More than one bite of the Apple

It used to be that developers had one shot at making money from a game. A one-off-purchase. Today it’s a different story.

Microsoft and Sony have provided a marketplace where gamers can purchase further content to extend the lifespan of a game. This content is often in the form of multiplayer maps, additional storylines, avatar accessories, even whole new games from a side-story of the original game, such as The Lost and The Damned in GTA4 or the Undead Nightmare add on for Red Dead Redemption. After the initial game purchase, gamers can spend that much again on additional downloads.

You can’t ignore the impact the iPhone’s had on gaming, relegating the likes of the Sony PSP and Nintendo’s DS further down the rankings. With its built-in payment platform through iTunes, the ‘Freemium’ model has come in to its own. Similar to demo discs included in industry magazines, this model allows gamers try out a demo of a game before deciding if they want to pay for the full version. The initial price points are much lower than its console counterparts, but when you look at in-game purchases, things start to add up very quickly.

Let’s take the current top-grossing iPhone game, Capcom’s Smurf’s Village, which has been causing a stir. The game knocked long-term favourite Angry Birds off the top spot and, unlike Angry Birds, is free to download. But, in-app purchases in order to progress in the game range from £2.99 (the minimum you need to spend) up to £34.99 (just as a comparison, Call of Duty: Black Ops is currently priced at £39 on Amazon).

The idea of the game is to build up your village as much as possible. Smurf’s Village has perhaps made it to the top by taking advantage (knowingly or not) of the fact that after signing in to your iTunes account to purchase an app or a game, you won’t need to enter it again for further purchases for another 15 minutes.

This game is obviously marketed at children. Very few children have iPhones and so would be playing this on their parent’s phone. The parent will input the password to download the game and then hand over the phone so the child can play. For 15 minutes it’s then very easy for a child to wrack up the purchases in order to build their Smurf Village as much as possible. This has obviously caused some commotion and perhaps rightly so.

The danger of in-game purchases is that unlike when you actually buy a game in a store, you’re not handing over anything in exchange, like a debit card or cash for instance. The genius and damnation of platforms like iTunes is that it doesn’t feel like you’re spending any money. A couple of clicks and ‘hey-presto’ - content downloaded. It’s extremely easy for people to lose track of how much they’re actually spending.

In-game purchases have become more and more popular and the model is here to stay and why not? It works for both parties. If a gamer likes a game, they can pay to download the full version and then pay further to enhance the experience. Developers obviously reap the benefits of making an addictive game with low barriers to entry for the gamer. The more accessible a game is, the greater chance of success, but at the end of the day gamers will vote with their thumbs as to whether a developer gets a second bite of the revenue apple. 

Video games: Much more than the new Hollywood.

It’s no secret that video games are big business. Gaming has arguably become as big as, if not bigger than Hollywood.

The latest installation of the Call of Duty franchise, Black Ops, has just broken the record for the biggest entertainment release of all time, taking £400m in five days. The record was previously held by its predecessor, Call of Duty: Modern Warfare 2 – which made £340m in the same period.

Video games have been present in Hollywood going back to around 1993, with Super Mario Bros. You can see a more comprehensive list of video game movie spin-offs here on Wikipedia.  It’s not a new thing. Although we’re seeing bigger budgets in video games, they’re still quite a way from cinema budgets.

Without needing the pull of blockbusting acting talent, video games have a distinct advantage over cinema in terms of profitability. Let’s compare two of the biggest cinema and video game releases of 2010: 

Toy Story 3 (released June 2010)

Cost to make = Around £120m

Made to date = Around £700m

Call of Duty: Black Ops (released November 2010)

Cost = around £20m

Made to date = £400m (five days)

In terms of budget and revenue, it’s not hard to see why video games are becoming bigger and bigger business. What would also be interesting to see is where iPhone games fit in to this. I’ve been trying to find some figures to help figure this out, but so far the only thing I can find is that since the launch of the Bejeweled series in 2001, it has ‘generated over $300m in consumer spending’. Obviously this is across a number of different platforms as the iPhone wasn’t introduced until 2007 and the piece was written in January 2009.

Medal of Honor, the rival franchise to Call of Duty, took a unique approach with the launch of its latest release, Medal of Honor: Limited Edition, to try and win back gamers from Call of Duty. Former SAS commando-turned best-selling author Chris Ryan penned a prequel book to accompany the game and help set up some of the storyline. It’s a good example of a video game crossing different mediums in order to try to enhance the gamer experience….as long as the game holds up.

Will videogames suffer the same fate as Hollywood, doomed to repeat itself and cannibalise ideas into eternity? Arguably this is inevitable and already happening.  You only need to look at the Halo franchise, a countless number of Call of Duty and Medal of Honor games, four Grand Theft Auto games and a number of spin-offs moving between different time periods and locations. Each sequel is bigger and more hyped than the preceding title.

To help rejuvenate the medium, video games have in places moved away from what they have meant historically. By this I mean sitting alone in a room with a controller glued to your hands for hours on end. Now, video games have become much more social and not just online. It’s not uncommon for people to have a group of friends round to play Rock Band or something like Sing Star or Lips. Games like this are ripe for further in-game purchases and downloads, with over 1000 songs available in the Rock Band series.

All this means that game developers now have further revenue opportunities after the initial purchase is made. In fact, there may come a time when that initial purchase becomes a rarity. In an piece in Develop i read this morning, 80% of new studios in the UK are focusing their efforts on digital distribution and not having a product for retail stores. With this in mind. Will we start to see cloud based gaming emerging as a major trend in the next generation of games consoles?

What do you think? 

- Neil