Parity: Why Third Parties Need Each of the Big Three - News
by VGChartz Staff , posted on 17 August 2010 / 4,599 Views
Introduction
During the PS2 era, individual publishers were selling 30m, 50m, 100m, and even in some cases 200m units of software on the PS2, Xbox, and GC. In the current era of machines, even with tremendous growth in the portable arena and steady growth in the console arena, third party successes and failures are more evenly spread out between platforms and publishers. Based on the VGChartz database, which is missing a sizable chunk of pre-2007 PS2 software, there were at least nine publishers to see software sales top 50m units in the PS2 era. Ranked by units sold across the three platforms in our database, we see that EA was the kingpin of the generation, even if we throw in GBA software (listed in parenthesis after the console total).
Electronic Arts: 255m (261m)
Sony: 110m
Activision: 92m (94m)
Take Two: 85m (85m)
Nintendo: 69m (166m)
Namco-Bandai: 68m (74m)
Konami: 67m (80m)
Square-Enix: 54m (60m)
THQ: 52m (66m)
Between the three consoles, roughly 1950m games were shipped worldwide - and thus these nine publishers accounted for at least 44% of all PS2, Xbox and GC software sold. Including Microsoft, Sega, and Capcom, twelve publishers sold at least 959m console games - good for at least 50% of all console software sold in the generation.
For current machines, Wii, PS3, X360, DS, and PSP, Nintendo has supplanted EA as the top dog. Note that these totals are compiled on a yearly top fifty by platform basis, and thus are slightly lower than totals in the database. Between DS, Wii, X360, PS3 and PSP roughly 2.25b games have shipped worldwide through June 2010. The 17 publishers below are the only publishers of the current generation who have, or who are likely to accumulate more than 1% of the software pie from the five systems. Figures are through August 8, 2010.
Nintendo - 507m (includes roughly 75m units bundled)
Electronic Arts - 201m
Activision - 158m
Ubisoft - 120m
Sony - 81m
Take Two - 80m
Sega - 77m
THQ - 70m
Microsoft - 59m
Square-Enix - 49m
Konami - 48m
Namco-Bandai - 46m
Capcom - 44m
Lucas Arts - 40m
Disney Interactive - 35m
WB Interactive - 18m
Majesco - 18m
In fact, these 17 publishers account for 1.65b units of software by themselves - nearly 3/4 of all software shipped in the generation. Due to changing economic realities of the industry and the Wii, these publishers now need all three players rather than just one dominant force.
The Big Guns Start Making Money on New Machines: 2006-2007
The fun begins when we breakdown how the publishers are performing overall by platform and on each platform by year. Looking back, none of the publishers began earning serious revenues on the current machines until 2007-2008. Nintendo essentially paved the way for a big base first, making it easier for pioneering third parties to transition from the PS2 era to the Wii era. Once publishers got on their feet again, content then expanded from third parties to build the X360 / PS3 base.
In 2006, the only publishers to sell over 5m games on the five current machines were Nintendo, Activision, EA, Ubisoft and Take Two. On a single platform, EA managed the feat on X360, and Nintendo managed it on both Wii and DS. Otherwise, no companies were earning much money on the latest round of hardware as the bases were too small. Part of this is because the PS2, GC, Xbox, GBA software markets were still very large, modest, small, and large respectively into 2006.
In 2007, the situation began improving - especially towards the end of the year. The biggest publishers began to sell more than 10 million games on a single platform and many more were selling 5 million games on a single platform.
Microsoft, Activision, and EA each cleared 10m games sold on the X360 in 2007. Nintendo sold more than 40m games on both Wii and DS more than any other publisher sold on all current-generation machines combined - the push that helped Wii climb towards the stratosphere. EA also sold over 5m games on Wii and PS3 in 2007. Sony sold over 5m games on PS3 as well. Square-Enix and Ubisoft also began to increase their DS efforts in 2007, with both companies selling over 5m units for the portable. All thirteen publishers in the image above topped 5m units on the current machines in 2007. EA, Activision, and Nintendo each topped 20m units. Sony and Ubisoft topped 10m on the new machines for the first time, and several other publishers began approaching 10m units of software annually on the current machines. Still, there were only seven instances of a third party topping 5m units on a single current generation machine in 2007, as compared to one instance in 2006. The transition was still far from over.
