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A tiny percentage of app users account for over half of gaming revenue
If you're like me, you often see the revenue figures that free-to-play game companies boast about and wonder who in their right mind is shelling out so much cash. I could probably tally the number of times I've made purchases in free-to-play games on both hands, but there is clearly some segment of the smartphone-owning populous that is doing it far more frequently. According to a new report from analytics and consulting firm EEDAR, it's not a whole bunch of people shelling out moderate amounts of cash -- it's actually a very small percentage of users who are paying in vast sums of money for their gaming habits. By breaking down the numbers and classifying app users as either "non-payers," "moderate payers," or "heavy payers," EEDAR was able to show exactly where the revenue is coming from. The research shows that less than 6% of all the people who use free-to-play apps make up 51% of the app's revenue. That's an astronomical figure, and has to make you wonder whether -- as many, including South Park, recently suggested -- the addictive nature of the games is preying upon those who are naturally predisposed to wasting money they can't afford. via GamesIndustry.biz
NPD forms 9-publisher panel to gather, report digital storefront data
The NPD Group, responsible for compiling and releasing monthly sales data of the gaming industry in North America, is attempting to address a hole in its retail-skewed data: digital point-of-sale information. NPD plans to change its methods to include these digital POS figures, and change them "quickly," Games President David McQuillan tells Games Industry. McQuillan wants to prepare for the new consoles hitting shelves this holiday. "We fully realize that the market needs the same level of information for the digital categories as exists for the physical business today: SKU-level POS," he says. "The progress on that effort up until recently has been slow and frustrating at times, but today I am very happy to share that the pace of progress has changed recently. NPD has formed a leader panel to track digital POS sales of full game and add-on content downloads." The leader panel includes nine "leading games publishers," and it will first focus on full-game downloads and DLC for PC, consoles and mobile devices. The program is in beta now, and NPD is partnering with research company EEDAR to track digital POS numbers worldwide –not only in North America as its current system does. Eventually the digital results will make their way into NPD's monthly reports, but there's no word on when that will happen. "Once we move past the beta or proof of concept phase, subscribers will have access to the full data set, which you would expect of any service," McQuillan says. "The level of information to be shared publicly has not been determined at this time." Since 2010, NPD has tracked downloads of full games and add-on content, subscriptions, mobile games and social games, but it leaves out numbers from digital stores such as Steam, Xbox Live Marketplace and PlayStation Network in its monthly reports. The importance of these marketplaces continues to grow over the years, and last month the ESA called the NPD reports a "disservice to the truth." In 2011, EA called NPD's data "a misrepresentation of the entire industry."
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.
EEDAR report: half of HD console owners buying DLC
Research firm EEDAR has produced its "Deconstructing Downloadable Content (DLC) Report" for 2011. The report, now in its third year, reveals that 51 percent of HD console owners have purchased DLC in the last 12 months. EEDAR expects DLC will generate over $875 million in 2011, surpassing $1 billion in 2012 in North America. EEDAR figures if publishers can get the 49 percent who have not purchased DLC to convert, the North American games industry could make an extra $600 million dollars. According to the report, the number one reason, at 47 percent, for consumers not purchasing DLC is privacy ... your guess is as good as ours as to what that means. EEDAR analyst Jesse Divnich told Joystiq the company plans to break out that question for more detail next year. Reasons two and three -- "no return policy" and "too expensive" -- make far more sense. We also asked Divnich how the company defined "purchased" to the survey participants, since the bundled "online pass" has become ubiquitous this year. He told us that the survey was specific about a transfer of money having occurred for online content, but that a respondent could have taken that to mean at the cash register instead of through a digital distribution network. Those interested in the business of DLC can take a look at the excerpt of the report.
NPD teaming with EEDAR to track digital sales
Game industry analysis firms NPD and EEDAR have announced a new partnership "aimed at improving the measurement and analysis of the evolving video game industry." Specifically, it appears that EEDAR will help NPD round out its coverage of downloadable game sales. Together, the two firms hope to create a "total market tracking service for interactive entertainment," providing a broad picture of both physical and digital sales data. As part of this strategy, EEDAR's GamePulse service will immediately begin incorporating NPD's point-of-sale data. Traditionally, NPD has only reported physical sales of games in North America, though the group has been attempting to expand its coverage of downloadable sales in recent years. Given EEDAR's expertise in the field, it seems to be a good partnership for both firms. It's worth pointing out, however, that Steam, undoubtedly one of the largest digital distribution platforms, does not share its sales numbers. In other words, getting a truly accurate picture of the downloadable landscape could be difficult.
