Videogame publisher Activision Blizzard (famous for Call of Duty and World of Warcraft games) announces a 30% increase in revenue from Digital Online Channels.
According to their Q1 Financial report (attached below), the "digital online channels" refer to revenues from subscriptions and licensing royalties, value-added services, downloadable content, digitally distributed products, and wireless devices.
According to their Q1 Financial report (attached below), the "digital online channels" refer to revenues from subscriptions and licensing royalties, value-added services, downloadable content, digitally distributed products, and wireless devices.
The online revenues portion represents $428 M out of the company's $1,449 M in Total net revenues, i.e. 30%. However, it is interesting to note that on a non-GAAP basis, digital channels account for roughly $440 M out of the $755 M Total non-GAPP net revenues, i.e. 58%
Electronics Arts, another giant videogame publisher, announced digital revenues in fiscal year ending March 2011 of $833 M, with an increase of 46%.
EA's digital channels refers to mobile games and social games on platforms such as Facebook. It excludes to downloadable content via consoles (although it does provide that).
This data is a clear indicator of how videogames will enjoy its main sources of revenue from online digital channels instead of content packed games.
The context under which the expression 'online digital channels' is defined will open up disctint business models for these videogame publishers in the future.
Social games are usually distributed for free and monetized with either advertising or through virtual goods purchased in the games.
Online games are mostly subscription based, and more specifically, the console ones usually require an upfront payment with the option to pay for more downloadable content later.
Focusing on Social and Mobile dimensions, investments such as EA's acquisition of Playfish and Disney's acquisition of Playdom are one way for these publisher to gain access to a large user database in social network communities to sell its recognizable content.
Activision on the other hand, leveraged its own personal online communities, and popular franchises such as Call of Duty under which the $15 digital add-on pack achieved 1.4 million downloads in the first 24 hours.
I believe that the future of videogames lies in the relationship between the publishers and the consumers throughout the game lifecycle, and not just at the point of sale. The theory of the long tail in this industry can be expanded from maximizing the reach to clients, to creating more sources of revenue during game-time, divided into micro-payments that would add up significantly over the game's cycle. During a corporate visit, I asked the folks at EA's Spanish Publishing organization (EA Madrid) how much emphasis will they be putting on the social aspects of games, they answered that not only will the games be in nature social based, but these social communities are becoming an integral part for marketing departments in order to monitor the "buzz" around each game. They added, the nice thing about having digital channel is that the publisher can immediately address an unpopular aspect of a game and 'update' the content to refine the games day to day.
The implications of these capabilities are immense, and will probably lead to concepts such as real time development/publishing, thus delivering the product in form of a service. Games-as-a-Product, in my opinion, will disappear not only because of these business models trends, but also to fight gaming piracy.
The question remains: what would will be the best platform to build these games on? Should videogame publishers with large enough communities build their own social platforms?
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