BBC News - "Gaming now worth more than video, music and the BBC combined"

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NickSCFC

PostBBC News - "Gaming now worth more than video, music and the BBC combined"
by NickSCFC » Thu Jan 03, 2019 11:58 am

https://www.bbc.co.uk/news/technology-46746593

Gaming worth more than video and music combined

The video games sector now accounts for more than half of the UK's entire entertainment market, according to a new report.

The industry is worth £3.86bn ($4.85bn) - more than double its value in 2007 - said the Entertainment Retailers Association (ERA).

That makes it more lucrative than video and music combined.

The success is largely down to three games: Fifa 19, Red Dead Redemption 2 and Call of Duty: Black Ops 4.

The games market has grown, despite the fact that the physical console and PC games market shrank slightly in 2018, and digital also had a modest 12.5% growth.

Chief executive of ERA, Kim Bayley said: "The games industry has been incredibly effective in taking advantage of the potential of digital technology to offer new and compelling forms of entertainment. Despite being the youngest of our three sectors, it is now by far the biggest."

Three games - Fifa 19, Red Dead Redemption 2 and Call of Duty: Black Ops 4 - each sold more than one million physical units in the UK during 2018.

The figures do not take account of the success of mobile and free games such as Fortnite, which has more than 200 million players around the world.

Piers Harding-Rolls, head of games research at IHS Markit said: "During the last five years the games sector has benefited hugely from the mainstream adoption of games apps on smart devices, and the transition from physical distribution to digital distribution in established parts of the market such as console gaming.

"Games are now truly mass market and a very important part of the entertainment sector."

He added: "Growth has been fuelled by the dominance of free content and in-game monetisation, which expands the adoption of games but also removes the cap on spending for those gamers that are really engaged in the experiences.

"The flexibility of interactive content means it is unique in that it can be monetised in this way, which is an advantage over other forms of entertainment."

Last edited by NickSCFC on Fri Jan 04, 2019 5:25 pm, edited 1 time in total.
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Rudolphin
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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Rudolphin » Thu Jan 03, 2019 12:05 pm

B...b...but gaming is for nerds!

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Gemini73

PostRe: BBC News - "Gaming now worth more than video and music combined"
by Gemini73 » Thu Jan 03, 2019 12:11 pm

B..b...but AAA publishers aren't making enough money to develop new games, that's why season passes, loot boxes etc must exist!!!

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Dig Dug » Thu Jan 03, 2019 12:17 pm

Gemini73 wrote:B..b...but AAA publishers aren't making enough money to develop new games, that's why season passes, loot boxes etc must exist!!!

The industry is still having huge issues with budget and covering costs. Even the article points out that the growth is mostly attributed to the only 3 games to sell over a million copies. It doesn't change the fact that games like Shadow of the Tomb Raider are leaving SquareEnix massively out of pocket. The industry is doubling down on making things bigger all the time but very few games can actually cover their increasing costs. There's more competition on the market too, Tomb Raider costs more to make but is only selling a fraction of what the original PS1 games managed, that's a problem with the industry.

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Qikzmas » Thu Jan 03, 2019 12:21 pm

Gemini73 wrote:B..b...but AAA publishers aren't making enough money to develop new games, that's why season passes, loot boxes etc must exist!!!


Shareholders.

Activision are making millions in profit and its not enough, they must make more money for shareholders.

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Rudolphin » Thu Jan 03, 2019 12:42 pm

Qikzmas wrote:
Gemini73 wrote:B..b...but AAA publishers aren't making enough money to develop new games, that's why season passes, loot boxes etc must exist!!!


Shareholders.

Activision are making millions in profit and its not enough, they must make more money for shareholders.


I found this article particularly stunning:

Blizzard has spent the year taking big measures to cut costs as it prepares for a lean 2019. Those measures, as conveyed by people who work or have worked for the iconic studio, include employee buyouts in which workers are offered money to leave, a broadening of the finance department, and the limitation of budgets for any team at the company that isn’t directly making video games.


Last month, a Kotaku investigation revealed that Blizzard’s staff have been told to reduce expenses while at the same time produce more games.


https://kotaku.com/with-activisions-inf ... 1831263741

One of the, if not the most successful games studio in the world is having to partake of cost cutting measures whilst bringing in billions in revenue every year. No surprise this is all being led by Activision, and Bobby Kotick specifically.

I've had several long conversations with Trelliz about this but at some point this idea of exponential growth with finite resources is going to come crashing down upon the heads of these companies who consistently want double digit percentile profit increases year on year.