EEDAR: PSN Welcome Back program spurred download sales
According to a new report from analytics firm EEDAR, Sony's PlayStation Network Welcome Back program did more than boost user morale: it actually boosted purchases of downloadable titles. Using data gathered from IGN GamerMetrics, ownership of downloadable titles jumped from 13 percent in March, before the PSN first went down, up to 17 percent in June. The jump isn't surprising, given the free titles Sony made available. Even taking those out of the equation, though, downloadable ownership was still up to 15 percent in June. The firm also noted that interest in sequels to the free games, notably LittleBigPlanet and Dead Nation, rose significantly. Specifically, LittleBigPlanet 2 trailer views were up 69 percent on GameTrailers, while Google Insights data indicated a greatly increased number of searches for the term "Dead Nation 2." Based on the increased interest in sequels to the free titles in the Welcome Back program, EEDAR suggests a possible new model for sequel releases. Essentially, in order to drum up interest for upcoming sequels, publishers could release their respective predecessors for free for a limited time. The report acknowledges that this is a risky maneuver, though it notes that the free titles would only have to boost sales of their sequels by a small margin for the practice to be profitable.
EEDAR picks its most promising retail performers from E3 2011
Using a complex mish-mash of chicken bones, crystal spheres and traffic reports from IGN and GameTrailers, game industry analysis firm EEDAR has picked which games from the E3 show floor it expects to be the biggest sellers this year. Their choices probably won't shock and surprise you: Mass Effect 3 took top honors, followed by Battlefield 3, Skyrim, Modern Warfare 3 and Assassin's Creed: Revelations. Let this be a lesson to all the video game publishers out there: If you want your games to sell like hotcakes this holiday season, you best slap a three on the title. Check out EEDAR's full report (PDF) for the rest of E3's expected mega-successes.
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.
Analysts sound off on 3DS price and release date announcement
Over the past 24 hours, select members of the gaming industry peanut gallery have sounded off on Nintendo's recently announced launch plans for the 3DS. Many in the investment community balked at the high price and later-than-expected launch window, including Lazard Capital Markets' Colin Sebastian, who worries "shipment quantities to the U.S. next spring might be more constrained than originally anticipated." MF Global FXA Securities' Jay Defibaugh explained that those two qualms, combined with the devices apparent lack of 3G support, made the announcement a "worst-case scenario." Though many analysts appear to share these concerns, EEDAR, which expects the handheld to come to the US in March 2011 at $249 to $299, disagrees. "The higher price point allows Nintendo to incorporate new features such as 3D movies, camera, and game support," EEDAR noted in a report received by Joystiq yesterday, later adding, "a 2010 Holiday launch would severely impact both the quantity and quality of titles that could be made available by November 2010." Wedbush Morgan analyst Michael Pachter predicts that the market will bear the relatively high price of the handheld, though he expects the cost to drop to $250 when it arrives in the U.S.. For more of Pachter's predictions for Nintendo's western 3DS launch plans, check out our interview with the outspoken analyst.
EEDAR: consumers have greater interest in DLC a month after game's release
Click to engraphisizeEEDAR CEO Greg Short previewed a new report today at GDC Europe, indicating that a majority of consumers want DLC one to three months after a game's launch. That detail is just one part of the company's "Deconstructing DLC Report," which should be available later this month (to those with the cash). Comparing data from 2009 and 2010 revealed a significant uptick in the percentage of those who want DLC a month after a game's release, and a decrease in those who want it at launch or a year later. Given the data, Short notes that developers need to make DLC releases "part of the build plan" for games. Comparing when consumers check for paid vs. free DLC for a game, the figures are incredibly similar. The report indicates 35 percent never check for paid DLC, compared to 29 percent of consumers who never check for free DLC before purchase. On the other hand, an average of 20 percent check up on free or paid DLC before purchasing. As for those who check for paid or free DLC during purchase, after purchase or after finishing the game, they all have very similar percentages. It appears that DLC is important to consumers, but whether it's paid or free, they seem to go looking for it at similar times.
