96% of All Games Financially Flop? Not Exactly



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Could this article have been any more confusing to read not exactly maxPC's fault considering the source material but can anyone explain this to me more clearly?



I'd be willing to bet this number will rise as digital distribution continues to increase. Store bought retail boxed games must have far more overhead. I don't see any reason for the industry to worry. Besides, the truelly great games will sell well. I'm sure there's a lot of garbage killing the numbers here.



Does anyone have comparable information for the movie industry?



The movie industry in the US Markets had an annual realized profit margin of 5.4% in 2007 an increase of 2.1% year over year.  If you look deeper into the statistics here: http://www.mpaa.org/USEntertainmentIndustryMarketStats.pdf you will see that the average profitable film and the average profitable video game have similar rates of success.  What seperates the two is the longevity and the multiple paths to market that a film has to profitability that a Video Game does not have.  Where I may play DOOM3 once or twice, I will watch a movie like War Games five ten or more times.  The reason for this is fairly simple,  Movies and television are whats known as "cool" mediums.  That is they have little or no way to change the outcome of the broadcast by the user, and the user is only asked to do a couple of things to maximize enjoyment:  Observe the broadcast and in most cases willingly suspend his or her disbelief of the spectacle.  A Video Game, Sporting Activity (such as shooting hoops or playing golf) are "Warm" mediums.  They require coordinated interaction and interaction within and with the environment form the user. This interaction will determine success or failure of the user to achieve the stated goals of the event, whether thats getting a birdie on that par 3 5th hole or Killing legions of Mutants in DOOM3.  In the latter case it requires a suspension of disbelief to play the game per se as well as the coordination to move user input devices mapped on to pixels on a screen to achieve a desired goal.  

What this all boils down to is this:  A consumer of a video game (not non-Arcade style games which dont factor in due to the brevity of the experience and the stated goal of achieving as high an score as possible) will play a full length title to its completion from 1-3 times but not generally over this.  Thus the developer of the title must continually release expansions to the title Farcry Farcry2 Call of Duty... in a series of releases. Or if the game is an online interactive and based on a distributed model like World of Warcraft or LotR Online or Final Fantasy XI Online the developer must continually add new content via patches and expansion packs.  Which of course adds to the Overhead of the title, which incidentally reduces the profitability of the title from a profit over time perspective.  Hollywood does not have this problem.  Once a movie is made and is in the theatres it can be watched over and over again in multiple venues and the royalties continue to accrue without major modification to the content of the film play or television show.

Video Games, and in particular PC based Video Games, have a platform issues to worry about in addition to distribution model issues.  You have to get people to fork over the dough for the game in order to turn a profit.  Marketing, Content Development, Production, Maintenance, and etc all play their role in making a profitable video game as it does in film making.  Yet the Game developer has to continually improve on his original work and add content or the title fades from the shelves rapidly. 

 People will sit for hours on end to finish a game but when they are done with it they are done unless new content comes along.  Not so with films we will watch the same film several times over the course of ten years.

 The next issue is that of the platform.  The pc title you bought 3 years ago may play well on your pc now.  the one you bought 10 years ago probably does not, at least it does not without considerable maintenance and emulation software to reproduce the environment that the pc title of 10 years ago had.  The VHS Tape of Snow White plays just as well in a VCR today as it did when you bought it 15 years ago.  You may have worn the tape out and had to replace it but its shelf life is MUCH longer than a pc video game as is its appeal.




Seems like that'd be kind of difficult to compile. Movies have have a number of avenues toward profitability that games lack -- most noticeably, they generally release twice, once in theaters and once on DVD, iTunes, PPV, Xbox Live, etc. At any rate, I Googled it, but couldn't find anything overtly relevant.  

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