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Growing the Long Tail

New business models are finally weaning the industry off transient hits.

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Image credit: Eurogamer

Published as part of our sister-site GamesIndustry.biz' widely-read weekly newsletter, the GamesIndustry.biz Editorial is a weekly dissection of one of the issues weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.

Having bandied about the term "recession-proof" a few times in recent months, albeit with a few more caveats than usual, it's something of a relief to see that the industry's top number-crunchers seem to agree.

GfK Chart-Track's pronouncement that this year's Q4 is on track to be a record-breaker in the UK will come as a relief to far more people than just errant pundits, however. For the games industry as a whole, the news that the perfect storm which has hit the world's economies seems to have passed over this corner of the entertainment business is welcome news indeed - especially since it comes from Britain, one of the countries where a crash in over-inflated house prices has amplified the effects of the crisis on consumers' wallets.

In the three months to the end of September - with house prices falling and credit deals disappearing from the market, not to mention newspapers filled with constant economic gloom - videogame software sales rose by 15 per cent in the UK. Even in the USA, supposedly on the vanguard of the financial crisis, none too shabby growth of 8 per cent was noted.

If recession were going to bite, then, perhaps it would bite in the run-up to Christmas? GfK Chart-Track doesn't think so - with business group director Dorian Bloch readily describing the UK as "gearing up for a best-ever Q4 performance overall".

It's hard to disagree. There was no sign of the recession on Oxford Street this week, when huge crowds gathered to buy the latest expansion pack for World of Warcraft, Wrath of the Lich King, at HMV's midnight launch event.

The store's own estimates suggest 2000 to 2500 avid gamers braved the cold weather to get their hands on the game - up from a crowd of 1500 who turned up for the previous pack, The Burning Crusade. Enthusiasm ran high even in unexpected places - at a Tesco 24-hour supermarket in the depths of East London, over half of a queue of well over a hundred gamers had to be turned away when the store ran out of copies within minutes of midnight.

WOW, of course, elicits significant passion from its core fans - which makes it tempting to dismiss this as an anomaly. Yet it's exactly that passion (albeit usually in less blatant forms, and with fewer fantasy costumes) which is helping to keep gaming's flame burning bright even while households around the world are tightening their belts and worrying about their outgoings.

It's passion for the medium and its properties, after all, that has driven Microsoft's Gears of War 2 to sell two million copies in around a week, while Ubisoft's Far Cry 2 strolled past the one million mark in three weeks. This, at a time when games like LittleBigPlanet, Fable II, Fallout 3, Mirror's Edge and Saints Row 2 are clamouring for space on the shelves and in gamers' hearts, and each no doubt contributing significantly to that industry bottom line.

So Christmas, it's fair to say, is looking fantastic. The passion of the medium's fans for their hobby is a big part of the reason for that, and the rest of the reasons have been outlined time and time again. In summary, videogames are a surprisingly cost-effective form of entertainment for people at a time when nights in are seen as an economy over nights out - a hypothesis borne out time and time again by the figures the industry records during tough financial times.

Another interesting note, however, does emerge from all of this - and that's the role of the "casual" games which have recently become such an important part of the market.

In a recent column, I mentioned my belief that more casual software - such as the games championed by Nintendo for the Wii and DS - could be significantly more exposed to macroeconomic effects than the traditional, "hardcore" games market is used to. That still holds true, to some extent - although it's worth mentioning that there's nothing to stop the industry's new, casual consumers from making similar value judgements to those which drive more traditional consumers to keep buying games in tough financial times.

What emerges from this latest set of figures, however, is not a picture of an industry which has recently expanded into territory on which it has yet to fully consolidate its hold. Rather, it's a view of an industry which, after being driven forward by transitory hits for decades, has suddenly discovered how to add a long-tail element to its output.

It's not that some software hasn't enjoyed long-tail effects for years, of course - but by comparison with the continued strong sales of games like Brain Training, Wii Fit and Nintendogs, previous videogame long-sellers look positively irrelevant. These products, and others like them (Nintendo's spring most readily to mind, but other titles like The Sims 2 and Mario & Sonic At The Olympics prove that it's not only Nintendo that has the long-tail Midas Touch), are finally providing a steady revenue stream that gives an underlying strength to an industry which has, in the past, generally lurched from one flash-in-the-pan hit to the next.

Even the "casual market long tail" isn't the only new business model in town. The Sims provides a perfect example of a property that's creating ongoing revenue in a unique way - in this case, by pumping out packs of add-on items and functions for an existing, popular game.