Social Gaming and the Next Fiscal Year

The video game industry has been rapidly changing. With the next generation of consoles on our doorstep and now Smartphone and tablets taking aggressive leap into the video game market it's no doubt that developers and publishers will have to change their tactics to ensure higher profits for the next fiscal year. But it's in that fiscal information that highlight what titles are the most successful and what platforms prove to provide the most revenue. After combing through layers to financial information I've notice that addictive social games generate more revenue for companies than actual titles. Companies are focuses on the casual market with the same intensity as the hardcore audience because both carry either a tablet, Smartphone, or both.

Social games tend to be free titles that can easily function without making a purchase, but involves a lot of time. People have become impatient and easily sacrifice their hard earn money in order to quell any vexation or make things easier, and that's how social games work. By offering micro-transitions that allow players to breeze through what would've required several hours to do in a matter of seconds. If you look at EA's fiscal earning, The Simpsons Tapped Out, a free-to-play social has earned over $50 million in digital revenue since it was released in August. Why, because people don't want to wait 24 hours for Homer to finish watching the Monkey Trauma Center Marathon to earn XP or cash but would rather spend $99.99 on 2400 Donuts to speed up the process of everything.

Companies like EA have had steady sales of other triple-A titles such as FIFA 13 and SimCity, but companies like Konami weren't as successful. Although Pro Evolution Soccer 2013 and Metal Gear Rising: Revengeance sales were steady according to Konami's fiscal information they depended on social games. With more than 35 million registered users the finances of Konami depended on Metal Gear Solid Social Ops and Dragon Collection through the Japanese social networking service GREE. Konami saw a decrease of 15% in net revenue and intends to restore itself by focusing its attention on Smartphone and tablets, as well as promote the Metal Gear series in the upcoming E3.

Not all companies were blessed with social gaming success but plan to change that. Sega Sammy earned a net profit of $331 million and an annual growth of 53.5%. Despite this enlargement Sega Sammy intends to grow 41% and earn up to $464 million by not only ensuring that their titles meet next-generation standards but a greater focus on "digital software for mobile phones, Smartphone and PC downloading."

This does not mean that social gaming is required for all companies to increase revenue. Namco Bandai sales grew 7.3% in Japan year-over-year to $4.1 billion and American by 38.3% to a total of $339 million. The net income of the company was $327 million, a 67.8% increase from last year, and accredits it's expansion to Tekken Tag Tournament 2 selling 1.5 million units and Soulcalibur V selling 1.05 million copies. Social games are additive and easily accessed but companies like Namco Bandai show that it's possible to increase profits without diving into that market, but it does help.

Take-Two confirmed a GAAP net revenue of $1.214 billion because of high sales of Borderlands 2, NBA @k13, BioShock: Infinite, Max Payne 3, Grand Theft Auto IV, XCOM: Enemy Unknown, and Red Dead Redemption, as well as digital content that grew 148% year-over-year. But despite this 2K has entered the mobile gaming market with the recent release of Sid Meier's Ace Patrol. President of 2K, Christoph Hartmann, stated "2k's critically acclaimed triple-1 game design experience is being brought to bear on the burgeoning mobile market." They know that the mobile market is growing larger each day and by provide a entertaining option for consumers to play anywhere on their phones will increase profits for next year.

Everyone's mind is on the next-generation of gaming, will Sony regain the championship or will Microsoft continue to reign supreme, or will Nintendo surprise everyone and come out on top. However judging by the fiscal information it's clear that third-party developers and publishers intend to focus that same attention currently be used on the Xbox One, PS4, and the Wii U on the mobile and social marketplace. I know this may annoy a lot of people but gaming is ultimately a business and companies will do whatever is necessary to ensure that they make a large profit, consumers vote using their wallets not with comments on YouTube. If a free social title like The Simpsons Tapped Out can stand alongside triple-A titles you better believe that companies will attempt to mimic that concept and develop their own social title. But of course next year’s fiscal information will tell what works and what doesn't, for now its social gaming. 

Article by Amaya and Adam.