Transition Concludes & Most Publishers Peak: 2008-2009
In 2008, alot of publishers began to make serious money from the current round of hardware. Nintendo (Wii, DS), Activision (X360, Wii - almost on PS3), EA (X360, PS3, Wii), Ubisoft (DS, X360) each sold over 10m games on multiple platforms. Sega also very nearly sold 10m games on Wii, Take Two sold over 10m games on X360, while Microsoft and Sony sold over 10m games for X360 and PS3. With Wii and DS easing risk, publishers began to move content en-masse on to the current five systems from PS2 era systems during 2008-2009.
In addition to the 10m markets on individual platforms for Nintendo, Sony, Microsoft, Activision, EA, Take Two, and Sega in 2008 some publishers began selling roughly 20m games on individual current-gen platforms. EA and Activision got to almost 20m on X360 in 2008, while Ubisoft got to almost 20m on DS. Nintendo also sold over 50m games for both Wii and DS in 2008. Every publisher in the chart above except for Square-Enix, twelve publishers overall, sold over 10m games on current machines in 2008. Remember that in 2007, only five publishers sold over 10m games on current machines and that in 2006 only two publishers did.
With an expanded base, topping 20m also became much easier in 2008 on current systems. Eight of the thirteen publishers topped 20m units in 2008, up from three in 2007. It is worth noting that this is where many Japanese publishers begin to seriously lag behind western publishers - as EA, Activision, Ubisoft, Take Two, and THQ all topped 20m units on current machines in 2008, but on the Japanese side only Sega (as well as first parties Nintendo and Sony) topped 20m units.
In 2009, several publishers continued to see their software totals on the five current generation machines grow. However, several publishers also showed declines on various platforms and in aggregate. Nintendo, Sony, Microsoft, Ubisoft, Take Two, Sega, and Konami all sold less software in 2009 than in 2008 on current generation hardware. Capcom, Square-Enix, EA, and Activision all enjoyed big increases in software sales. Namco-Bandai and THQ also saw modest increases in software sales.
In 2008, eight publishers sold over 20m units on current generation machines. For 2009, that figure dropped to seven publishers. All thirteen publishers did top 10m units for the year though, for the first time since the generation began. EA and Activision topped 20m games sold on X360 in 2009, and the biggest publishers continued to have multiple platforms where they sold over 10m games. Games from Nintendo (DS, Wii), Activision (X360, PS3, Wii), EA (X360, PS3, Wii) all topped 10m units on multiple platforms. Ubisoft nearly accomplished the feat too, selling over 9.5m games on DS and Wii in 2009.
Most publishers had at least one 5m console market in 2009. Capcom, Konami, and Namco-Bandai were the only publishers not to - choosing instead to sell a decent number of games across multiple platforms. On DS, Nintendo, Activision, EA, Ubisoft, THQ, Sega, and Square-Enix all sold over 5m games in 2009. For Wii, Nintendo, Activision, EA, Ubisoft, THQ, and Sega all sold over 5m games in 2009. On the X360, Microsoft, Activision, EA, Ubisoft, Take Two, and THQ all sold over 5m games in 2009. For PS3, Sony, Activision, EA and Ubisoft all sold over 5m games in 2009. PSP had a tough year in 2009, with only Sony selling over 5m games in 2009.
Generally speaking, not much changed from 2008 to 2009. There were six publishers to sell over 5m games on Wii in both years, five in 2008, and six in 2009 for X360, six in 2008 and seven in 2009 for DS, two in 2008 and one in 2009 for PSP, six in 2008 for PS3 and four in 2009 for PS3.
