You’ve probably noticed over the years that the last quarter of the year is stuffed with big game releases. Traditional wisdom suggests it’s so that publishers can benefit from holiday sales, with their games showing up under trees, ready to be ripped open like a brand new Nintendo 64 on Christmas morning.
For years, it’s been about holiday sales – which is why we’ve had games like Titanfall 2, Dishonored 2, Call of Duty, Battlefield 1, Watch Dogs 2, The Last Guardian and about a million other big blockbuster games launch within the past few weeks. It’s been an exhausting time, and a an especially rough time on gamers’ wallets.
But it is changing – and will change even more. You’ll probably see games being a little more spread out, and then supported for longer, giving them longer tails. Why? Because publishers can keep making money off of games that are already out. Publishers are making a lot more money these days from “add-on content” (Read: DLC).
“As for recurring revenue, in the console market close to 40% is likely to be from online revenue streams in 2016 with the biggest one being add-on content that releases after a game’s initial launch. Even a company like Take-Two Interactive is reporting that nearly 40% of revenue is now from ‘recurrent consumer spending.’ Activision Blizzard of course has the Blizzard and King division that is all about recurrent spending products,” Cole says.
While the year-end rush is still important to sales, day one sales aren’t as important a measure of profitability.
“The Q4 holiday rush is still important; it is just not make or break for most of these companies. The downside for a Call of Duty or Titanfall 2 is fewer initial sales mean less recurrent revenue but we think it is still possible to add consumers after a product launches. A slowdown in CoD or other products simply means Activision needs to work harder promoting the product after the initial blast.”
This aligns with Ubisoft’s recent statements about games having longer tails through increased post-release support. It’s not as important to sell many copies on day one, or through pre-orders. Instead, it’s more important to foster a focused, engaged community that’s willing to keep paying.
“The Crew, The Division and Rainbow Six Siege each have more than 10 million registered players, demonstrating that we are effectively executing our business development plan and moving towards an ever-more recurring model,” said Ubiboss Yves Guillemot. “All of our actions and initiatives are aimed at achieving this objective. We are creating powerful franchises that offer long-term visibility. Our multi-studios organization enables us to have regular games releases. And the Live experiences for our consoles and PC games, including our investments in eSports, encourage long-term player engagement.”
Last Updated: December 7, 2016