Video Game Business Overview (2008)

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I gave this presentation March 4, 2008 to a group of investors in San Francisco. It is a SHORT overview of the business at the time.

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Video Game Business Overview (2008)

  1. 1. Mark DeLoura - VP TechnologyMarch 4, 2008
  2. 2.  Then: Simple sports games. Now: action, adventure, fighting, platform, shooter, role-playing, simulation, strategy, sports, racing, flying, music-based, puzzle, party, and massively multiplayer games.
  3. 3.  Then: Just games. Now:  Core games.  Casual games.  Serious games.
  4. 4.  2007 Market Stats  US Retail Sales: $18.85 billion ▪ Hardware: $7.04 billion Retail Sales ▪ Non-PC Software: $8.64 billion Hardware ▪ PC Software: $910.7 million ▪ Accessories: $2.26 billion PC Software Non-PC  Box Office: $9.7 billion Software  DVD: $23.5 billion Accessories  Rentals: $7.5 billion Source: NPD Group, www.npd.com
  5. 5. Global Global  Wii: 21.97 million Wii  Xbox360: 17.27 million Xbox360  PS3: 10.52 million PS3 U.S. U.S.  Wii: 7.38 million Wii  Xbox360: 9.15 million Xbox360  PS3: 3.25 million PS3 Source: NPD Group (www.npd.com) and vgchartz.com
  6. 6. Global Global  NintendoDS: 67.71 million DS  Sony PSP: 31.49 million PSP U.S. U.S.  NintendoDS: 17.65 million  Sony PSP: 10.47 million DS PSP Source: NPD Group (www.npd.com) and vgchartz.com
  7. 7.  2007 Top Titles  Halo 3 – 4.82M  Wii Play – 4.12M  Call of Duty 4 – 3.04M  Guitar Hero III – 2.72M  Super Mario Galaxy – 2.52M  Pokemon Diamond – 2.48M  Madden NFL 08 – 1.9M  Guitar Hero II – 1.89M  Assassins Creed – 1.87M  Mario Party 8 – 1.82M Source: Vgchartz.com
  8. 8.  World of Warcraft (Blizzard Entertainment)  Released December 2004  Expansion pack January 2007 ▪ Fastest selling PC title of all time: 2.4M WW in 24 hours  10 million subscribers worldwide ▪ USD 14.95/month  2007 revenues: $1.1 billion Source: mmogchart.com
  9. 9.  Activision / Blizzard (Vivendi) merger  Proposed December 2007  Activision market cap: $8.01 billion  Vivendi Game valuation: $8.1 billion Electronic Arts / Take-Two acquisition  Proposed February 2008  Electronic Arts market cap: $15.12 billion  Take-Two valuation: $2.0 billion Source: www.activisionblizzard.com, www.eatake2.com
  10. 10.  Platform Manufacturers Publishers Developers Service Providers
  11. 11.  Nintendo  Wii, GameBoy Advance, NintendoDS Sony  PlayStation3, PSP Microsoft  Xbox360 Produces the hardware, and software development kits Controls flow of software onto the platform Manufactures the software for a per-unit royalty
  12. 12.  Electronic Arts, Activision, Ubisoft, THQ, Take- Two, Sega, SCi, Square Enix, Namco Bandai, Vivendi, Capcom, Konami, NCSoft, Di sney, Atlus, LucasArts, Midway, ... Manage and fund creation of games by developer studios Work with platform manufacturers Conduct sales, marketing
  13. 13.  Thousands of studios  Most well-known: Epic Games, Id Software, Valve Corporation, Blizzard Entertainment Invent and produce games
  14. 14.  Art providers Middleware tools Motion capture houses Music providers Testing houses Used to reduce costs, reduce time, manage headcount more efficiently
  15. 15.  Developer creates game concept Game idea is pitched to many publishers A publisher funds the game through to completion Publisher works with platform manufacturer to produce Publisher conducts sales, marketing Finished product distributed to retailers Developer receives royalties... Hopefully!
  16. 16.  Handhelds cheapest  DS: $250K - $500K  PSP: $500K - $1.5M Consoles more expensive  Wii: $4M - $8M  Xbox360/PS3: $8M - $15M PC variable depending on quality, genre  Casual: $100k-$500K  High-end AAA: $8M - $15M  MMO: $50M+ Multi-platform development License costs
  17. 17.  PS3/Xbox360/PC AAA title, North America + Europe (EFIGS)  Development: $20M  Marketing: $10M  Title MSRP $50, to retailers at $35  Platform manufacturing and royalty: $10  = $25/unit to publisher  $30M outlay, $25/unit requires 1.2M unit sell-through
  18. 18.  Each advance in technology increases development costs  PS1: $2M - $5M  PS2: $5M - $10M  PS3: $8M - $15M With each new generation, must sell more copies per game, or sell for a higher price Multi-platform, multi-territory titles More outsourcing Less innovation
  19. 19.  Mark DeLoura  mdeloura@satori.org  www.satori.org

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