2010: Peak Continues for Some, Ends Abruptly for Others
Right now, 2010 is looking like a mixed year. Some players, like Take Two, Sony, Square-Enix and Microsoft will likely see increased software sales. Others will see big declines though. Using year to date figures through August 8, 2010, half the publishers look set to decline from 2009 while the other half should see stronger figures.
Generally speaking, video game industry sales can be split in the following manner: January - October = 10x (x = monthly sales weight), November = 2x, December = 4x. Roughly speaking, the end of August is the "half way" point for sales in a given year. With a price cut, or major software pushes ahead of the fall season January to August sales can be even less than 1/2 of all sakes in a calendar year. But if you assume sales will at least double over the next five months, then Take Two, Square-Enix and Sony are in for good years - with sales through early August nearly equalling full-year 2009 totals. Nintendo, EA, Activision, Microsoft, Konami, Ubisoft and Capcom all have major content still coming - and thus should more than double their sales to date by the end of 2010. Some publishers (see below) look like they could have record years on the current machines for software, while Nintendo, EA, and Activision among others, will probably flatline or drop off from last year.
There are already several 5m and 10m performances in 2010 on a publisher level, which bodes well for the Christmas rush. On Wii, Nintendo, EA and Ubisoft have each sold over 5m games year to date. For X360, Microsoft, Activision, EA, and Take Two have sold over 5m units to date. On DS, Nintendo has sold over 16m games, though no other publishers are over 5m yet. For PS3, Sony, EA, Activision, and Take Two are over 5m units in 2010. For PSP, no publisher has sold over 5m games in 2010.
Nintendo is over 10m games sold year to date on Wii & DS, Sony is over 10m games sold year to date on PS3, and EA is over 10m games sold year to date on X360.
Some of the signs are good, some aren't for 2010.
Previewing Final 2010 Figures
As with 2009, it looks like 2010 is going to be a mixed bag for publishers. Several publishers are set for record years on this round of machines, but others will see more decline. Wii, X360, PS3 and even PSP look like they will support record volumes of software for certain publishers in 2010.
Ubisoft and Konami look like they are set for record years on Wii as they are strongly positioned to capture the singing / dancing market which should grow tremendously over the Christmas season. THQ, EA, Square-Enix and Take Two will likely see flat sales on Wii for the year. Namco-Bandai and Sega do look like they will see big drop offs in Wii software compared to 2009, but most other publishers - including Nintendo - should be flat (+/- 5%) or down only slightly from 2009. Nintendo, EA, Activision, Ubisoft should all top 10m units on Wii in 2010. THQ should also be over 5m units on Wii in 2010. Konami and Sega may also get pretty close to 5m units on Wii in 2010.
For DS, almost every major publisher looks like it will see declining sales in 2010 compared to 2009. Nintendo, Activision, Ubisoft, Square-Enix look like the only sure bets to top 5m units on DS in 2010. Nintendo will be the only publisher over 10m on the DS for the year. 3DS is part of this - publishers want to be on the next big hit and may be abandoning DS a bit early, particularly in Japan where 30m bases don't come around very often.
Sony, EA, and Activision should all sell over 10m PS3 games in 2010. EA looks like it will sell more games on PS3 in 2010 than it ever has, while Activision is heading for more of a flattish year as Call of Duty is likely to decline. Sony will top 20m units on PS3 for the first time with Gran Turismo 5 and Move titles set to launch. Ubisoft, THQ, Konami, Take Two, Sqaure-Enix and Sega all have reached or are set to reach 5m units on PS3 in 2010. Square-Enix and Sega are already assured to have record years on the system as 2010 year to date sales are higher than any previous year for those publishers on PS3. There is a slim possibility that Take Two will also reach 10m on PS3. Ubisoft, Capcom, and Namco-Bandai are probably going to have down years on PS3, because a) most of Ubisoft's dancing content is going to Wii / X360, b) Dead Rising 2 will probably sell better on X360 by a wide margin, and c) Namco-Bandai sold over 3m PS3 games in 2009 and I don't see that figure being topped in 2010. Capcom should only be down 10% or so - it is Namco-Bandai and Ubisoft that look like significant drop offs.
