2011 - a great end to the year?

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darrens
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2011 - a great end to the year?

Many people, myself included, have been predicting that the back end of 2011 is going to be very strong for the video game industry with a release schedule that is the strongest for many years.

I have tried to do a bit more analysis to see if this is true or not by going back over the NPD (US) numbers and releases for last year and comparing it to this year. To do that I've looked at the top 5 titles for last year in each month and compared it to what is going to be happening this year.

I've had to pick what I believe are going to be the strongest titles over the coming months and you may disagree. Firstly, let's get the titles out of the way that were in both last year and this year. The list of notable titles are:

  • Madden
  • NHL
  • FIFA
  • NBA2k
  • Just Dance
  • Need for Speed
  • Assassin's Creed
  • Call of Duty

With the exception of NBA2k (because of the players strike) I think most people are forecasting that this year's iterations will sell at least as well as the previous year, probably more. There is also a question of whether COD sales will be cannibalised by Battlefield but with Modern Warfare 3 pre-orders tracking ahead of Black Ops the current evidence is that it won't.

So, looking at that list, I'm going to predict that those titles will sell at least as many this year as last and will probably sell more (although not spectacularly so).

If you then take it month by month I've got titles that made the top 5 for last year (with units where available), the "competing" titles this year and some notes.

Month 2010 2011 Notes
August     Super Mario Galaxy 2 (Wii) – 124.6K Deus Ex: Human Revolution In 2010, Madden was released but it won't be released until September this year so August will probably be down year on year because of the timing differences
 
September Halo Reach (360) - 3.3 million Gears of War 3 September will include Madden but last year Halo Reach was the big hit.  Not sure if Gears of War 3 plus Madden (1st month) will be able to beat Madden (2nd month) plus Halo Reach from last year.
Dead Rising 2 (360, PS3, PC) 370k  
October Fallout: New Vegas 1,117,000 Battlefield 3 With the release of Battlefield 3 and other strong titles this looks to be the month which will clearly outperform the previous year.  Both years had NBA2k (in 2010 it did 1.15m units) and the 2011 iteration may not perform as well but looking at the other releases 2011 looks much stronger.
Medal of Honor Over 1 Million Batman: Arkham City
Fable III 580K  Forza 4
Star Wars: The Force Unleashed II >315k Rage
November Fable III MICROSOFT Uncharted 3 November is the month where Modern Warfare 3 goes up against Black Ops (which was 25% of all units sold in 2010) but looking at the other 2011 titles then as long as Modern Warfare 3 gets near Black Ops numbers then this month also looks far stronger.
  Legends of Zelda:Skyward sword
  Elder Scrolls V Skyrim
Super Mario Land
December World of Warcraft: Cataclysm  1.5 Million SWTOR? Not a lot of releases in December, mainly follow through from previous months but this could be the month were SWTOR, is released.
Donkey Kong Country Returns (Wii) >1.32m Mario Kart 7

Looking at that, then I think it is fairly clear that the top titles this year should be stronger than previous year although that won't actually be apparent until October NPD results which will be in early November. From that point on, I expect software sales to show year on year increases although the headlines up until that point may continue to be negative.

Thoughts?

tsanalysis
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Good summary, I agree with

Good summary, I agree with your assessment. Just a few quick thoughts:

Looking at past NPD data, Madden has been around a 2 million unit seller in its first month and 500k seller in its second month in 2010 and 2009. So, I agree that August will be down with that 2 million from Madden lost. September 2010 had 3.3 million units of Halo Reach. September 2011 will have Gears, which sold around 1.6 million units in its first month in November 2008. I think 2 million units is a reasonable assumption for Gears 3. Add the 2 million units of Madden, and you get close to Reach + second month Madden sales from last year. So September looks like a toss-up to me. October and November look obviously stronger year over year, and I'd just add to the list for November Halo Anniversary. While it is not a full price title it will still move a lot of units. And then December will be carried by strong follow-through and possible SWTOR/Nintendo releases.

As you have noted however, a strong 4th quarter is expected so perhaps the video game stocks start moving in advance of the expected good October/November NPD results and then experience a bit of sell on the news effect.

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darrens
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Yes, I agree October could

Yes, I agree October could also look okay but what I'm thinking about is when there could come a tipping point where the investment community starts to believe that traditional publishers aren't dinosaurs in a shrinking market. Which is pretty much exactly where they sit at the moment.

Look at the multiples they are on compared to things like Popcap, Rovio and Zynga and you can see that, even given the market turmoil, the general view from most of the investment community is that there's no growth potential in the traditional video game markets. While that is, to some extent, true at a macro level a few blistering months may start to change the story.

For me, the real investment story is at an individual company level but a rising tide may lift all the boats and will make any success stories easier to swallow.

darrens
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Tony, looks like you were

Tony, looks like you were pretty much spot on with your GOW3 numbers. Microsoft said this

NPD shows Xbox 360 #1 selling console in Sept, 438K units and Gears 3 #1 title with over 2M units sold-through

and you said this

I think 2 million units is a reasonable assumption for Gears 3

So, take a bow for that one.

Still waiting for the headline figures to see if that GOW3 performance and the Madden mis-match month has finally given us an up month.

Edit: total sales up 3%, hardware down 9%
Edit 2: actually total sales down 6%, with software up 3%, hardware down 9% and accessories down 14%.

tsanalysis
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Thanks, but 2 million was

Thanks, but 2 million was just a nice round number I picked.

