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Jan 16, 2017

Video Game consumers should expect even more choice in 2017

Mat Piscatella, Industry Analyst ;

Video Games

@MatPiscatella

Consumers of console and PC video games have never faced a more overwhelming level of choices.  There are more games, and more opportunities to spend, than ever before.  Iterative console hardware, digital distribution and subscriptions, free-to-play monetization models in full-price games gaining in prevalence, and multiple SKUs with competing offers across digital and retail have already impacted the market (and have been confusing consumers) for some time.

This overwhelming amount of choice will only grow in 2017.  Console and PC gaming consumers will have even more options, across more platforms and with a larger range of price points, than ever before.  Here are a few things I’m predicting will happen in 2017:

Over 5k games will release on STEAM in 2017.  For every title released on consoles or portables at retail, at least 25 titles will release on STEAM.

This is, of course, a double-edged sword.  It will bring far more variety to the PC platform, and allow for developers of all sizes to get games into distribution.  On the other hand, this expanding flood of releases will make discoverability an even more daunting challenge for both developers and consumers.

Users, not Units, will be firmly embedded as the planning currency for console game publishers, so expect more incentives to stick with one console game longer.

Topline planning at publishers used to be simple: units and average price for sales of a console game at retail or digitally.  Now, the shift towards ARPU-based planning for console games is accelerating.  Publishers looking to retain and grow the player base for a game, while offering that base more opportunity to spend, is what consumers should expect.

Virtual currencies and consumables will be baked into more (most?) console games.

Adopting free-to-play monetization in full-price console titles will become more prevalent.  Accelerators, cosmetics, loot crates and boosts purchased with real world money will become a normal and expected component of most major console releases.

Gold editions will become more prevalent, lifting average selling prices at launch well above $60.

Game base retail prices have held at $60 largely because consumers have purchased enough DLC and MTX over the past few years to make the model hold.  Now, given the success of titles offering gold editions (versions of the game that include bonus content like season passes, virtual currencies or exclusive content) effectively raising the average retail price well over $60 at and around launch, expect most major console titles to offer this type of offering in a SKU mix.  I also expect more exclusive content to be included in these higher-priced versions.

The Nintendo Switch will experience hardware shortages, alter the console landscape.

Nintendo has very quietly been experiencing a sales resurgence.  3DS hardware and software sales have been on an extended year-on-year growth run in the U.S. market, while Pokémon Sun and Pokémon Moon were the best-selling launch Pokémon combo in history.  Super Mario Run has also achieved market success in mobile, allowing gamers to reengage with the brand.  Finally, the NES Classic has been sold out at retail since launch and was one of the quarter’s hottest gifting items.  Given this success, Nintendo is poised to re-establish itself as a market leader in the console space, and strongly compete in the retail market.  “Never count Nintendo out” is the oldest mantra in the video game industry.  I suspect it will be revived.


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