Start Your FREE Membership NOW
 Get Immediate Access to Licensing Articles & Special Features
 Receive Our Weekly eNewsletters, The Deal Sheet,
   The Licensing Advisor and Weekly Wrap Up
 Absolutely NO Risk or Obligation on Your Part -- It's FREE!



Upgrade to Premium Membership NOW for Just $47!
Get 3 Months of Full Premium Membership Access
Includes Our Monthly Newsletter, Licensing News, Deals, and Contacts
And MUCH MORE!
Video Games

Video Game Sales Up; Licensed Options Grow

2016 was a big year for retail sales of video games—but, interestingly enough, licensed games didn’t make much headlines (with the one obvious exception). In fact, it was just the opposite: Metacritic’s lowest score of the year was for Activision’s Ghostbusters. Meanwhile, Pokémon emerged as one of the hottest brands of 2016, topping the list of Google’s breakout searches worldwide. The lack of coverage however, doesn’t translate to a lag in revenue—in fact, retail sales are picking up.

Retail sales of licensed video games and software picked up in 2015—growing 2.4% to reach $3.00 billion in retail sales—and are expected to grow for 2016, largely on the strength of a few properties. In this product category, TLL tracks sales related to console, desktop, and mobile games—including in-game purchases.

Sales from in-game purchases is one of the top-growing revenue streams. For example, free-to-play mobile game apps might allow players to purchase items to improve game play with two or three in-game currency types. Console and desktop games might similarly offer expansions and updates that players can purchase after buying the original game—and interesting opportunity for brands that. However, the rate of players that actually make in-app purchases is far lower than the number of downloads; TLL estimates that 10% of active players actually make in-app purchases. In fact, most revenue is derived from a small percentage (3–5%) of power players that can spend up to thousands of dollars on in-game purchases, especially in mobile game apps. In contrast, most free-to-play mobile games generate revenue from in-game advertisements.

Royalty rates for these three categories varies, but generally desktop and console games will demand lower rates because they have associated physical products. In contrast, mobile game apps tend to have smaller development staffs and be download-only.

Retail Sales of Licensed Video Games & Software, 2013–2015
Note: Numbers may not add up due to rounding.
Year 2013 2014 2015
Retail Sales in Billions $3.18 $2.93 $3.00
Rate of Growth -7.6% -7.9% 2.4%
Share of Total 3.3% 2.9% 2.9%

Getting Into the Game

The interactive games space is quickly growing in importance as one of the top revenue-earners in entertainment studio’s pockets, according to Gary Rosenfeld and Mark Caplan of digital consultancy BD Labs. They warn however, that the key to success is not the brand, but the quality of the game.

Increasing industry success means the games space is getting ever-more competitive. For example, if mobile games were to be compared to other consumer goods, the number of SKUs in an average Walmart Superstore would number over 140,000 products. In contrast, Apple’s App Store boasts over 2 million apps and Google’s Play has 2.2 million apps—around 40% of those are games. In such a crowded space, licensing is one of the tools developers are increasingly relying on to stay relevant in a coast-effective way.

Although TLL consistently stresses the importance of collaboration between partners in a licensing deal, this is expecially true for the interactive digital space. On average, games can take up to 24 months to develop with teams of thousands of people; in comparison, the development schedule of a film from green-light to screen can last anywhere from 12 months to an average of 2 years. While studios are increasingly expecting large revenue returns, developers are strapped for the time it would take to develop the kind of high-quality game that can become a top hit. The bottom line? Licensors have to plan well in advance and develop close relationships with video game and software developers to see returns.

2016’s Top-Selling Games

Amazon’s biggest sellers were the Pokémon Sun and Moon games for the 3DS (taking the No. 1 and 2 slots), followed by Final Fantasy XV (PS4), Uncharted 4 (PS4), Madden NFL 17 (the Xbox One version took the No. 5 slot and the PS4 the No. 6 slot), and Skyrim (PS4).

Valve’s list of top games ranked by gross revenue for its Steam platform include Fallout 4, Tom Clancy’s The Division, Grand Theft Auto V, Counter-Strike: Global Offensive, and free-to-play DOTA 2.

In mobile game apps, the biggest earners from Apple’s App Store (with developers earning $20 billion in 2016, up 40% from 2015) were Pokémon Go, Clash Royale, Monster Strike, and Fantasy Westward. The New Year was the biggest single day ever on the App Store with nearly $240 million in purchases, driven in part by Nintendo’s Super Mario Run. The fastest growing market? China, at 90% growth—according to Newzoo and TalkingData, it’s the largest mobile market in the world with $10 billion in revenue in 2016.

CLOSE TO VIEW ARTICLE x

You have 8 articles left to view this month.

Your 8 Free Articles Per Month Goes Very Quickly!
Get a 3 month Premium Membership to
The Licensing Letter for just $47!

Sign up now and get unlimited access to all articles, archives, and tools for The Licensing Letter!

You need to be logged in to access this content.

If this is the first time you are visiting our new website, you may experience problems logging in. If your username is your email address, you should have no difficulties using your existing username and password.

If your email address was not your username, please logon by entering your email address and your present password.

If you need help logging in, please contact customer service at 1-888-729-2315 or customerservice@plainlanguagemedia.com

Please Login...

Email Address

Password

or Register for free for a Limited Access account.

Email Address


(-000tll)
()