The big releases have really been killing it quality wise so far. I guess you could say Rage fell a little bit short on Metacritic, but Deus Ex, Gears, FIFA, NBA 2k, Forza, Batman all nailed it.

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darrens
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Well, you picked well :)

Well, you picked well :)

Quality and hype wise then I think the big title are all really nailing it. Nothing has really disappointed and Batman seems like it could be the hit of the season judging by the reviews.

However, I am starting to have some small doubts about whether this year is going to turn out as well as I thought it would. I'm just wondering if there's the follow-on business beyond the first week or two's sales. I'm talking specifically about the UK numbers here (where we get weekly figures) and we've seen FIFA drop 60% in week 2, another 60% in week 3...and it ends up selling 700 units less than Forza. That's a very steep drop off on FIFA and it makes me wonder about the depth of the support for the video game industry.

I'm not changing my mind just yet but I don't feel certain about the last 3 months being as strong as I've been saying it would be.

darrens
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Just to continue the "nailing

Just to continue the "nailing it" theme - the early reviews for Uncharted 3 look really strong: 99%, 94% and 98%. All from European magazines, the last one from OPM Spain.

darrens
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...and Zelda Skyward Sword

...and Zelda Skyward Sword gets 98% in ONM. Joint highest review score they've ever given. Let's see if those Wii owners are ready to buy a game that doesn't involve you dancing around.

tsanalysis
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Maybe the EA thread would be

Maybe the EA thread would be a better place for this, but do you have the week 2 and week 3 percent drop-offs for FIFA 11 for comparison? I thought I read that despite FIFA's week 2 drop off, it was still the 13th best all-time weekly unit sales total:

http://www.next-gen.biz/news/fifa-12-holds-top-spot-uk-chart

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tsanalysis
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One of the analysts in this

One of the analysts in this article expressed an opinion that MW3 and BF3 could cannibalize sales of all other games this Christmas except for Batman, Skyrim, and "maybe Assassin's Creed Revelations".

http://games.ign.com/articles/120/1200238p2.html

I think I mentioned in another thread that I thought sales could become even more concentrated in the top titles this holiday - maybe the top 10 instead of the top 20. But could it really become so concentrated that only the top-5, the top-4, or even only the top-2 are really successful?

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darrens
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FIFA 10 dropped off 63% in

FIFA 10 dropped off 63% in its second week and another 65% in its third (FIFA 11 68% and 62% respectively). Thanks for making me check because actually FIFA 11 declining about the same as FIFA 10 and, obviously, from a bigger launch week that means higher sales.

All UK numbers.

I think the real losers this holiday season (sorry THQ) will be those titles that are really good but are just 3rd or 4th on a gamers wishlist whereas any other time of year they'd be 1st or 2nd. I think those titles always struggle at holiday season but competition this holiday is fiercer than in the past couple of years.

MW3 and BF3 are more likely to cannibalise sales of each other rather than other games. They are direct competition with each other and doubtless some people who would have bought MW3 will buy BF3 and vice versa. I don't think many people who would have bought MW3 and Batman will decide to buy MW3 and BF3 instead.

Trade-ins will be interesting this holiday season. I wonder how many people will swap between MW3 and BF3 and vice versa. Gamestop UK are doing a deal where you can trade in BF3 for MW3 for 99p (sic). It could be a very good source of revenue for the retailers although will stifle sales of new copies at the tills.

darrens
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I'm starting to change my

I'm starting to change my mind about this year and am now quite worried that we won't see the bumper end to this year that I was expecting. If you look at the UK numbers which are available at the bottom of this thread then you'll see that October didn't really pick up in the way that I was expecting in the UK.

This Thursday we get NPD numbers and I'm starting to worry that things aren't going to look that rosy. In particular, Battlefield 3 doesn't appear to have been quite the game that everybody was hoping for and that's been reflected in both the reviews and the sales numbers. FIFA 12 launch week drove the UK market to £53m whereas Battlefield 3 launch week only drove it to £39.1m. Similarly, even though Batman got amazing reviews it's done okay rather than spectacularly well at the tills.

The other thing to note is that October is a 4 week month (as far as NPD is concerned) against a 5 week month for September so, when you add it all up, I'm genuinely starting to think that NPD numbers on Thursday may well get people to revise their view as to how well the video game industry is going to perform.

Anybody else agree?

tsanalysis
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Yeah, I think the risk is on

Yeah, I think the risk is on the downside for the October NPD report. EA kind of set the expectations for BF3 with their announcement of 5 million units sold through in its first week. So less than that just for North America and then subtract digital sales and then also account for the fact that October NPD only includes up to Oct 29th whereas I think EA was including up to Oct 31st in its PR. So I think the risk is the actual numbers reported by NPD for BF3 might appear disappointing. Also agree that Batman sales aren't going gangbusters despite the excellent reviews. Rage was also kind of disappointing. NBA 2k12 will be down also. So yeah, I think reaction to Oct NPDs might be disappointment.

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darrens
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Apologies, NPD (unusually)

Apologies, NPD (unusually) tonight rather than on a Thursday.

Just back on the subject of games "nailing" it critically then Skryim's metacritic is currently at 94% and 96% for the different versions and Zelda at 95%. There's certainly no shortage of critically acclaimed and mega-franchises at the moment - so if this does end up being a down year then it's not for lack of quality.

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