The Cost Of The Beatles

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MTV Games/EA and Rock Band have the same dilemma Activision has with their Guitar Hero franchise. Video game sales are down year-over-year, and the story is even worse for the music genre, whose sales are down a whopping 46 percent.

Rock Band is giving it their best attempt yet at breaking Guitar Hero’s continued grip on the genre, though, with The Beatles: Rock Band next week, but the financials of the deal are finally coming out, and it s a big one.

From the LA Times:

Viacom will pay Beatles rights holders an unprecedented amount to include the band members’ songs and likenesses in the video game. It has guaranteed them a minimum of around $10 million and will shell out royalties of $40 million or more if the game sells as expected, according to three people familiar with the terms of the deal.

“The royalty rates on this are not even comparable to anything that has been done before,” said Martin Bandier, chairman of Sony/ATV Music Publishing, a joint venture of Sony Corp. and Michael Jackson’s estate, which controls the publishing rights to most of the Beatles catalog.

That equates to a helluva lot of Beatles fans buying a helluva lot of The Beatles: Rock Band to make this a profitable venture for MTV Games and EA. How much does the Beatles name bolstering the Rock Band brand worth in the long run, though

No More Plastic Instruments

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From LA Times:

Rock Band has been a consistent money loser for Viacom, largely because of its plastic instrument-like controllers. Manufacturing them in China, shipping them around the world and packing them into boxes that fit on retailers’ shelves have proved more complicated and expensive than the company expected.

“Our core competency is media,” said Paul DeGooyer, senior vice president of electronic games and music for MTV Games. “Let [Activision] take on the burden of getting those super-tight margin instruments out there.”

The problem with marketing a game like Rock Band is, not only the super-tight margins, but the fact that so much retail space is being used in those boxed instruments that are becoming ubiquitous in peoples homes (and closets).

MTV Games, deemphasizing the instruments, looks to capitalize on Rock Band instrument sales in a different way. The upcoming The Beatles: Rock Band has a premium price of $250 with special replica instruments familiar to any fan.

MTV Games is also packing in the older, generic instruments in a value pack with The Beatles: Rock Band for almost $100 less than The Beatles full edition in an effort to move inventory that has just been sitting on store shelves for awhile now.

A great move would be to just focus on premium versions of Rock Band with special instruments, created in much lower quantities but for a much higher margin, akin to what MTV Games is currently doing with The Beatles: Rock Band. They may eventually give up the instrument market to Activision (who, frankly, have better quality hardware), but it doesn’t matter since those instruments work on both games.

Digital Downloads The Place To Be

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If you’re not marketing your games through digital means, you re missing out on the fastest growing market in gaming.

A recent editorial in IndustryGamers raised the specter in context of GameStop and their slow-to-market digital efforts, offering a reminder once again that being among the first movers in the digital distribution space is extremely important in marketing games.

“I think that they are too far behind digital services like Xbox Live. Over 70 percent of content sales happens on the consoles,” Michael Pachter of Wedbush Morgan Securities told IndustryGamers. “If you have a 360, you don’t need an aggregator, since Microsoft won’t let you go to the Internet and download content anyway. This has been part of Microsoft’s strategy from the beginning: THEY want to be the aggregator for their console, and Sony will follow suit with PSN. The Wii Plus (HD) will likely have a hard drive, and the Wii Channel will be the aggregator there. Bottom line, unless the console guys open a gateway to the Internet, GameStop has no place as an aggregator.”

Of course, there will be a market for physical game media in the future, and GameStop may dominate that market forever. But the importance of marketing your games and having them available on digital distribution cannot be discounted, because while the market may be small right now, things are ramping up quickly.

And if you have any doubts, just ask yourself, when was the last time you strolled into a record store to buy your music

IPhone Scores Grand Theft Auto

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Rockstar Games recently announced one of the biggest franchises in gaming will hit the iPod Touch and iPhone this fall with Grand Theft Auto: Chinatown Wars.

This is a huge coup for Apple s portable game market that, while extremely successful, has been plagued in recent months with questions of credibility stemming from the flood of 99-cent games in the iTunes App Store.

“Chinatown Wars is a perfect match for the iPhone and iPod touch,” said Sam Houser, Founder of Rockstar Games. “We are very excited to bring this incredibly ambitious version of Liberty City, with this level of detail and immersive gameplay on Apple’s new gaming platforms.”

