Yes, thirty-percent down is the new up.
I’ll rarely focus on market values, but since I just posted on relative new-media/old-media values I’m quoting (in the title) this month’s Video Game Briefing (PDF) from Paul Heydon at Avista Partners. (You can subscribe.)
Online games (down 29% from Jan 2008 ) narrowly led PC/Console games (-30%) and distributors/accessories (down 34%). They all outperformed the S&P 500 (-38%), well ahead of retailers and mobile games, (both down about 50%). The low point was Nov 20, ’08, but not by much.
The report also shows regional performance, ranked as you would expect (Asia, S&P, U.S., Europe) but perhaps spread more-broadly than you expect. And there are many details on M&A and on equity raised. In total:
- Over $1.8 billion of M&A deals in global sector (LTM)
- Over $1.6 billion raised in global sector (LTM)>
The communications, media, and technology (CMT) sector lost 47% of its market value in 2008, worst than most markets overall. An Oliver Wyman press release, summarizing their 2009 State of the Industry Report (PDF) notes that within that sector, for the the 5-year period:
Traditional media — including media agencies, publishing, and broadcast and entertainment — lost 32% of its market value, or $137 billion, while new media (online content and services) gained 102% or $58 billion.
The top performer in the media segment was China’s Tencent, with a market value of $11.6B.
(The above quote is from the press release. If you can find that data in the full report — or other analysis of the new-media-subsegment — then I owe you serious respect.)
The report does discuss sector-specific strategies. Strategic recommendations include strong focus on emerging markets and on broadening corporate scope, such as broadening from distribution to content. (More on this detail in a later post.)
In support of comScore’s assertion (which I argued against) that free-online game growth comes at the expense of paid content, note that 18% of US consumers “expect to spend significantly less” on “a la carte content purchases (including movie tickets, … downloads, games, etc.)” And 19% expect to spend “a little less.” Only 10% see spending more. (Oliver Wyman’s November survey: Exh. 8, p. 13, of the full PDF report.)
Good news for the online-games biz, specifically the casual (mass-market) online games biz. Discussion after these highlights from today’s comScore report (Dec. 2008 data):
- Free online-game-site visitors grew 27% in 2008, to 86m.
- Aggregate playing time jumped 42%
- Online games consumed 4.9% of total Internet time (up from 3.7% in Dec. ’07 )
- Online display-ad views grew 29% to 8.6b (in Nov ’08 )
- The average player views 127 ads (unchanged year-over-year)
- Ads per page view (“a measure of ‘ad clutter’“) dropped 17%, to 0.83
The top sites? Make your guess, then check the tables in the press release from comScore, and let me know if you were close. Suffice to say, I’m impressed by WildTangent’s good work. (Regardless of November’s major changes there.)
Why the growth? ComScore says that people have “turned to outlets such as gaming to take their minds off the economy“. Also, they are “turning to free alternatives.” A 14% drop in retail sales for PC games is cited as evidence.
I don’t buy it. As Dean Takahashi notes in VentureBeat, console games grew 19%. And, even if free-online (casual) and paid-retail games both reach broader demographics than last year, they nonetheless reach different demographics: I don’t see them as clear-cut substitutes. Maybe this is less a down-turn driven shift in spending habits, than a continuation of casual-game growth, fostered by innovation, and by wider use of social content-sharing. (“I stumbled-upon a great game!”) By contrasted, we didn’t see an exceptional year for retail-game innovation.
Footnote for the algebraically obsessive: Yes, 127 avg impressions against 8.6b ad views implies only 68m visitors in Nov ’08. That would be unique visitors to ad-supported sites, versus the 86m online-game-site visitors overall.