Building up Budget

It is undeniable that this current generation of consoles has changed the face of gaming demographics.

The success of Wii and DS has created the highly lucrative casual market. Retail is now enjoying long-tail hits and impressive sales that are unaffected by traditional trading seasons.

However, it’s important to remember that there is a sector that has long been providing consumers with accessible titles for a minimal price: budget games.

From PC re-releases to the retail debuts of online casual titles, publishers have been able to breed success without setting a hefty RRP.

A look at the charts alone shows how much weight budget titles carry at retail, able to outsell some of the best-selling mainstream PC games. And while the current trend dictates that these titles are largely casual, it can’t be ignored that the sector’s price point is a crucial factor in chart success.

When three of the top four PC budget games are casual, you know that a seismic shift has taken place in the industry,” says Focus Multimedia’s marketing manager Grant Hughes.

That happened in April, when World of Warcraft was beaten into third place in ChartTrack’s PC Budget Chart by two of our Mystery titles.”

Data Design Interactive’s MD Stewart Green agrees: The biggest growth for the games industry over recent years has been in casual gaming. Imagine how retail would be hit if we had not had this influx or new customers.”

Mastertronic’s MD Andy Payne is more cautious over the future for the casual sector: It will be interesting to see how long this lasts. It has certainly grown the market in terms of consumers. The PC market has not really grown, but having said that, it has not receded, so we are still very happy to be in this space.”

However, Payne observes that things are less stable for the console market, where there seems to be two sorts of value offerings. Firstly, games made with slim development budgets that are usually rubbish” and then overstocks that failed to meet sales expectations.

Natural selection will mean that both of these areas will slim down as publishers and game makers cannot afford unsuccessful games any more,” he explains. Such is the power and savvy nature of consumers. This is a good thing. Quality and experience go up and everyone wins. Some lose, but then again, what value did the total cheapskate companies add anyway?”

Wii value
The budget market on Wii is one area that has flourished over the past few years. And for companies such as DDI that specialise in this sector, the appeal is inescapable. But Green warns that making a casual Wii game isn’t necessarily a licence to print money.

Some companies might spin how sales have increased, which is true, but turnover isn’t profit,” says Green.

Financially, this sector is having serious problems and history tells us that things are only going to get worse.
A year ago the market was growing and titles were in short supply, but now the tables have turned.

There is a lot more supply with hundreds more budget titles available, and competition forces the trade prices down. We also have to take into account the increase in full price titles, which end up in price reduced bins and discounted overstocks, and if this wasn’t competition enough, the real challenge comes from pre-owned games.”

Zushi Games marketing executive Chris Walton adds: The sector had certainly become more competitive over the last 12 months as more publishers realise the advantages of broadening their offering to an ever-expanding consumer base.”

Meanwhile, in some cases, simply cutting the price is no longer an option to achieve retail success. In fact, some games need to be cut in price even before it is distributed. And as Payne warns, this often means cutting costs at development level.

If games are to be sold cheaply as a deliberate publishing choice then development is the only real cost that needs to be kept down,” he says.

It is actually possible to develop great selling games on the cheap, but do not bank on it – the instances of this actually happening are rare and getting even rarer.

Logic dictates that until the platform owners reduce the cost of goods, then value offerings across all formats will be fewer and far between and could be more cost effective via digital distribution. It’s all about choice, value and convenience – whether buying new, trading in or digitally downloading – and that’s not to mention being able to buy something else if that 10 game didn’t quite hit the spot.

Although developing games at budget prices can be tough (albeit potentially profitable), an action that has always provided good revenues for budget publishers is re-releasing classic games at a more affordable price.

Republishing is a fantastic way to monetise your back catalogue titles,” adds Hughes. From packaging, warehousing and merchandising to point of sale, PR and marketing, every step of the sales process is managed by Focus, leaving the publisher free to concentrate on their full-price business.

For many years now we have been working successfully with some of the biggest games publishers in the world, including Ubisoft and THQ. When you republish top quality titles you get two bites at the cherry – an initial launch at SRP 9.99, followed by a super budget release at 4.99.”

Focus’ successful budget model is now commonplace in the market, although, much like its rivals, the firm has teamed up with online casual giants (such as Popcap and Big Fish) to grow its budget range with original releases.

Budget appreciation
Despite all this, there is discontent in the budget sector. The companies that make up this market feel somewhat neglected, given the games industry’s focus on mainstream and casual titles. Green even suggests budget games are vital to the industry’s future.

The role of budget games is currently undervalued in our industry,” he states.

We are the starting point of much of the talent and creativity for the future of gaming. We employ new programmers, artists, and designers and release original games that could not get approval at full price.

In other creative industries, this breeding ground of talent is acknowledged and celebrated. Independent film makers with aspiring actors are looked upon as the future stars of Hollywood, small bands playing local pubs and clubs are tomorrow’s rock stars, short story writers develop into award-winning novelists.”

The games industry needs budget. We need to appreciate that small low cost games are important and the small independent teams that it employs and supports are the industry’s life blood.”

However, Walton feels attitudes are changing: I think this sector of the market is going to broaden out and continue to grow with the female audience,” he concludes. Current trends suggest that this sector is both gaining interest in gaming and also being catered for better by publishing.”