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Gemini73

PostRe: BBC News - "Gaming now worth more than video and music combined"
by Gemini73 » Thu Jan 03, 2019 12:45 pm

Industry crash incoming. :slol:

NickSCFC

PostRe: BBC News - "Gaming now worth more than video and music combined"
by NickSCFC » Thu Jan 03, 2019 12:52 pm

Oddly enough I've not bought a single game from Activision this generation, same goes for EA and Ubisoft.

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Qikzmas » Thu Jan 03, 2019 12:59 pm

One of the, if not the most successful games studio in the world is having to partake of cost cutting measures whilst bringing in billions in revenue every year. No surprise this is all being led by Activision, and Bobby Kotick specifically.


Yup :(

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Sandy » Thu Jan 03, 2019 1:20 pm

Gemini73 wrote:Industry crash incoming. :slol:


Being worked on by an unknown entity, in an unknown location, to be released at an unknown point some time in 2019 - E.T. 2.

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by jiggles » Thu Jan 03, 2019 2:35 pm

Hey guys, watch this:



Assign a competitive 2 year salary + benefits to every name you see. Add the licensing fees for every copy of software each of these people have to use to do their job. That's your investment.

Take the revenue taken by AC Origins* (base sales only, no DLC). Cut half off for distribution and marketing costs. That's your initial return.

Do you think, given the risk that the game could turn out shite and not sell as well as forecasted, is that return alone worth the investment? When there are a ton of other safer, non-gaming ways to invest the money?

Nobody seems to want to acknowledge how risky putting money in game development is. The audience is extremely fickle and can just lose interest in long-running hyper-successful franchises at the drop of a hat. Making a 1.2x return isn't something you'd want to reinvest in if you only took the chance because of the potential for 10 times as much.

Activision-Blizzard are making bank on Hearthstone, but that doesn't justify pissing more money away on Heroes of the Storm. And I'm sure the revenue trickles for StarCraft and Diablo have dried up at this point. Call of Duty is performing worse than it did before. Tony Hawk's Pro Skater and Guitar Hero were two of the largest properties in the world and now they're both gone, the latter's DLC being a particular cash cow that I'm sure it hurts to lose. Destiny isn't doing as well as they were predicting, WoW subs are down and Overwatch is also in a slow decline, with an expensive eSports investment doing little to reinvigorate it. Again, the largest franchises in the world, either gone, in decline, on the shelf, or underperforming. If you'd taken the risk to invest money in those, year after year, would you be happy with how the projects are doing?

* Ubisoft forecasted 19 million copies sold lifetime. But remember most copies are not sold at full price.

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Abacus » Thu Jan 03, 2019 2:40 pm

Or is it just due to the fact that no-one pays for music or 'video' any more, whereas it's harder to nick games?

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Peter Crisp
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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Peter Crisp » Thu Jan 03, 2019 2:47 pm

Rudolphin wrote:B...b...but gaming is for nerds!


Don't forget the geeks :shifty: .

jiggles wrote:Nobody with a VR headset is going to be using it regularly this time next year, let alone in 4 years time.


Posted 16th March 2016. Let's see.
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PostRe: BBC News - "Gaming now worth more than video and music combined"
by OrangeXMS » Thu Jan 03, 2019 3:41 pm

They're not even counting mobile and FTP games, so this no doubt happened a while ago

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Rudolphin » Thu Jan 03, 2019 4:29 pm

jiggles wrote:Hey guys, watch this:



Assign a competitive 2 year salary + benefits to every name you see. Add the licensing fees for every copy of software each of these people have to use to do their job. That's your investment.

Take the revenue taken by AC Origins* (base sales only, no DLC). Cut half off for distribution and marketing costs. That's your initial return.

Do you think, given the risk that the game could turn out shite and not sell as well as forecasted, is that return alone worth the investment? When there are a ton of other safer, non-gaming ways to invest the money?

Nobody seems to want to acknowledge how risky putting money in game development is. The audience is extremely fickle and can just lose interest in long-running hyper-successful franchises at the drop of a hat. Making a 1.2x return isn't something you'd want to reinvest in if you only took the chance because of the potential for 10 times as much.

Activision-Blizzard are making bank on Hearthstone, but that doesn't justify pissing more money away on Heroes of the Storm. And I'm sure the revenue trickles for StarCraft and Diablo have dried up at this point. Call of Duty is performing worse than it did before. Tony Hawk's Pro Skater and Guitar Hero were two of the largest properties in the world and now they're both gone, the latter's DLC being a particular cash cow that I'm sure it hurts to lose. Destiny isn't doing as well as they were predicting, WoW subs are down and Overwatch is also in a slow decline, with an expensive eSports investment doing little to reinvigorate it. Again, the largest franchises in the world, either gone, in decline, on the shelf, or underperforming. If you'd taken the risk to invest money in those, year after year, would you be happy with how the projects are doing?