Rockstar ‘ move is a huge vote of confidence in the iPhone OS as a platform of note, and an upcoming music game Beaterator will also have a port on Apple’s hardware. Waning sales of Chinatown Wars on Nintendo DS also has something to do with the game moving to PSP and now iPhone.

Sony Releasing God Of War Blu-Ray This Year

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In another example of how old IP can be retooled and reused for current profit, as well as a way to market upcoming releases, Sony announced God of War Collection for the PS3.

The Blu-Ray disc will feature the first two games in the series in HD, and will come out this holiday season. This gives Sony a nice little release this year after news of God of War III being delayed to March 2010.

We are excited today to announce God of War Collection, said Scott Rohde, vice president, Worldwide Studios America. Our fans spoke and we listened; thanks to our partnership with Bluepoint Games, fans and newcomers to the series can experience the epic God of War and God of War II saga in stunning 720p on PS3. This Blu-ray Disc compilation brings Kratos to PS3 even earlier than expected.

Publishers should look at sales of this collection as a wake up call to treat their IP with just a little bit more care (HD graphics are a must) to facilitate excitement for upcoming releases and to make some cash without worrying about significant development costs.

PSA: Disney Buys Marvel

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Disney this week acquired Marvel in a deal worth an astounding $4 billion. Marvel shareholders will now own Disney stock as well as $30 per share of their original Marvel stock, and Disney retains ownership over Marvel’s business and over 5000 characters.

Joystiq has a look at what this means for gaming:

In a conference call following the announcement, Disney CEO Robert Iger briefly mentioned the company’s plans regarding Marvel licensed games. He noted that Marvel “has smart licensing agreements with some of the best video game manufacturers in the business” and that even though Disney has been “moving in a vertically integrated direction,” it’s possible that it will pursue a “blend of licensed games as well as self-produced and self-distributed.” He concluded that Disney has the “luxury” of deciding “what’s best for the company” as the current Marvel licensing deals begin to expire.

In other words, expect Disney to bring at least some Marvel development in-house to its Disney Interactive Studios. It’s important to understand the potential impact Disney’s hold on Marvel could have. There are many, many Marvel games out there. Just to name a few, THQ, Activision, Sega, Gazillion and Capcom all have recently-released or upcoming Marvel titles. Activision in particular fills out a hefty portion of its portfolio with Marvel games, including Spider-Man, the recent Wolverine and the upcoming Ultimate Alliance 2. These companies may soon be faced with losing these properties altogether.

Speaking to paidContent, Disney CFO Tom Staggs also had a few things to say regarding Marvel’s game business. Scaggs noted that Marvel has “a number of good strong licensing agreements,” adding that Disney will “enjoy the benefit of those deals.” He also stated that Disney will “broaden the base of properties that [its] leveraging within Marvel,” and concluded that there’s an “opportunity” to expand Disney’s gaming business as well.

Sports Gamers Play 200-300 Hours Per Game

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From Kotaku:

EA Sports’ Dave Littman – producer on NHL at EA Canada – has told us that “The average EA SPORTS gamer spends 200 to 300 hours playing their favorite sports game each year”. That figure is a combination of both online and offline play. And is for just one game.

With a devoted userbase like that on sports games, it s no wonder companies like EA are now charging for everything from an elite Madden mode to in-game powerups. We just think this lends to our argument of sports games being ripe for a subscription play.

Capcom Bringing The Goods To PAX

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From Capcom Unity  (official blog):

Featuring the lovely ladies of SFIV (Sakura, Viper, Rose, Chun Li, and of course Cammy), the new sticks will make their first on-sale appearance this weekend at our booth at the Penny Arcade Expo.

For anyone that can’t make it to PAX, there will also be a very limited stock available in the Capcom Store and at Mad Catz’ online ‘GameShark’ store, starting on September 4.

Our exclusive Comic-Con edition sticks sold out instantly every day we put them on sale, so if you want to pick up one of these collectibles, do it *quick*.

The upsell is always expected, but fans appreciate the level of care shown in these products, so an exclusive release is a nice bonus to give sell to your most hardcore fans.

Video Of The Day: Uncharted 2 Cinema Mode

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Today’s video of the day comes to use from Naughty Dog, developer of Uncharted 2, and a new mode called Cinema Mode that will allow players to look at their game again, but this time with a directorial’s eye. We can’t wait to see how players use these tools, with the side benefit to Sony of continuing the marketing push for the game well after the game s release in October.