For the PSP, the situation is a bit complicated. Capcom could easily sell over 5m PSP games in 2010 - but it depends on when Monster Hunter Portable 3 releases. Sony definitely will sell 5m PSP games in 2010, as God of War is coming. No other publishers are likely to top 5m units on PSP this year. Activision, EA, THQ, Take Two, all look set for down years - but Japanese publishers - notably Square-Enix, Konami and Capcom - should best their 2009 figures on PSP due to the remaining sizable PSP software market in Japan. Sega, Ubisoft and Namco-Bandai however are likely to see flat or down sales for the year.
On the X360, Microsoft, EA, Activision will all top 10m units in 2010 and Take Two might. EA should have its second 20m year on X360, likely a record year, but Activision will probably decline from 2009 to below 20m. With any luck with Kinect software at all, and the expected sales for Halo: Reach and Fable III, Microsoft should sell over 20m of its own games in a single year for the first time. Ubisoft, THQ and Sega look like they can top 5m units, and Square-Enix might be capable of reaching 5m as well. Konami has historically struggled on X360 compared to Wii, PS3, DS and PSP - but that should begin to change in 2010 with Kinect even though WIi / PS3 sw will still be stronger for Konami this year. But next year Konami's slate of dancing games may position the publisher better on X360 when Kinect has a bigger base.
With all that in mind, here is a very rough and very early sketch of how 2010 will turn out for the major publishers. Keep in mind that several "non-major" third parties are likely to perform quite well in 2010 too - notably WB Interactive, Disney, and Level 5 and so even as a guess this isn't completely representative of the entire third party situation for the five platforms. In fact, over time the top ten publishers and first parties have represented less and less of software sales per year - dropping from 90% of all software sold initially to 70-85% in more recent years.
Overall, it looks like all the major publishers will top 10m units once again in 2010. I have EA reaching 66m - slightly higher than 2009 and what should be its best year on the current round of machines but essentially flat from 2009. Capcom and Konami are in this boat as well - just barely outperforming their previous software record for these machines in the estimate above. Microsoft, Sony, and Square-Enix however look like they will solidly beat their previous records this generation. Everybody else - Nintendo, Activision, Ubisoft, Take Two, THQ, Sega, Namco-Bandai will be flat or down against previous years on the current round of hardware. Activision, Nintendo, Ubisoft, THQ and Sega especially may decline quickly from here on out on the current machines, as much of their content will work well on 3DS - meaning the light-blue DS segment will start to quickly vanish from 2011 onwards. There is growing speculation as well that there is no PSP2 - only a PSP-Phone. If that is true, Capcom, Konami, and Sega - whose content has performed well on PSP in Japan but not super well on DS in Japan - may be in a bit of trouble in the next round of portable machines if they can not move their fan bases to the 3DS.
Conclusions
Lifetime to date, numerous publishers have performed well on the current systems. Through August 8, 2010, the following publishers (and obviously first parties) have topped 10m units (9.5m+ is in red) on a given system. Figures are calculated on a top fifty yearly basis by platform. Those items highlighted in blue will assuredly top 10m on the platform in question...eventually.
>10m EA Act Ubi THQ Take 2 Dis Maj Lucas WB Sega Cap Kon Sq-En Nam-Ba
Wii Yes Yes Yes Yes No Yes No Yes No Yes No No No No
PS3 Yes Yes Yes Yes Yes No No No No Yes No Yes No No
X360 Yes Yes Yes Yes Yes No No No No Yes Yes No No No
PSP Yes No No No Yes No No No No No Yes Yes No Yes
DS Yes Yes Yes Yes No Yes Yes No No Yes No Yes Yes Yes
Overall, each machine has supported volumes of over 10m units from at least five third party publishers. Wii, PS3, X360 and DS should each end up supporting nine to eleven 10m third party markets by the time they stop selling. Depending on the platform and price of the units, 10m units is anywhere from about $100 million to $400 million - so even over three to six years it is real money. Put another way, seven companies other than Nintendo have generated $250 million or more on Wii - and Take Two, Capcom, Konami and Namco-Bandai will get there eventually too.
