Its hard not to be impressed by the Halo 3 launch - as we said when Halo 2 came out, big video game launches are the big event in entertainment these days. But compare the $252m opening week sales for Halo 2 with the $150m sales for the opening of Spiderman 3 - and then think about how much more profitable a game is versus a film - and whilst a film revenues dip dramatically after opening a game can keep selling at full retail price for months. That's real money.
So we were interested to read about Electronic Arts new approach to pricing. At the Royal Televison Society conference the EA CEO John Riccitiello announced that they were moving to a model where games are given away free - with revenue coming from micropayments for extra content bought online. In Korea they trialed this approach with Fifa; “We gave the Fifa disc away free, but, instead of
charging people for software, we charged small payments within the game: 5p
for injury updates, 10p for a new strip. We found that 10 per cent of all
Korean households downloaded Fifa online and the consumer paid us more
online than they would have done buying the game in a store.
Riccitiello also said that lots of current games are too complicated - and future growth would come from simpler formats such as puzzles and word games played on mobile and handheld devices. We see real opportunities for brands here - games get people attention and advertising is increasingly proven as a funding model (Look at the success of Wild Tangent - in whom MindShare parent company WPP has an investment). The brand that develops the next big game for BlackBerry could do very well - BrickBreaker is seriously addictive.
So is Microsoft buying Massive a simple extension of their increasing advertising business ( adding more inventory to sell with MSN) or is it a key strategy in the battle to dominate the console market? This seems a smart way of adding more inventory in a fast growing sector of the market, which gives them something Google and yahoo don't have.
And there must be some benefit in owning the company that can serve ads in PS2 games, giving Microsoft a chance to try to cross-sell their platform before PS3 hits the market. With the Halo movie planned for summer 2007 ( and rumours of a new version of the game at the same time) that's quite a lot of marketing firepower.
Massive is one of the major players in the relatively new business of inserting ads into online games - and as the newer consoles major on online gaming as an option - the opportunity will grow very quickly. A new report from S&P in Business week quotes gaming revenue as being around $56m in 2005 ( up 76% yoy) and forecast to top $730m by 2010.
Just at the Sky+, a smart phone and broadband connection are essential for todays marketers to understand how consumers are consuming media, so too is a games console. As the BBC pointed out recently 59% of people between 6 and 65 are gamers - what's stopping you?
As brands look for ways of engaging with consumers and experiment with creating/curating or funding content Alternative Reality Games (ARGs)are being studied carefully.
The concept was invented as part of the marketing for the Stephen Spielberg movie AI, where Microsoft created hundreds of web pages and then gave people clues and hints in the movie trailers. Thousands of people took the bait and became involved in the ARG called The Beast. Read a good explanation of ARGs here.
And right now the UK is at the heart of this scene. The BBC are using an ARG format to experiment with what they call part game, part drama, part murder mystery. Jamie Kane is about a missing pop star and participants receive clues through emails, blogs and instant messenger. Its very clever and further evidence that the BBC is leading the experimentation with new channels and their potential for interactivity.
The other UK player is Perplex City which has been running for months and is not actually marketing anything - its an attempt to create a new standalone media property - with a business model based on selling cards. Good Wired article gives the background.
And there is a good round up on the subject of these games as a marketing medium here.
So is this something we expect to see more of? Definitely - the Audi model shows how a brand can leverage its media spend to get people involved ( a little like Sharp did with their moretosee campaign last year). For example an FMCG brand could organise an ARG - using their ads and the packaging on various of their products to give clues - and use the exercise to build a permission database for an ongoing content driven dialogue - with their sales messages subtly woven in. Watch this space.
This weeks E3 in Los Angeles is the main event in the games industry - anyone who is anyone in the business is there (63,000 of them!) - and they usually have a great time.
This year is a little different as the main focus is on the hardware rather than the software - the games are taking second place as Sony, Microsoft and Nintendo unveil their new consoles in the hope of being the dominant player in what is expected to be a $6billion market by 2010.
Microsoft went first with the launch of the Xbox360, but Sony have got great press for their PS3 - even though its not scheduled to launch until early 2006 - probably 3 months behind the new Xbox. Nintendo will be third into the market with their Revolution. Whilst mobile devices such as the Sony PSP and the Nintendo Gameboy Micro get lots of attention, it is the next generation of consoles that will define the games space.
The PS3 is said (by Sony) to be twice as fast as the Xbox 360 and is backwords compatible with the 85 million PlayStations sold so far - as is the Xbox 360. The processing speed of these consoles require new technology and the PS3 is 10 times more powerful than the latest PCS
Whoever wins this battle, we expect to see more time and attention devoted to games, and that has a big impact on advertisers who lose those eyeballs from TV. In response to this, another big trend at E3 has been companies offering ways of advertising within games. This channel is getting more and more sophisticated as companies leverage online playing through 'ad serving' technology and partnerships with Nielsen promise the sort of data on viewing that advertisers are used to.
If your brand hasn't got a games strategy, you're probably not going to be a winner.
World of Warcraft went in sale in the UK last Friday and it's on top of the Amazon saleslist. WoW is a Massive Multiplayer Online Roleplaying Game (MMORPG) that is played across the Internet on PCs and has sold incredibly well in the US and Asia before launching here. To give an idea of the size of this community, in the US there are around 250,000 people playing at peak times and each day there are around 150,000 messages posted to the furums!
What is really interesting is the business model - as well as the purchase price of £29.99 there is a monthly fee of £8.99 to keep playing - so over a year the ARPU is over £100. Further evidence that games are a major player in the entertainment business.
Opening weekends have been the traditional way for Hollywood to measure the success of new movies, but the games industry is starting to use this metric too.
When Grand Theft Auto San Andreas went on sale on Friday October 29th all eyes were on the sales figures for the weekend. The figures are now available - 677,000 units sold over 3 days, generating revenues of over £20million. To put that into context the latest Harry Potter film set a new UK box office record with £5m revenue on its first day.
But even this performance will be overshadowed by the launch of Halo 2 in the US tomorrow - pre orders have passed 1.5 million which equates to sales of over $750million.
Games are no longer the preserve of spotty teenagers - in the US the average age of gamers is 29 and in the UK Playstation 2 has an installed base of over 5 million. And with the average game requiring 40 hours of play that's an awful lot of attention for brands to try to and attract.