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The video game Halo 3 earned $300m at the cash registers during its first week of release.  It earned more than $170m in its first day.  That easily trounced the all time best opening day box office returns for the movie industry (Spider-Man 3 earned $59.8m (source: Box Office Mojo)).  That makes Microsoft’s announcement today to spin off Halo’s creator, Bungie Studios, seem curious at first glance.  On a second look, it’s not actually that surprising.

Game Development is a little bit like movie production and venture capital.  For every hit, there are dozens of failures.  Companies spend extreme sums of time and money developing projects all the while knowing full well that many of the efforts will ultimately have to be supported by a few leaders in the portfolio.   Click to Read More

Is someone at Sony throwing darts and hoping something will stick? It’s starting to look that way with the PS3.  From the beginning the company’s sent mixed messages and the practice is continuing.

When Sony first began selling PlayStation 3 consoles in November 2006 they chose to offer two models. A $100 price difference and 40GB’s of hard drive capacity separated the two.  It was a decision that left consumers scratching their heads instead of opening their wallets. 

By April, when Sony corrected its mistake and discontinued the smaller model, it had been outsold by its sibling 10:1.  

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Forget Web 2.0.  Think twice about Internet video? Is gaming the next big frontier for investors and entertainment media companies alike?  It’s sure starting to look that way; even for those late to the party.  From Venture Investors to Big Media, gaming seems hot all over.

The sector has been hot for a while but in the past few months the temperature continues to rise.  Retail sales of consoles and games are returning consistently impressive results well ahead of the holiday season.  More than 68m people played a console game in June worldwide.  According to a report released Tuesday from market research firm DFC Intelligence, the cumulative worldwide “interactive entertainment industry” is on track to grow about 9% per year to reach $47b by 2009 (from $33billion in 2006).  Other market data firms are similarly bullish: Gartner has predicted mobile gaming revenue will hit $9.6b by 2011.  IDC predicts Internet connected consoles will generate revenue upwards of $10b by 2011, up from $981 in 2007.

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Every month gaming analysts wait for retail sales statistics like others sit anxiously in wait for interest rate news from the Fed. Thursday, they got their monthly relief when NPD, North America’s primary source of game-retail statistics, released its sales figures for August. As seems to consistently be the case, and the story for the year, the numbers handedly beat expectations and continue to validate projections that the industry is growing revenue at an astonishing rate.

For August, Nintendo continued its reign as king of the consoles and portables. Click to Read More

From earnings announcements to press releases to interviews, they said it. Collected recent quips and clips from the executive suites On Gaming, On Mobile, On Internet Video, On Advertising and On Business:

“Video-game consumers are the single most sophisticated shoppers in the entertainment industry, despite their age and what you might think. People go to a movie or buy a book on a whim. But buying a video game is a much more methodical and judicious process. Next time you’re in an airport, look at how many magazines are dedicated to video games. And they’re not writing about the sex lives of game designers. They are writing about the content.” –Jeff Brown, vice president for corporate communications at Electronic Arts (New York Times)

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Amidst continually bullish forecasts for the gaming industry, NPD Group released its monthly hardware U.S. sales data for June. Taking seasonal slowdown into account, the numbers were again incredibly strong, especially for Nintendo, which for the first time saw the Wii beat out even the portables as the top selling platform of the month.

For hardware, sales was up 77% over last year to $380.8m. Nintendo, attention to the user experience and efforts to reach out to new gamers again dominated both full–size and portable hardware categories. In Jul6, Nintendo sold 425k Wii units and 381.8k DS. . The numbers are particularly impressive considering the July include 4 weeks of data and the June numbers included 5. Readjusted for weeks, Nintendo sold about 106k Wii’s a week this month, last month they totaled about 76k.

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The gaming industry is valued at $37.5b by some measurements and growing.  The Asian Pacific market is expected to be nearly $19b by 2011. 81% of American youth play video games at least a month. Despite such staggering numbers, if you read the words of Electronic Arts CEO, all is not rosy.  Games are becoming too complex, too involved and alienating the mass-market. Their producers are also failing to innovate. So said John Riccitiello in Yesterdays Wallstreet Journal where he was quoted commenting that the industry is "making games that are harder and harder to play" and that "for the most part, the industry has been rinse and repeat."  And he’s right. 

Statistics show the competition for leisure time and entertainment is incredibly fierce and even with convergence in hardware (which now include DVD players and Internet connections) helping expand the gaming marketplace in some ways, the same competition is requiring game publishers and developers to tread carefully; mistakes are costly. A missed opportunity to get a game to market (e.g. a gamble on the wrong platform) or a weak showing from a game with expensive development costs could be a heavy drag on revenues for months.

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