titles, it should come as no surprise that the subscription model is losing its grip on the industry. Eurogamer reports that starting in 2010, the money brought in from MMO subscriptions has actually gone into decline for the first time ever since analysts began tracking it in 2002. 2010's subscription revenue added up to $1.58 billion, a respectable amount but still 5% less than 2009. 2009 saw a 10% bump in subscriptions, and 2008 witnessed 21.6% growth. Connect the dots, and subscription revenue has most likely peaked and begun a downhill slide. Analysts predict that by 2015, revenue from subs will be as low as $1.33 billion. However, with the popularity of RIFT this year and the coming storm of Star Wars: The Old Republic, the subscription model may see a resurgence. On the flip side, microtransactions from F2P models are rising exponentially, jumping 24% from 2009 to 2010 to account for $1.13 billion. With the two models combined, the industry saw a very modest 5% increase last year in revenue. Screen Digest analyst Piers Harding-Rolls sees the writing on the wall: "The focus of many PC game operators has clearly shifted to micro-transaction‐based models -- in part due to competition in the subscription market especially in the high‐end MMOG segment, but also because of the flexibility micro-transactions offer operators in monetising gamers."
The state of the subscription MMO: Revenues up, WoW's stranglehold slipping
While MMO subscription numbers are largely hidden from public eyes, GamesIndustry.biz found a report by Screen Digest that delivered solid figures for the rate of subscription growth and revenue from the Western market. It's a classic case of "good news, bad news" for the industry. The good news is that MMO subscriptions rose from $1.4 billion in 2008 to $1.6 billion in 2009, a respectable increase, especially when you consider the increase of free-to-play and microtransaction titles. This number is expected to hit the $2 billion mark by 2014. The bad news is that the average revenue per player is down 10% during the same time period due to "the popularity of cheaper premium subscription services." So more people are playing and paying, but they're spending less per person. The analysis noted that World of Warcraft's domination in the subscription MMO market is slipping, going from 60% to 54% during that time period. Screen Digest says not to count the subscription MMO out, however: "We maintain our view that subscriptions will continue to play an important role in the MMOG sector. Certain consumer groups and types of service are well suited to subscriptions but we also acknowledge the growing success and adoption of microtransaction-based MMOGs as an alternative business model for operators."
Analyst: Blu-ray can't stop video sales slump, sees modest growth in 2010
As frequently predicted, Blu-ray hasn't been enough to make up for sagging DVD sales, as a new Screen Digest report indicates a 4.8 percent slide worldwide last year, falling more than $2.6 billion. After plateauing approaching 2007, disc sales have been falling ever since and even Blu-ray's $482 million contribution can't hold up the slack. Still, it's looking at online rentals like Lovefilm and Quickflix to make up for some of the rental losses internationally, but don't expect Blu-ray to help grow the market at all until at least 2010. Of course, the company did also predict the format war would remain stalemated just weeks before Warner ended the whole thing, so we'd keep a grain of salt handy while reading.[Via Financial Times]
In-game ad spending to reach over $1 billion by 2014
In a future where unfathomably large sums of money are spent trying to get you to buy things, only one man can make a difference. We haven't found that man, so until he shows up we're going to buy a new Dell and maybe some Pepsi. We don't know why this urge has struck us -- maybe it has something to do with all those ads we just saw in [INSERT LATEST ACTIVISIONBLIZZARD TITLE HERE].We know not what fate awaits us in this future, but since everyone will be too busy buying stuff it probably doesn't matter. It's not like the machines will rise up or anything, right?
Analysts expect in-game ad spending to reach $1 billion
Analysts at Screen Digest estimate we'll be seeing a lot more virtual billboards as companies throw greater sums of money at in-game advertising. A lot more. The UK-based firm suggests that spending on in-game ads will push beyond a $1 billion by 2014, accounting for about one and a half percent of total global advertising dollars spent. This is despite what the firm refers to as "short term softness" of in-game ad spending so far in 2009. In fact, the company believes in its gilded heart that virtual billboards are here to stay, as they help reach groups of people who are "increasingly hard to reach via other media." So, listen rookie, those bullets the enemy are using are very real, so keep your head down behind that fallen Pepsi billboard over there and bring me a soda.
