Question Block : Casually Kickstarting

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Welcome to another edition of Question Block. As always, if you have questions you would like to see in a future edition, post them in the Comments section below or email rdonaldson@vfs.com. And now, on with our show…

I recently read that Ubisoft has seen revenue growth in FY13 because of its core games like Assassin’s Creed, Just Dance, and Far Cry 3, and less growth in its casual games. Does this mean they will focus less on developing casual games? They are also depending on the success of new consoles. How much will the success or failure of the new consoles affect the company?

We have seen something of a platform transition in the casual space in the past year or two, as companies shift away from Facebook in favor of mobile devices. This has caused a bit of a downturn in revenue for many casual developers as they wind down their social titles, and Ubisoft’s casual arm is no exception. Keep in mind that Ubisoft makes a lot of casual games for platforms like Wii and DS as well, and with slow sales of the Wii U and 3DS, they aren’t reaching the casual install bases they found on Nintendo’s last generation of systems. Despite the slowdown, it’s almost certain that Ubisoft will continue to support casual to some extent, so we can expect that its performance in that space will generally follow the market. Whether that means casual revenue will be at higher or lower levels than before remains to be seen.

Ubisoft has tended to have a very diverse portfolio of games, and some of the titles that we as gamers might dismiss are actually some of their top sellers. True, Assassin’s Creed III shipped 12.5 million units to retail to date, but Just Dance 4 has shipped 8.5 million! (Though keep in mind that shipping to retail doesn’t necessarily mean impressive sell-through numbers.) This pervasive strategy helps the company weather transitions rather well, since it means it has products spread across many different platforms. That said, certain consoles skew towards certain demographics, so a slowdown in Nintendo console sales will lead to a downturn in Ubisoft’s casual revenue; poor sales of Sony or Microsoft consoles would have a bigger impact on Ubisoft’s hardcore franchises.

Regarding the company’s presence on upcoming consoles, the company has of course released trailers for Assassin’s Creed IV and a new property, Watch Dogs. It is forecasting that Watch Dogs will see sales figures comparable to what the original Assassin’s Creed franchise achieved upon release in 2007, which may be conservative if Watch Dogs comes out on this generation’s consoles in addition to the new systems – after all, think of the install base we have today versus when the first Assassin’s Creed came out. The company is also forecasting that sales of Assassin’s Creed IV will fall below those of Assassin’s Creed III.

Watch Dogs Screenshot

Ubisoft expects Watch Dogs to sell 5-6 million units.

There are a number of reasons Ubisoft might have forecasted lower numbers, but the potentially positive repercussion is that the company seems to be taking a somewhat cautious business approach as it enters into the new generation of consoles. It sounds like they are hoping for success on the new platforms, but aren’t putting all of their eggs in that basket.

And that is probably a smart approach.

 

Once a game is funded through Kickstarter, how does the developer go about selling the game?

I’ll refer exclusively to Kickstarter here, but these points apply equally to other crowdfunding sites – like Indiegogo, for any Canadian readers who still can’t use Kickstarter!

Shipping games to retail is an extremely costly and difficult endeavor, requiring a ton of infrastructure, and expenses that far exceed that budgets raised by most game-related Kickstarter campaigns (remember, projects like Torment, Project Eternity, Broken Age, and Wasteland 2 are outliers!). Thus, while a funded game could theoretically try to pursue the brick-and-mortar retail route, it just doesn’t make sense given the many viable digital distribution channels available today.

Tim Schafer Is Shocked

We raised how much?? *Results not typical.

Some will primarily use their own website. Others will likely distribute on services like Steam. Still others might target online channels like Kongregate, Google Play, or even, gasp, Facebook. If the game is on mobile, of course the leading devices have their own app stores. The revenue split on these digital distribution platforms is generally 30% to the platform owner and 70% to the developer, which is decent (of course there are some exceptions to these numbers).

Keep in mind that many digital distribution services have an approval process; developers can’t just post their game and start selling it right away. And once you do start selling, be prepared for a delay before you get any paychecks from the platform owner. Some platforms pay out on a monthly basis, but others are more delayed.

One potential upside is that a developer who has a successfully funded game through Kickstarter already has a proven audience of backers. This helps to raise the credibility of the project, and show that there is real demand for it. This evidence of demand can help convince the owners of digital distribution channels that the game will see strong sales to non-backers as well.

Lastly, although it’s beyond the scope of this post, don’t forget about your marketing strategy as well! Don’t assume that anyone other than your backers knows your game exists. And don’t assume that you will sell a ton of copies just by virtue of being on Steam. Be sure you have a plan to spread the word about your game and get people playing.


Ryan Donaldson teaches the Business of Games course at VFS