The Power of Brands

Is the power of existing brands so strong that the development community is powerless to resist? Scott Miller suggests that publishers are being naive in plugging so much development cash into licensed products, claiming that the real money is in original product. Join me on a brief journey to explore Scott's claims, and what this means for the future of game development. Are you sitting comfortably? Then I shall begin to ramble...

Sony, believe it or not, tops the publisher league table for investment in original product - while EA, the world's largest publisher, is bottom of the league table. (Source: MCV). This has provoked some very public criticism of EA, including from the New York Times. I have very frequently criticised EA for their lack of investment in originality - they may be top of the heap right now, but they have become so conservative that it would only take a modest shift in the commercial environment to leave them as the dinosaur shivering through the ice age. (I appreciate that ice ages probably did not kill many dinosaurs, but I doubt there's a meteor big enough to extinguish EA in a single impact right now...)

Scott Miller's blog, Game Matters, carries a spirited and defiant post entitled IP on Licensed Games which suggests that the publishers shoulder the blame for the increasing sales dominance of licensed products, and suggesting that original IP is financially a better option. Although I have sympathy with Scott's motivations for his post, his logic and conclusions strike me as flawed for a number of reasons. His post begins as follows:

The June/July issue of Game Developer has an article, Playing Smart with IP, by Dan Lee Rogers, that hits on several strong points in favor of original IP versus licensed IP.  One of Rogers' key stats:  If you look at the top 40 console games (lifetime sales) since 1995, 31 of them, or 77 percent, are original brands (including sequels within these brands).  That leaves just nine out of 40 as licensed game brands.  That's near total dominance in favor of original IP.  Some of these top selling brands include: GTA, Mario, Zelda, Pokemon, Halo, Crash Bandicoot, Tekken, Final Fantasy, Metal Gear Solid and Driver.

The first point is a key point... What Dan has looked at is licensed IP versus IP that originated within games. He's not looking at original IP versus existing IP, as might appear at first glance. An intellectual property is only original the first time. When you make a sequel based upon that IP, it's no longer original IP. What Dan is pointing to is the (alleged) success of IP that originated within the games industry, not the success of original product.

Let's look at one of the many lists of Top Twenty Best-Selling Games for a second, just for context. (This one is not wholly complete or accurate, but it's sufficient to our current needs - by all means send me a link to a better one! Free copy of our new book to the sender of the best data!) What do you notice? Well, for the sake of argument let's exclude games that sold on the back of hardware bundling - that cuts out Super Mario Bros, Tetris and (I think) Myst. Obviously games from licensed IP are also to be excluded - that cuts out Harry Potter and Goldeneye. Of the games that are left, how many of them are original products (not sequels)? Four. The Sims, Pokemon Red/Blue, Super Mario Kart and Half-Life. Everything else here is a sequel, including (but not restricted to) Grand Theft Auto: Vice City, Final Fantasy VII and Gran Turismo 3.

Also note that the bottom of this table is 6 million units. (I believe the same chart looked at today would have 8 million units at the bottom).

Back to Scott:

So, if original brands control nearly 80% percent of the chart every year, why aren't we seeing a LOT more original games in development?  It's clear that the real gold mine in our industry is with original IP (and their sequels and spin-offs). 

There's a great metaphor here in the comparison of original product to gold mining. Nineteenth century gold mining was a high risk, high reward endeavour... Many, many people went bankrupt chasing "gold rushes". In the early days, you could get in quickly and make a killing - but once the easy-to-find gold mines were established, it started to get expensive. You needed to fund expeditions to the furthest reaches of the world (from a European perspective, at least), against all sorts of dangers such as rare diseases and angry locals who were peeved at you invading them and stealing their assets (sound familiar?) - and a lot of attempts to make a profit from gold mining failed. It was a lot safer, financially, to invest in known and readily available commodities like iron and coal.

In the games industry, original products represent the same high risk, high reward proposition to publishers. Because despite most developers insistence that they "know great games", publishers don't see the sales receipts to back up this claim very often. And like gold mining, a successful new brand requires long term investment before you start to see a return.

Take the GTA franchise. Yes, it is now pulling in tremendous numbers of unit sales - never mind the 8.5 million units credited to Vice City - San Andreas is looking to pull in 15 million units in sales (putting aside the recent embarrassing slap on the wrist). But the first two GTA games didn't sell this amount. They sold about 500,000 units. Compare that to what Final Fantasy VII (7.8 million units) and Goldeneye (8 million units) did that very same year (1997). The cashcow that is GTA started as a single heifer, and not a brilliantly profitable one at that. It wasn't a significant force when it was an original product, it had to grow its brand name over the years with careful nurturing and investment to become the monster that is now - and the same is true for the aforementioned Final Fantasy VII... The first Final Fantasy game, well, I don't know what it sold back in 1987. But a tiny, tiny fraction of the 18 million units shipped by Super Mario Bros 3 the following year.