Study: MMOs bringing in $1.4 billion a year
If America's bankers want to get back into Moneytown, apparently they could do a lot worse than designing a hit MMO -- a study by a group named Screen Digest says that the MMO market is hotter than ever. After dropping down to a total of $701 million in 2008, games like World of Warcraft are seeing their revenues rise again, up to a total of $1.4 billion. And not surprisingly, WoW is still leading the charge -- while their overall market share is dropping very slightly, from 60% of the market down to around 58%, they're still making more money than ever. And while other games are picking up some numbers, according to Screen Digest, they're not really stealing players from Azeroth -- they're actually pulling new MMO players in.Which is understandable -- during times of economic downturn, online games like MMOs are actually positioned to do very well. Why spend $15 on one night at the movies when you can spend it on a whole month of entertainment? World of Warcraft may have brought the MMO monster to the surface, but according to numbers like these, this is a game genre that's going to be extremely popular (and profitable) for a long time to come.
Analyst: PS3 will catch up to Wii by 2011
You'll typically find that any words following a colon and the word "analyst" are interesting enough to merit some consideration, yet vague enough to pass as either calculated reasoning or transparent thumb sucking. Speaking to The Economist regarding recent Activision Blizzard mega merger, Screen Digest analyst Piers Harding-Rolls notes that consolidation makes sense in an industry where all of the competing consoles matter. Some currently matter more than most, but he suggests that in the future, it might not be the ones you expect.Harding-Rolls reckons that by 2011, the PlayStation 3 will not only have surpassed the Xbox 360, but will have caught up with the wildly popular Wii's worldwide install base. Though the PlayStation 3 has fared better in Japan following a price drop, the results of the American cut have yet to be revealed. A notable increase in sales is likely, but will it result in a continuing trend that eventually puts it on par with the Wii? It certainly doesn't seem realistic today, but who (aside from the analysts) knows what things await in the year 2011? Perhaps our analytical friend is merely holding out for the inevitable reality tunneling device which would enable travel to a realm where all of this is true. If you want proper closure though, be sure to bookmark this page and return to it after about four years. We'll be waiting.[Thanks, Andrew]
Analysts continue optimistic predictions, PS3 to meet Wii sales in 2011
The PS3 was originally touted as a machine with a "ten year life span." Well, we can see why Sony is banking on such a long console life -- PS3 is on its way to gaining some serious momentum, if analysts can be believed. With a shaky first year, many have ridiculed the PS3 for its high price and limited software library. Upcoming exclusives in 2008 and the recent price drop are just the first steps for Sony to regain the audience it captured in the PS1 and PS2 eras."Despite increasing PS3 sales, we do not expect any significant shift in PS3 market share in Sony's favor until mid 2008," analyst Jesse Divnich said. "A shift will likely be the result of continued hardware price cuts and the release of several AAA titles such as Metal Gear Solid 4 and Grand Theft Auto IV-both of which is expected to be released near the half-way point of 2008."Looking beyond that, Screen Digest is predicting that PS3 will overtake the Xbox 360, and will even match the success of the Wii years into the future. "As more games become available for the PS3 next year, sales are expected to rise even further, says Mr Harding-Rolls, so that by 2011 the PS3 will have caught up with the Wii." While that would be fantastic for PS fans everywhere, it certainly won't be an easy feat for Sony to accomplish. Will Sony really be able to make good on such optimistic outlooks next year?[Via Joystiq]
Analysts predict PSP sales of 67 million by 2011
Here's another analyst story for you to chew on. Screen Digest is predicting that Sony will sell 67 million PSP systems by 2011. Certainly, that's an impressive figure. It's dwarfed by DS's predicted sales of 112 million, but certainly 67 million consoles is nothing to scoff at. In fact, if Sony's able to sell as many systems as predicted, it will have sold more systems in its lifetime than the industry-defining NES (62 million), SNES, N64, Genesis, Xbox, Gamecube, Dreamcast and Saturn. Certainly, that's a remarkable achievement for Sony's first entry into the handheld arena.[Via Next Gen]
Will rising development costs hinder innovation?