Many companies have also reached the 20m level lifetime (EA, Ubisoft, Activision, and Nintendo reach it on some platforms in a single year) this generation.
> 20m EA Act Ubi THQ Take 2 Dis Maj Lucas WB Sega Cap Kon Sq-En Nam-Ba
Wii Yes Yes Yes No No No No No No Yes No No No No
PS3 Yes Yes No No No No No No No No No No No No
X360 Yes Yes Yes No Yes No No No No No No No No No
PSP Yes No No No No No No No No No No No No No
DS Yes Yes Yes Yes No No No No No Yes No No Yes No
Sega is the only Japanese third party to see sales of its game reach 20m units on more than one current system. Right now it looks like DS will end up supporting more publishers over 20m units than any other system although Wii and PS3 may eventually support a couple Japanese publishers at that level.
The point is publishers have had to be very careful this generation. Going by the numbers alone, EA, Activision, Ubisoft and Sega are likely to continue to support the Wii the longest - as each has sold 25m - 40m games on Wii to date. Disney, Lucas Arts and THQ have Wii as their strongest platform as well. For PS3, EA and Activision are over 30m units to date and Ubisoft and Take Two will top 20m soon. Those are the four publishers likely to support the PS3 the longest. On X360, Activision and EA have created huge markets - 60m+ and 70m+ respectively - and so they will be in a bit of trouble when the core X360 market begins to decline. Ubisoft and Take Two are over 30m on X360 as well, and THQ is nearing 20m. On the console side, there is ongoing incentive to maintain the Wii market for these publishers because if / as PS3 and X360 begin to decline for certain publishers there is a need for a big base to tap extra sales from. Early on in this generation PS2 and then DS had that role. With PS2, PSP and DS in serious decline though, that massive base is the Wii.
On a yearly basis, Wii / X360 / PS3 are pretty evenly split for biggest console software sales for publishers. Konami, Capcom and Square-Enix are selling the most software per year on PS3, Sega, Namco-Bandai, THQ and Ubisoft are selling the most software per year on Wii, EA, Take Two and Activision are selling the most software per year on X360. Smaller publishers tend to prefer Wii as well - Majesco, Lucas Arts, Disney and WB Interactive are all selling more software per year on Wii than on X360 and/or PS3. Investment will continue to follow those lines.
Portables complicate the matter - DS has been the biggest platform for Namco-Bandai and Square-Enix on a yearly basis. With DS and PSP both shrinking though (even in Japan PSP only supports three-five publishers with strong volumes), the performances of the publishers to date, and recently on Wii, PS3, and X360 should be indicative of their long-term support. None of the publishers really look "done" with any of the consoles yet. Konami will be down on PS3 in 2010 vs. its all time high as an example - but that is because of Metal Gear Solid 4 in 2008. The same is true with Sega in 2010 on Wii - no Mario & Sonic - but Mario & Sonic 2012 could still sell fairly well so the 2010 declines for Konami on PS3 and Sega on Wii aren't huge deals in that context.
On the HD side the only publishers who really look like they will steadily decline after 2010 are Square-Enix, Activision and Ubisoft as Final Fantasy, Guitar Hero, Call of Duty, Assassin's Creed and other big franchise appear to be in decline. In 2011 and 2012 we may see some slowdown in core games from those publishers for the HD market. For DS, Capcom and EA are starting to have serious trouble selling their games given the size of the DS base - and they look like they duck out pretty soon. Square-Enix, Activision, Ubisoft, and Konami are still making decent money on DS though and should support it for a while yet. On PSP, Activision, Ubisoft, Square-Enix, Sega and a couple others should be just about done after 2010, at least in the West. Konami and Capcom should remain on PSP for a while though as their markets may not peak until 2010 even as the overall PSP software market contracts. For Wii, Namco-Bandai and Activision look like they are past their peak - and EA sales should start steadily declining on Wii after 2010. Ubisoft, Konami and small publishers are still growing on Wii though. Most publishers won't see their sales really decline on Wii until 2012. Wii may actually be extended to some degree by the 3DS, which seems to have similar specs. Ports could be adapted relatively easily from one system to the other. There was a period when PS2 / PSP / Wii all got the same games - but with PS2 and PSP just about dead in the West, the option vanished. 3DS may revive it for some publishers.
