Games dwarf movie profits: ThePost.ie


TCH Archives > Sunday Business Post > 2005/05/22 > Games dwarf movie profits

Games dwarf movie profits
Sunday, May 22, 2005 - By Cariona Neary
The gaming industry is expanding at a dizzying rate. By 2007, it's forecast to be worth some €20 billion - bigger than the Hollywood movie industry and bigger than the music industry. Why are so few mainstream marketers talking about it?

Maybe it's the (almost) all-male anorak scene. Maybe it's the absence of hot-blooded celebrities. Maybe it's the impenetrable world that gaming is to the uninitiated. But marketers have been slow to hook up to the world of games.

A report by the European Leisure and Software Publishers' Association in 2002 put the industry value at €14 billion, including games and ‘edutainment'/reference software, but excluding hardware sales.

Worldwide, the video and PC games industry is forecast to grow by up to 45 per cent by 2007, according to game analyst DFC Intelligence.

The profits associated with this Cinderella industry are phenomenal. Compare, for example, the revenues associated with the launch of a new game versus the noisy, high-profile launch of a top-ranking movie.

In the US, the movie SpiderMan 2 set an all-time record for its opening weekend by grossing $115 million. The Incredibles grossed $70 million in its first three days in the US. The highest single-day gross went to blockbuster Shrek 2 at $44 million.

But these profits are dwarfed by the revenues of the gaming sector. Microsoft's Halo 2, at $50 a pop, sold 2.4 million units in its first 24 hours in the US. That's $125 million in gross receipts in just one day.

Given that a big movie can cost up to $180 million to make, compared with just $20 million for Halo 2, the profits in the gaming industry are staggering.

“Everybody respects the movie industry,” said gaming aficionado and marketing whiz kid Jermain (Jazz) Williams, online creative director at direct response brand agency Dialogue. “Despite the world phenomenon of games and the profits they can make for those involved, the world of games is not yet taken so seriously by mainstream marketing.”

Williams has a unique insight into the mindset of gamers. With the backing of Dialogue, Williams has set up a gaming company, GameCon. The company organises four major gaming events a year, at which new games are played and tested by up to 300 hardcore gamers.

GameCon conference (www.gamecon.net) provides a valuable link between game producers and high-spending gaming specialists. The events attract the sponsorship of the biggest companies in the field, including EA Games, Microsoft, Ubisoft, Creative Labs Hardware and Activision.

Sponsors are keen to get these early-adopter gamers to test their products, sometimes while still in the development stage. Apart from the money they spend on the latest games and technologies, they have a significant influence on other gamers through virtual chat rooms and bulletin boards.

“We use GameCon to analyse the market, otherwise gamers are very hard to find,” said Williams. “We run show reels and conduct questionnaires to get feedback on particular games.

“For example, we have been involved in providing feedback on the Fifa Game, which is Ireland's number one game, and Burnout 3, an Xbox game. Microsoft added a special feature enabling gamers to create their own soundtrack, thanks to feedback from our gamers,” said Williams.

“Marketing to gamers is like marketing to people who are involved in an extreme sport.

“Hard-core gamers are highly knowledgeable, and will only respect marketing messages that fit in with their highly developed virtual world.

“An outsider who tries to appeal to gamers by trying to use their language and style will probably be ignored. Perhaps this is the reason so many marketers have stayed away from the sector up until now,” said Williams.

The sector is dominated by global players such as Sony and Microsoft, but there is a network of distributors and retailers selling games in Ireland.

Distributors are interested in influencing purchasing decisions of the hard-core and more casual gamers.

Traditional communications strategies are less likely to work, because the media habits of gamers are different from other consumers. More interested in the internet than TV, gamers are unlikely to respond to mass advertising. In the future, even the distribution of games and upgrades will be delivered over the internet.

“The lines between gaming and TV are becoming blurred.

“Interactive TV will enable people to play games using their TVs. Microsoft wants to get its technology into our living rooms, because it anticipates this merging of the internet, TV and gaming,” said Williams.

“In fact, it is already happening. But just imagine the future, where viewers will be able to control the movie story line, or where viewers of a soap opera can make the decisions about what happens to different characters. In many ways, it's a case of TV catching up with some of the techniques used in games.”

The gaming world is not only relevant to Microsoft. Local advertisers will have an opportunity to insert advertising material into games. Streetscapes could have localised advertising messages appearing on billboards.

This technique has been used in the movie Spider-Man 2 ,where the content on billboards featuring in the movie varied depending on the country where the movie was being shown. Ireland is one of the most vibrant markets in the world for games.

Ireland's vaunted IT industry has not yet been able to cash in on the sector's employment potential. But earlier this year a games degree course was launched - a BSc at Carlow IT, a high-profile initiative by the government, supported by Microsoft, to capitalise on the industry's potential.

Cariona Neary is a marketing and communications consultant.