Setting money on fire

Not too long ago I wrote about the lavish launch budget that Activision is affording Call of Duty: Black Ops, and how this felt like a ridiculous waste of money to me. Last week I began to read stories about the Halo: Reach marketing budget surpassing that of Halo 3, which was anywhere from $6.5 to $10 million depending on whose numbers you quote. It’s a huge amount of money, no matter the precise figure; and while I feel that much has been written about how preposterous these advertising budgets are, what I haven’t seen are enough people drawing the potential connections between publishers setting all of this money on fire advertising AAA titles, and the used games market.

What’s ironic is that the biggest ad budgets seem to be generated on behalf of the games which require them the least. My sister is traveling the world right now, and we keep in touch via Facebook. Somehow the children in a village she visited in Laos with no televisions, telephones, or other technological connections to the outside world, knew about the upcoming release of Halo: Reach. Does anyone NOT know that Halo: Reach is being released in September? Between the live action videos and the open Beta and the viddocs from Bungie, the market is saturated with awareness of this title…and how much of the advertising did we need in the first place? I would love to see research about intent to purchase figures for Halo: Reach before and after major advertising campaigns to see if the numbers moved in any meaningful fashion related to the amount of money being spent on the ads. In the case of a game like Halo: Reach, I am highly dubious. I find it more likely that 95% of the people who will be onboard for the game were onboard the day its existence was officially announced to the world.

I wonder sometimes whether the current nature of video game advertising isn’t some kind of learned reflex on behalf of the publishers, a vestigial organ born from the days of video games not having any mainstream popularity and playing to a limited audience of gamers; and then when we see Microsoft and Activision shelling out these huge budgets for games that people on Mars know are coming out like Reach and Black Ops, it feels like an arms race of stupidity. And it bears repeating that the modern video game industry has its own, practically-captive press who is just begging to do free promotion for them! When Microsoft puts their live action Halo commercials on television, they have to pay for that ad space, and chances are they get even fewer “looks” (that’s modern day advertising currency according to a friend of mine who works in marketing over at MTV) than the copies of their videos, which are playing for free, on the gaming websites.



Not only do I question that actual return on investment for AAA title promotion, but the schedule on which these ad campaigns run. THQ recently got in hot water with the audience for their “we don’t care if the used games purchasers are upset” comment. At E3, THQ put on a massive marketing blitz for their upcoming first person shooter Homefront. They bought out the bloody parking lot across the street from the Los Angeles Convention Center. At the hotel I was staying at, I saw cars running North Korean flags on their radio antennae. There were huge banners lining the ceiling in between the halls of the expo. I wonder how much all of that cost, and for a game which isn’t coming out for a very long time by the way we gamers tend to measure it. I’m at the point now where if a game isn’t coming out in three months, I don’t want to hear about it. Sorry, other games to play. Come bother me when I might actually have to start thinking about putting the money aside to buy your new title.

When games are good, they practically sell themselves. I don’t remember any sort of marketing blitz for BioShock, and I’ve read estimates of $75 million per how much money it made. With a budget of $15 million that’s a hell of a profit for Take Two Interactive. The game got popular because it was smart, polished, and worth the money to pick it up. Word of mouth and good reviews are what sell games, and I don’t see why publishers need to focus so much on the opening-week profits which have to be all that huge pre-release marketing campaigns are good for. In the film industry, distributors split profits with theater owners on a sliding scale. It goes 90/10 in favor of the studios for the first two weeks, and then 70/30, 50/50, etc. every two weeks following. For film distributors, therefore, marketing blitzes make sense because you want as many asses in seats during those first two weeks. The video game industry, to the best of my knowledge, doesn’t work that way. They can keep selling a “new” game, if it’s good, many months after the release, and the profit structure doesn’t change.

I think we all agree that the used games market ultimately comes down to the price of titles. This is a tremendous amount of money being spent unnecessarily advertising games which are going to sell no matter what, due to the strength of the franchise or consumer faith in the development studios. These marketing budgets then effect the prices of all the titles a publisher distributes, which undoubtedly plays no small part in why we don't have the tiered-pricing schemes which would probably increase total unit sales in no small a fashion. If the publishers had more faith in the quality of their product, they could axe these marketing money sinks and dial down software prices – and that would be the biggest blow to the used games market they could collectively deal. I suppose that makes too much sense.