14 DAY TRIAL // The conventional wisdom among video game publishers is that a successful intellectual property should be used as much as possible, with the aim of launching a new game linked to it every year, if possible, in order to keep gamers hooked on a particular game world.
Michael Pachter, who is an analyst watching the industry for Wedbush Morgan, has questioned this approach and says that major franchises should not get a new release every year.
The one exception is linked to sports franchises, like the Madden NFL and FIFA from EA Sports, who can benefit from each new season of the sport they simulate.
The analyst has stated, “We think that a balance between the EA approach (games every two years) and the Take-Two approach (games every six years) is appropriate.”
He added, “We still think that if Take-Two were able to deliver its key franchises every three or four years instead of every five or six, its share price would appreciate dramatically.”
The analyst is also saying that the new multiplayer only elements added to the Call of Duty franchise might make it attractive on an yearly basis but that other games that adopt the same launch program might have long-term problems with market saturation.
The modern video game industry is at the moment dominated by sequels and by spin offs and most publishers tend to focus on creating games that bear titles that are recognizable to gamers, even this means eschewing any new intellectual property.
In his research note, Pachter has also talked about the Zynga Initial Public Offering, saying that a realistic evaluation for the social gaming company, which created titles like FavmVille and CityVille, was between 15 and 20 billion dollars, even though this is more than the current market values for publishers like Electronic Arts, Activision Blizzard, THQ and Ubisoft.