A pause to say I don't believe "might makes right" nor that "the ends justify the means". But I do believe that publishers are about making money, not making "great games" (whatever that happens to mean), and we can criticise them for this, but we are then largely criticising capitalism, not publishers per se (and there's plenty to criticise about capitalism, but that's a whole different kettle of ball games).

Back to Scott:

Yet we have a large publisher like THQ being out-IP'ed by a little game studio like Id Software, who've created three blockbuster IPs, Wolfenstein, Doom, and Quake.

Now obviously the term "blockbuster IP" is open to a lot of subjective interpretation, but I don't believe from a strictly financial perspective that any of those three games can be considered blockbusters. I'm going to use a fairly conventional definition for 'blockbuster': "Something that sustains widespread popularity and achieves enormous sales".

The way I see it, Mario 64 was a blockbuster (11 million units), The Sims was a blockbuster (10 million units) and Half-Life (8 million units) was also a blockbuster. According to at least one article, Doom racked up a "mere" 2.9 million units, and Quake only 1.8 million units. (Both respectable figures for their day, mind...). These games might seem more significant to those of us in games development because almost everyone we knew in games development was playing them. But they were appealing solely to the core of the market, the so-called Hardcore gamer. The three games Scott mentions provided meteoric success from the perspective of id, but I do not believe that a publisher would view any of these three games as blockbuster material.

Back to Scott again:

Given the success of original brands over licensed ones, why don't publishers invest more in original IP?  There can be only one answer:  They're not good at it.  They're afraid.

That's two answers. And Scott's right, publishers are afraid - they're afraid that the enthusiasm of developers about their shiny new game will not be reflected in unit sales. And they're absolutely right to be afraid, because nine times out of ten it won't be. Less than 10% of the games made contribute 50% of the turnover, and 2.5% of games contribute 25% of game turnover [Source: Parker Consulting]. Most original games flop. Horribly.

As for Scott's other answer, that publishers aren't good at investing in original IP - Sony invests millions in original products. But most do not succeed very well. I don't use this as an argument to say they shouldn't continue to invest - the EyeToy alone justifies Sony's persistence in this area, and games like Ico which are commercially rather insignificant do much to raise Sony's status with Hardcore game players.

I don't believe that the publishers are to blame for not wanting to invest in original products - the developers do not consistently deliver original products which sell better than average or poor games with licenses adopted from other media. Our game Ghost Master got a 90% review score in the US PC Gamer... I don't have sales figures, but it certainly sold a lot less than the publisher's other investments in license adaptations such as Starsky & Hutch and Bad Boys II.

The real problem here is the rising cost of development (as other more prominent people than myself have noted). Skyrocketing costs increase the risk of development further - and publishers are terrified. When Scott says the publisher's are afraid he's bang on the money. Because they know just a handful of band investments in one year could take them out completely. Bang. Ask Acclaim.

Back to Scott one last time:

And yet every year publishers trip over themselves to license Hollywood summer movies, adding value to Hollywood's bottom-line, while spanking ours.  What we need are fewer chicken-shit publishers run by non-gamer financial or legal suits, and instead run by someone with a creative spark in their cranium, who have the guts to ignore financial quarters or slotted release dates.  I won't hold my breath, though.

I agree with Scott in part - we need more publishers run by people with a creative spark in their cranium. But I don't think that those publishers should be operating in the upper market. I believe the development community should wave a white flag in the battle for the upper market if they aren't willing to make licensed products.

If you want to develop a game with the budget of a space mission (which is every upper market game now) and you want to develop it with original content, why not prove that your original content is worth the money first? That's what most if not all of the big sellers in the past have done. As I mentioned before, GTA earned it's budget with a couple of titles which just pulled in a small but loyal share of the Hardcore gamer market.

Now that the Casual market is being dug into to a significant degree, it is more true than ever that brands sell games. It doesn't matter (to the publishers, at least) if those brands are bought from other media, or developed internally to the games industry. They just want to make maximum profit with minimum risk of loss.

I believe the reason so many developers are angry about branding right now is because they want to make new and original games with the new and original graphical power and technology that's now available. But most are going to have to accept that they can't do that - unless they have a couple of million dollars in their back pocket that they're willing to invest themselves.