All in all, when the systems finally stop selling, multiple third parties will have sold 5m units on DS from 2007-2010, on Wii from 2008 to at least 2011, on PS3 from at least 2008 to at least 2011, on X360 from 2007 to at least 2011, and never on PSP. Once third parties have enough trouble selling their content in big volume, say 5m (5m units = $100m - $200m roughly) on the consoles, we'll get new systems just as we're seeing with the DS --> 3DS transition right now. Going by how third parties are likely to trend after 2010, new systems will be arriving sometime between 2011 and 2013 as even on X360 / PS3 some publishers have already sold as much software in a year as they ever will.
Contact VGChartz at jmazel@vgchartz.com
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Also would like to note that this analysis is better than some made by half-assed analysts out there.
Looks like a good year for software.
Declan - that's accurate - but with the possible exception of Nintendo averaging even 200,000 per game is a pipe dream for just about everyone even though titles like Modern Warfare II / GTA IV make the flops worth the risk.
PS2 for instance is a 1500m SW market with over 10,000 releases, but the top 750 games still account for over half the market.
Current gen with Nintendo leading 507m units sell. :(
Wow, quite a read, there. O_O
Interesting stuff, really...
This is a fascinating read. Perhaps this is the reason why THQ is putting such an effort into the Wii by releasing the uDraw peripheral, because the Wii is a strong sw market for it? I suppose that would make sense. I also really like how the timing of the console/handheld life cycle is incorporated and discussed in conjunction with the software sales; the guesses on new console introductions makes sense in relation to when software markets are expected to contract. I've long wondered how long 3rd parties would really support the Wii, as it never seems like they sell much on it, but based on the graphs above it seems that perception is misguided; it must be Nintendo just sells so much more on the Wii that it seems like no one else is selling on it. Really, a great article, a great read.
SE have released a couple of DQ spin-offs to moderate success. They're developing Mario Sports Mix, too, and that could be a huge seller. DQX will shift a few million.
Square Enix made shit all on the wii.. have they even made a wii game?
Which are the companies making the money? A company might shift 20m units of software on a platform in its lifetime, but if it's released 100 games on it that would only average 200,000 units per game - less impressive than, say, shifting 5m units from 10 releases, and in all likelihood less profitable.
The point you made about Capcom, Konami, and Sega content selling the most on the PSP and possibly being in trouble isn't a worry I don't think. It's clear Nintendo are targeting the PSP market with the 3DS and with Metal Gear Solid, Resident Evil and Street Fighter games confirmed for the console, I think that proves that the three companies know that they will need to build a userbase on the 3DS from the start.
Great incite into the software cycles for specific publishers, It'll definitely give me things to think over in terms of what it means for specific content on specific platforms going forward.
Well...I guess I blame Wii Fit lol. But seriously, when games like that sell 20M and stuff like....Okami sell like ass, people are going to cherry pick to make it seem like Nintendo doesn't sell games @LordTheNightKnight
So you don't just cherry pick certain games on the Wii to make it look as though it doesn't sell games?
What is wrong with you, Mazel?
very good read. didn't expect it to be so long, pissed my girlfriend off but it was totally worth it.
long, but well read. I like.
Pay attention all you six figure analysts out there. This is how it is done.
Jacob, once again you fail to disappoint me.
Yeah Nice Work, Very interesting.
Mind=blown
Top notch work
Whoa, what an analysis! Great job, thanks!