* Ubisoft forecasted 19 million copies sold lifetime. But remember most copies are not sold at full price.


I'm slightly worried about replying to this as I don't have the energy to get into a full-on barney at the moment, but I sort of feel I have to.

I couldn't agree with this opinion less.

What you've done up there is describe the basic functioning of the capitalist system. Invest money to create a product to sell for a profit to invest all over again. There is always risk involved in any such venture which is factored into the investment. Nothing you've said excuses Activision cutting corners whilst still making billions of dollars in revenue a year. Again, this is core to idea of capitalism.

The following, to me, is the centre of your point:

Destiny isn't doing as well as they were predicting


Destiny wasn't doing as well as predicted, this is true. But the point here is that the prediction was wrong. Activision refused to share hard statistics regarding this "failure", but we can assume that the game continued to rake in huge amounts of money...just not enough money. We don't even need to assume:

http://www.pushsquare.com/news/2018/11/ ... t_of_money

According to SuperData, Destiny 2 was the highest grossing digital console game of September 2018 -- a month that saw juggernauts like Marvel's Spider-Man and FIFA 19 launch. It even managed to make more money than Fortnite, which we imagine by this point is turning over a huge amount of dosh every single day.


What does this tell us? Is it that the publishers are simply suffering the inevitable after-effects of an expensive creative venture, or is it that their predictions are massively over-inflated and based on nothing but the desire to appeal to shareholders?

The examples you have cited, Diablo and Starcraft especially, are games that are pushing 5 years old at this point and are still making money for Blizzard. Diablo 3 recently hit Switch at full $60 price. WoW subs are declining as the game is 14 years old but it, alongside Overwatch are still some of the most popular games on the planet.

Check the graph here:

https://www.macrotrends.net/stocks/char ... it-margins

Gross profits, after expenses, have continued to rise for almost 10 years. Operating costs have remained steady. They took a hit in net profits in 2017 but that's been increasing since then.

This isn't about a publisher buckling under the weigh of production costs and expenses. This is the video games industry as a whole being about more, forever more, profits for shareholders. It's about exponential growth with a finite consumer base and finite resources being mathematically impossible and as this idea settles in, it being the devs that feel the repercussions of this realisation in order insulate the shareholders that little bit longer.

Last edited by Rudolphin on Thu Jan 03, 2019 4:47 pm, edited 1 time in total.
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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Trelliz » Thu Jan 03, 2019 4:44 pm

I wonder how much of that massive pile of profits is divvied out to the developers of games like destiny/asscreed etc, if their studio isn't immediately closed or downsized after launch.

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Dannie Lennox_ » Thu Jan 03, 2019 5:44 pm

Gemini73 wrote:Industry crash incoming. :slol:

This was my initial thought too. With Brexit likely to drive up costs for developers, publishers and retailers in the UK and EU, can things really be sustainable?

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NickSCFC

PostRe: BBC News - "Gaming now worth more than video and music combined"
by NickSCFC » Thu Jan 03, 2019 5:46 pm

Quantum Name wrote:
Gemini73 wrote:Industry crash incoming. :slol:

This was my initial thought too. With Brexit likely to drive up costs for developers, publishers and retailers in the UK and EU, can things really be sustainable?


Does the UK have much of a development industry left?

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by Squinty » Thu Jan 03, 2019 6:07 pm

But....but.....but......fish!

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PostRe: BBC News - "Gaming now worth more than video and music combined"
by jiggles » Thu Jan 03, 2019 6:14 pm

Rudolphin wrote:stuff


I'm not saying how it should be, I'm saying how it is.

All the investment that happens is to try and make more money. It's easy to picture Kotick laughing maniacally on a golden throne demanding MORE, but as you've correctly pointed out, he has to answer to shareholders, who all want their investments to grow. From the big VCs that it's easy to hate to the 26 year old single dad with one $47 share as a miniscule part of his pension portfolio,
or the Blizzard audio engineer that has stock options, everyone wants maximum returns for their capital. And if they're not getting the gains they expect, they'll move their money elsewhere.

(Company-wide figures include mobile and DLC, too. My point was more that AAA console and PC games that don't have any DLC are becoming less and less viable as investment opportunities.)

If I ask myself "what would the gaming industry look like in 2019 if every single game was £49.99 and nothing ever had DLC?" My best guess is that it would have crashed by now. Either by stagnation, or by oversaturation of low-quality shovelware.

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