image courtesy of dgoomany (via Flickr)

 

With the video game industry showing continued signs of turmoil as a weak November adds to pressure for embattled retailers, we take a look at what the industry can do to give its halo a little more lustre.

 

Sales drop

With another double-digit drop in like-for-like sales last month, the industry is enduring a torrid time. Research firm NPD reported an 11% drop in November for hardware and software sold by retailers, despite strong showings from hit titles such as the latest Call of Duty and Halo sequels.

Even the launch of Nintendo’s Wii U and Assassin’s Creed 3 could not reverse the trend, although the dip was less than the 15% average over the course of the year.

 

Top guns lead the cavalry

A pattern has begun to emerge with the top-5 titles outperforming last year’s bestsellers by 5%, whilst those outside the elites struggled to put in a good showing.

The success stories have been spectacular indeed. Black Ops 2 – the first in the Call of Duty series to be part-set in the future – astonishingly hit the billion dollar mark within the first 15 days of release, said Activision Publishing. In doing so, it outpaced 3D-film spectacular Avatar in 2009 by one day.

Microsoft has already sold a staggering 50-million games of first-person shooter series Halo for the Xbox. A little reading between the numbers indicates that in only a month it has shifted 4-million of its latest edition Halo 4.

 

An alternate reality

Although NPD’s figures make depressing viewing, there are some silver linings. Notably digital sales are not included and neither are tablet or mobile phone games. These platforms are a major contributors to the gaming industry as a whole, and there is a sense that the industry itself may just be undergoing a maturing metamorphic process rather than a straightforward downsizing.

 

Important factors

There are a number of relevant factors that are pulling the games industry in different directions and affecting sales patterns.

 

A series-ious business

First, and perhaps more importantly, is the growing establishment of an elite of must-have sequels, such as the Halo, Call of Duty or Borderlands series. Gaming fans have developed stronger brand loyalty, so it is clear that developers should persist with winning formulas. Obviously, there is still a danger of the gaming industry or an individual games publisher stagnating if they concentrate too much on series development, but the enduring appetite for sequels shows that developers have not tapped out their golden gooses.

 

Put the time in to make the dime

Putting it simply, developers need to spend big to generate high non-digital gaming console software sales. The reason is that there is bucket-loads of competition from digital sales, many of which are free, as well as from ever-advancing smartphones and tablets. Developers as a consequence need to cultivate a ‘blowing the competition out the water’ mentality , so that gamers consider their titles simply must-haves with gaming experiences that can not come close to being replicated on either a Google Nexus or iPhone 5.

 

Breed success

The success of blockbuster sequels shows the increasing value of a Halo-style gaming franchise. Although budgets may be tight, it is worth investing to lay a foundation for the future. If there is not much flexibility on budgets, it makes sense for developers to hold fewer rather more games in their basket. Thus spending more on a couple of projects will probably reap a greater dividend in the long run because although short-term revenue streams may take a hit, the benefit of developing a new gaming franchise with a loyal customer base is like the holy grail in the gaming industry.