Full EEDAR/SMU study on purchasing influence is now available
A couple weeks back, Joystiq received an advance copy of a study conducted by EEDAR and SMU's Guildhall, the purpose of which was to determine the purchase intent of individuals and how trusted review sources weighed into consumer decision-making. While our previous post offered all kinds of insights and neat breakouts from the study, you can now freely peruse the 31-page report for yourselves. In the spirit of figuring things out, we've decided to conduct our own little study, which you can participate in just past the break. It's not scientific or anything, but then again, we're not Sciencestiq now, are we?
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.
EEDAR/SMU study: review scores affect perceived quality, purchase intent
A study conducted by EEDAR and SMU's Guildhall found trusted media outlets do affect consumers' perception of video games and their willingness to purchase. Joystiq received an advanced copy of the study (releasing publicly next week), that involved 165 qualified participants split into three groups, who were then exposed to high, low and no review scores for Plants vs. Zombies before playing the game. After the 20-minute session, the subjects were offered either a copy of the game or $10. A result of the study was that participants exposed to higher review scores were 100 percent more likely than those exposed to low scores to take a copy of Plants vs. Zombies over the $10 and "85 percent more likely to take the game than the control group." The study concludes that "because nearly twice as many participants in the high review group took the copy ... that the relationship between video game sales and professional review scores are not correlative but causal." Plants vs. Zombies was chosen because it's "regarded by the gaming community and by critics as a high quality title of broad appeal." The mock reviews used in the study were from five well-known media outlets and participants were told that the aggregate review score they were given was "comprised of 51 professional" outlets. All participants "played the same game, on the same type of computer, in the same environment, for the same amount of time."
EEDAR releases preliminary E3 interest stats
Electronic Entertainment Design and Research (EEDAR) has released a report listing various attention metrics from gamers from two sites, GameTrailers and IGN.com, regarding the most "popular" titles from E3. We put "popular" in quotes there because these stats are for things like trailer streaming and page views rather than a scientific survey -- this is a general feel of the zeitgeist on these two specific sites rather than a comprehensive view of what gamers thought of E3. But there are interesting things to note even in this limited set of stats, especially when you compare it to our own anecdotal show floor and "chatter" data from you commenters. We heard from quite a few of you during the show that Nintendo's press conference was the most popular event, and this list agrees. Likewise, The Legend of Zelda: Skyward Sword was one of the most popular titles on the show floor, and there's no shortage of Link representation here. Kirby's Epic Yarn is probably the biggest unannounced-before E3 title on the lists, and Marvel vs. Capcom 3 captured a lot of attention -- not much was revealed at the show itself, but it was placed front and center on the floor of the West Hall. At the same time, there are some weird conclusions here. World of Warcraft: Cataclysm, an expansion which didn't even make an appearance at E3, registered in the top 20 in the GameTrailers stats and Red Dead Redemption, a game that's already out, picked up spot No. 8 on IGN's Page Views list of big E3 titles. EEDAR also notes that the Nintendo 3DS didn't rank on any of these lists, but given the lines at the Nintendo booth to see it, the new handheld garnered plenty of attention. So you can't really bank on these titles yet. But if you're interested, you can check out EEDAR's top 10 in each category 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."
LOGIN conference hosting two panels on game addiction
It's been pretty hard, but after 45 straight minutes of arguing with ourselves, we were able to pull away from Imagine Babyz long enough to get some work done. And who woulda guessed it, the very first post we sit down to write happens to be about the upcoming Login Conference in Seattle, an event which includes not just one but two panels specifically dedicated to video game addiction. Author and psychotherapist Hilarie Cash will be presenting the (tautologically delicious) "Games and Addiction: The Addictive Power of Games," a panel that examines the correlation between addictive gameplay and "something that is truly addictive." The second panel again features Cash, this time alongside Entertainment Science's Darion Rapoza, with discussion moderated by EEDAR's Geoffrey Zatkin, and will further discuss the first panel's subject. For those of you looking to attend (and not stand up and shout during either of the panels), more information can be found on the conference's official website. [Via GamePolitics]