There's an interesting piece over at CVG worth bringing on the PS3 Fanboy front. An analyst actually stopped making console guesstimations and thought about the developers end of the equation for a bit. The man, Ed Barton from Screen Digest, called the "risk reduction strategy" of focusing on franchise sequels and multi-platform titles will choke the innovation out of the gaming industry.But it's not just developers to blame -- consumers widely ignore the innovative titles that are specific to one platform (see Ico) but will eat up a franchise title with minor improvements over the last iteration (see Devil May Cry, EA Sports games, etc). In a contrasting view, those games that are now franchises did indeed start out innovative -- there was nothing like DMC before it, but now it's a cash cow. Sort of. It's breaking into the franchise market by creating an innovative title that's key, right? That's my aside, but let's continue on Ed Barton's rant.Barton talks about the PS3 briefly, calling it the one system that will take the longest to exploit the potential of because of the multi-platform attitude of developers. Since each system this generation is so different, he says, the one that stands apart (my words) will take the longest mature. Good stuff. What do you guys think? Will original titles fade out completely, or is making an original title the only way to break into making successful sequels and a franchise out of what was once innovative?
Gamasutra asks: "Is there anything wrong with the PSP?"
We'd like to think that there's nothing wrong with our beloved handheld. However, the truth is that many people, misinformed or not, do not believe in Sony's platform. Gamasutra asked a number of industry professionals about what they think is wrong about PSP, if there is anything at all. David Cole from DFC Intelligence points out that the price drop is a good step, but that's not enough. "I think a new form factor is needed more than a price cut." Ed Barton from Screen Digest is frustrated at the constant comparisons to Nintendo DS: "We forecast that the global installed base of PSP users will be around 29 million at the end of 2007, generating $1.9 billion in software sales. Lifetime software sales at the end of 2007 will be around $4.5 billion. If this is 'failing,' then failure just got a huge brand makeover." Mike Wolf from ABI Research thinks that anti-Sony fanboyism runs wild due to high expectations placed on Sony ... due to their ambitious claims. "I believe the device's perceived 'failure' by some is due to the device struggling to live up to Sony's own marketing of the product, much like what the PS3 is going through today." I completely agree with many of the things these professionals have to say about PSP. It's true that PSP is certainly not a failure, but it could've been far more successful as well. Sony has made a ton of mistakes this life cycle, but as they've been recently showing, things can easily change with a refocused effort.
Analyst #198744365 says: PS3 will blast rivals away in Europe
To answer your question, yes, we really did count every analyst up to this point. What do you think we do in our off-time anyway? In all seriousness, The Times have released an article stating this fun point: "Sony is expected to sell up to 1.5 million of its PlayStation 3 consoles in Britain this year, putting it on track to outstrip Nintendo's cheaper Wii within 12 to 18 months of its launch." Hmm, in all of Europe, sure, but in the world? Maybe not so much.But perhaps it will apply to the whole world. Anaylst Nick Parker from Screen Digest said this about the PS3's launch and expected sales: "The lack of shortage is supply driven; what Sony has shipped will sell. We estimate that Sony will sell around 4 million units in Europe this year, with 1 to 1.5 million in the UK." Well, that's a pretty noble target to be estimating. Not that we take these guys' word as law, but do you think this is a plausible outcome? Will the PS3 sell over 6 million units before year's end?