This is, in part, why I am advocating that developers change their focus - look at the mid and lower market instead of futilely failing to compete in the upper market with the many bland games with big brands to add value. Make new, original games for less money - then it doesn't matter if they sell fewer units. Katamari Damacy (still my poster child game) sold about 200,000 units in the US - but I'll bet it's made a profit for Namco, because I doubt it was that expensive to make. And that's the most fabulous thing about it - I genuinely don't care that it doesn't have real time fur, or whatever the latest graphical buzz phrase is. Hell, most of the objects only have a handful of frames of animation, if that. But it works - it's fun to play, new, different and, I believe, everything that we should be doing instead of blaming publishers for embracing capitalism.

I respect Scott's opinion, and in many ways I share his frustrations - but let's get off our collective backsides, stop trying to make the upper market into something that there's a good chance it will never be (after all, have you looked at the balance of original movie concepts versus formula flicks? The balance of successful original TV concepts versus Reality TV or Close Ups of Animals with a Wide-Angle Lens?) and instead reclaim our heritage as people who make "great games" by finding the spaces in the market which can financially support "great games".

If we do this, some of the games we make will succeed sufficiently that they can then have their sequels made on a higher budget - the best games will 'graduate' to the upper market. It's like a sporting league. In almost all countries of the world, a new team doesn't compete in the Majors straight away, it has to fight its way up through the lower divisions. Mind you, it's a different story in the US were you can buy an entire sporting franchise and move it to a new city for some inconceivable reason. Presumably because in the US, capitalism is bigger than God right now.

Seek out new markets, and new ways to play... boldly go where no games have gone before. Just do it more cheaply than the bloated upper market products can afford to do - they practically need the brand name recognition to stabilise their otherwise questionable return on investment potential.

Speaking for myself, I just bought a treasure map to a gold mine in the lower market... I'll let you know what I find there.

Comments

[lordxixor101]

I also respect Scott's opinion, but only to a point. You are right, these companies are businesses. They have costs they need to cover (health care, 401k plans, rent, etc). It's always fun to think like a renegade, and spend someone elses money on a project. But, here is the fact, innovative games don't sell. Ico didn't sell. Beyond Good & Evil (though, personally, it never struck a cord with me) innovative (so the message boards say), but didn't sell. Price of Persia Sands of Time, innovative and a brand but didn't sell.

Halo was very innoative (the control scheme) and sold very well. But, very few talk about that as a "innovative" game. I think part of the problem might be what's innovative? Many people (at least on the boards) only seem to think a game can be innovative if it didn't do too well with the market.

[James O]

I think there's some truth to that, Xixor - exactly what new ground did Ico or BG&E break in gameplay? The answer is simply none - Ico was platforming and puzzle solving we have seen before, and the main gameplay hook of leading Yorda around has been done (on a smaller scale) in Zelda games. BG&E was a Zelda-type adventure with a little Pokemon Snap thrown in here and there. Perhaps the "problem" with the innovations here is that they pertain entirely to storytelling and characterization - Jade was innovative, but her game was not. Since games are still primarily understood as vehicles for play and not for storytelling, perhaps it isn't a big surprise.

Also interesting is your point on Halo - I would argue that some FPSes, like Brothers in Arms or the Battlefield series, were far more innovative in gameplay than Ico or BG&E. Small wonder they sold well. However, praising a FPS as innovative would seem shallow - after all, aren't they all basically Wolfenstein but 10 years prettier? Platforming/adventure games especially seem to have this aura of innovation where even minor new changes are hailed as modern examples of innovation; and when the game fares poorly at the market, it often serves to confirm in some minds that it was ahead of its time.

[Chris]

Although I agree that at its heart, Ico is a straight puzzle driven adventure, and that it's primary innovation is in terms of its atmosphere and experience, the elements of play surrounding the protection and co-operation with Yorda really are quite unique. You'd be hard pressed to come up with another game to have done this (certainly to have done it that well) - I personally don't think the Zelda example holds up to scrutiny as a precursor, if you mean the belly of the whale dungeon in Ocarina. The other character is not really interactive - more of a portable block.

I do agree that current FPS games are pretty shallow. In fact, most of the innovations in the history of FPS design have failed (commercially), and we now are left with a genre of largely carbon copied games built on slightly involuted linear paths. They bore me. But, to stand up for Halo, it has exceptionally polished control mechanics and audio design - perhaps an example of refinement, rather than innovation, though.