Beginning in 2006, gamers started to complain about the lack of fresh, new properties in the video game space and professionals began to forecast an industry slump if publishers didn’t focus on creating new brands to support future growth. Publishers listened and promised consumers that new games were around the corner. And guess what? They kept their promise!
From 2006 to 2009, the market share of new intellectual properties on the seventh generation home platforms grew from 16% to 22%, which may seem insignificant, but in absolute terms there were 61 new properties introduced in 2007, while 2009 had 126 --a 106% increase in new intellectual properties being introduced since 2007 on the next-generation home consoles.
So there you go gamers, you got what you wished for, more new intellectual properties! So why did 2009 feel like such a lackluster year in terms of new properties? It’s because most new intellectual properties fail to meet our expectations.
Case in point: Of the 126 new properties that launched in 2009 on the home consoles, only 7 reached “hit” status. Furthermore, of the 7 that succeeded, it will still take a sequel before the brand can grow to blockbuster status. (I understand “hit” and “blockbuster” status are subjective terms, but in my world, blockbuster > hit.) Additionally, if you want to remove “sales” as determination of quality, of the 9 retail games released in 2009 that received an aggregate review score of 90 or higher, none were considered new intellectual properties. And 2008 had only one: LittleBigPlanet.
The point, I believe, has a lot to do with a misconception or communication breakdown between consumers and publishers. When we see the same game being released year-in and year-out with little being done to improve or increase the game’s features, we show our dissatisfaction with our pocket books. Publishers and other industry professionals take that as a sign that the best strategy is to create new properties to replace the stalling ones. This leads to a publisher launching four new properties, but three of them will likely fail and be unprofitable. And for the one that does succeed, publishers instantly begin to think about how quickly they can extract profits from this new property; this mentality, of course, leads to problems such as feature stagnation, which ultimately causes the new brand to go stale, bringing us right back to the beginning!
I believe the lackluster sales from peaked existing properties has more to do with a failure to innovate than the brands themselves getting stale. When a publisher creates a new hit franchise, the company should be thinking about how best to elongate its popularity, rather than how to extract its riches as fast as possible.
Blizzard comes to mind as an exemplary developer. Blizzard has not launched a new property in over 12 years, yet they contribute over $1 billion a year to Activision’s top-line. And if things continue to go well with StarCraft II and Diablo III in 2010/2011, they will likely not launch another new property until 2014—16 years between the launches of new properties! Of course, Blizzard operates off a different economic model than a typical retail packaged goods publisher, but their business strategy is something to take note of. When Blizzard comes across a new successful property, they treat it the same way farmers treat their land; they nourish the soil and carefully cultivate the crops to ensure the land stays healthy for the next season. The opposite of this strategy is best reserved for nomadic Barbarians; when they come across a rich land, they drain its resources, pack up, and begin to forage for new resources. Rinse and Repeat. Sound familiar? I am no anthropologist, but I am pretty sure farming beat out the hunting-gathering strategy centuries ago.
