Business of Gaming - Closures and Going Digital

I promise I will stop going on vacation. The last time I went on vacation, 38 Studios was officially shut down. While that story has been well-discussed with other studios, primarily Epic and Irrational Games stepping in to offer jobs, there was another closing last week that went under the radar.

Prototype developer, Radical Entertainment, was shuttered by Activision following poor sales of the sequel to the surprise 2009 hit. With two full months of global sales, http://www.trueachievements.com/PROTOTYPE2-xbox-360.htm failed to move even a million copies across all platforms. The Xbox 360 version is the best selling, perhaps owing to the large install base, with just over 500,000 copies sold worldwide. As of this writing, no employees from Radical Entertainment have been re-assigned to other studios under Activision.

Another studio, also suffering from relatively under-performing sales numbers has been closed down. Max Payne 3 and Bully: Scholarship Edition developer Rockstar Vancouver will be shut down by Rockstar. Thankfully, the entire 35 person team has been offered positions with Rockstar Toronto, which is being expanded with a brand new office and 50 more positions. This consolidation follows the poor sales of Max Payne 3, which only sold 1.5 million copies worldwide across all platforms.

To put the Max Payne 3 numbers in perspective, keep in mind not only that development for the title spanned two developers and six years, but also Rockstar is a "quality over quantity" publisher. L.A. Noire, Rockstar's 2011 title, has moved nearly 5 million copies across all platforms. Red Dead Redemption has moved 11.4 million copies worldwide across all platforms. Stacked against just the previous two Rockstar titles, Max Payne 3 is a disappointment.

Sadly, you can't mention "poor sales" or "restructuring" without talking about THQ. It's like saying "Bloody Mary" three times, except instead of the wrathful ghost of Mary Queen of Scots appearing before you, it's a troubled gaming company holding out a tin cup. On July 5th, THQ issued a "reverse stock split" in order to remain listed on the NASDAQ (in layman's terms, that means to remain traded on the stock exchange as a de-listing means it can not sell stock). In short, the 68.5 million shares of THQ available for trade was reduced to roughly 6.9 million with no change in actual pricing. This move was done to keep the company listed by maintaining a price of $1 per share for 10 consecutive days beginning on July 25th. If THQ fails to meet the standard laid out by NASDAQ, it will be de-listed and in all reality, fold as a company.

Finally, history is about to be made here on the front page of TrueAchievements, as we are going to talk about Sony. Last week, Sony spent $380 million to acquire game streaming service, Gaikai. While this move will have no immediate impact on the current generation of consoles, it is a big bold step for the digital future. Just prior to Sony's acquisition of Gaikai, we were hearing comments from EA about a "100% digital future".

Further proof that the digital future is right around the corner? A recent ruling from the European Union's Court of Justice allows the resale of digital games. Specifically, the case was Oracle vs. UsedSoft and the actual issue being contended was UsedSoft's business practice of buying Oracle licenses and reselling them for a profit. The Court of Justice ruled that this transfer of ownership from the original owner is a business arrangement between two parties which has no bearing on the original license agreement. Furthermore, restricting sales of digital products was deemed as "beyond what is necessary to safeguard the subject-matter of the intellectual property".

For more information, the full Court of Justice release can be viewed here.

We've talked about games going digital before, but with Sony purchasing a streaming service, EA going public with their goal to be "discless" and the European Union ruling on digital license rights, the digital future is not going to be the digital future for much longer. Soon, we'll be talking about the digital present.