Why marketers should keep tabs on the video game industry's hardware and software sales.
As anyone in the games industry can confirm, most family members and close friends came around these past few weeks asking the same question: "Can you help me get a Wii?" As the Wii closes its third holiday season, I would venture to guess that sales records again will be broken when last week's holiday results are reported. Look at November alone: Nintendo sold over two million units including 800,000 during the Thanksgiving weekend despite the down economy. It appears that the Wii is and will be the console king. However, software sales hint at a slightly different story.
No one can argue that Nintendo has a more efficient profit model for the Wii than its console competitors. Many estimates have surfaced explaining the average loss that Microsoft suffers on each Xbox 360 sold and Sony on each PS3, while Nintendo actually makes money on the Wii. But history shows that the video games industry has been fueled by the "blades and razor" model. The console providers love to see the cash flowing in from their box sales aka razors, but they really get lathered up when consumers come back for the actual games and accessories aka blades that offer higher margins.
The latest sales results show that the Wii software doesn't quite paint the same dominant picture as the hardware. In November, we saw Xbox 360 own the top two spots with new blockbuster sequels to recognized first person shooter (FPS) franchises (Gears of War and Call of Duty). The Wii software cracks the top 10 but by no means replicates the record-breaking success of its console. Top titles for the Wii include: "Wii Play" (includes an extra controller and more fun mini-games to show your true living room dominance); "Wii Fit" (the latest fitness craze); "Guitar Hero: World Tour" (the Guitar Hero franchise speaks for itself); and "Wii Music" (a mixture of Wii Sports and Guitar Hero).
The surprising software totals led me to a few key takeaways:
With all that said, these questions will remain unanswered over the next 12 months as we monitor how the industry changes or continues on the same path. However, there is no question that marketers should be keeping tabs on the industry's hardware and software sales as they will a story that presents opportunities.
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Matt Story is director of Play, a division of Denuo. He oversees the West Coast operation, maintaining key publishing and gaming industry contacts for the agency. With expertise and perspective from both the client and the agency side, he brings to bear dual strengths: interactive and videogame advertising and how they can transcend and evolve a client brand.
Matt and his team develop unique gaming integration programs on behalf of General Motors, Procter & Gamble, Miller, and others. In March 2007, he played an integral role in the 2007 Pontiac Virtual NCAA Final 4 tournament, powered by videogame "College Hoops 2K7."
Before joining Play, Matt was interactive marketing manager across P&G's antiperspirants/deodorants category. During his four-year tenure, he managed the creation of the first P&G blog, which supported the launch of Secret Sparkle Body Spray. He also led innovative development with the Old Spice brand's in-game integrations in multiple key videogame titles. To hear more from Matt and the various creative minds at Denuo, visit Denuology for their unfiltered perspective on the world at large.
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