Rough waters: The next-generation transition

We all expected sales of Assassin’s Creed IV and Battlefield 4 to be down.

After all, this is only ‘part one’ of their launches. Both games will return, looking better than ever, on Xbox One and PS4 at the end of the month.

But judging this transition is tricky. The UK boss at one of the world’s biggest publishers told MCV last month that he found it ‘impossible’ to predict how many units of a current-gen game he should sell.

And not even the stat trackers can help. Dorian Bloch, director at GfK Chart-Track told MCV: We’ve never had two must-have consoles launched so close together. The unquantifiable question is, how many consumers are waiting on these franchises for a few more weeks?

How many PS4’s and Xbox One’s will have sold by Christmas? I would say, let the dust settle on 2013 and then we will know more.”

The sales declines posted by Assassin’s Creed IV and Battlefield 4 was severe. Sales of Creed are down 60 per cent year-on-year, while Battlefield 4’s sales are down 69 per cent compared with 2011’s Battlefield 3. Week one sales of FIFA?14 were also down 24 per cent.

But is this all because of the next-gen transition?

It’s difficult to know how many will buy current-gen,” said Activision’s UK MD Roy Stackhouse. There’s probably an amount of nervousness and hesitation in the marketplace with next-gen just around the corner.”

"Our next-gen software pre-
orders are strong, adding
them to current-gen sales
would make up most of
the deficit.”

Robert Lindsay,Games Centre

ShopTo’s James Rowson added: With almost all current-gen triple-A releases over the last few weeks the numbers look to be down on previous iterations whilst the same games on next-gen have been performing really well.

We do believe that outside of GTA and to some degree FIFA 14 the customer is waiting to see what to do with his 450 and if they will be able to secure a next-gen console.

The quality of some recent PS3 and 360 titles have been really high so we are sure it’s not down to that but more the almost instant transition between current and next-gen.”

It’s a feeling that most retailers seem to share. Robert Lindsay at Games Centre says next-gen pre-orders suggest the deficit will be made up come the arrival of PS4 and Xbox One.

There’s been a natural decline in current-gen software sales throughout the year which would have continued regardless of new consoles but there’s no denying that PS4 and Xbox One are having an even bigger impact,”he said.

But our next-gen software pre-orders are strong, adding them to current-gen sales would make up most of the deficit.”

But it’s not all due to next-gen. Piers Harding Rolls suggests a reduction in marketing spend has had a negative impact and that there may be an increase in spending the closer we get to the Christmas period.

Meanwhile, Dixons and Green Man Gaming feel that both Grand Theft Auto and rise of PC?gaming is taking its toll.

GTA V has completely blown everything away,” says Dixon’s Simon Urqhart. Gamers playing GTA are in no urgent need of triple-A titles right now. There will definitely be a surge in COD and BF4 players when the next-gen comes out and on Christmas Day.

I also wouldn’t overlook the rise of PC gaming. Three triple-A titles being given away with graphics cards, Steam sales making back-catalogues desirable, free-to-play games with triple-A content, indie titles picking up surprise share of market through digital distribution – it’s all cutting into cash-strapped gamers’ wallets.”

Green Man Gaming’s Darren Cairns added:?Yes, a fair proportion of gamers will be holding their wallet or purse for PS4 or Xbox One and those associated games as neither of these consoles are backwards compatible for PS3 or Xbox 360 games.

However, it is also worth remembering the recent knock-out success of GTA V, which many players will still be making their way through.

We have also seen a massive growth in PC gaming as well as some innovative and enchanting indie titles taking a larger share of the traditional consumer spend on video games. All of these factors combine to affect sales at this crucial time for the industry.”

AN ANALYST’S VIEW
Piers Harding-Rolls
Head of Games IHS
Screen Digest

There’s a number of things going on here.

It’s been five years since the last GTA and going on the incredible sales many dormant and late console cycle gamers have invested in the game. This investment in money and time means a higher percentage will be willing to wait longer to pick up the annual franchises.

Next-gen platforms will have disrupted the sales cycles of some of the biggest titles and we believe this disruption could be worth up to 15 to 30 per cent of early launch volume for a title such as FIFA. However a number of these delayed sales will come when the new consoles hit, so sales cycles will be unconventional compared to last year’s games. In all fairness, publishers have been much more active in building offers to smooth the upgrade process, but that additional step can still be confusing for the consumer and may turn some off.

At this stage of the current-gen cycle the late adopter and gamer is likely to be more mainstream than in previous years. With this sort of active user base, it’s likely that some spending on software will be shifted into the gifting season over Christmas, away from the early launch period for September/October releases. We still expect these titles to perform strongly, but it is not uncommon for later iterations to become more concentrated in the holiday shopping season.

We expect there to have been a disparity on marketing spend between last year’s games and the latest releases due to the more risky profile of a sales environment disrupted by the next-gen transition. Also, if we’re getting into specifics, Battlefield missed 2012, but BF3 was very heavily promoted in 2011 to compete with Call of Duty. The marketing spend this time round will not have been as significant. Similarly, EA escalated its marketing spend for FIFA 13 last year, but we haven’t seen the evidence of a similar escalation for FIFA 14, partly because the title is so dominant now across Europe and North America.

Lastly, the consumer has more devices and content to spend on than ever before. This is the evolving competitive backdrop for consoles, but it remains difficult to tease out the exact impact due to the complicating factors mentioned already.