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April 1st, 2007, 05:38
Originally Posted by Kharn View Post
Sure, that's all true, but it keeps begging the question; why doesn't this apply to CDs or DVDs? Obviously, it does. And it *could* apply to games too. That's not a matter of economics, since the economic basis for these three industries are roughly the same, it's simply a matter of good economics.

And that's not just the exceptional movies or music that keeps selling high numbers (y'know, Godfather DVDs), there's a whole segment of the industry dedicated to it.
The highlighted part is your mistake. The business model isn´t similar. Games are ageing quickly, they are not part of the mass market and there are just a few sales channels. Only few games can avoid the sad fate of being more or less worthless after only 2 years.
Take a mainstream movie for comparison. A random list of income streams: cinema, pay per view, pay tv, pay tv (classic), tv, tv (classic), DVD, DVD back katalog (repeat endlessly), DVD CE, DVD Dir. Cut, Blue Ray / HDDVD, IP-TV, video store, video store online / mail, travel licenses (plane, ship), merchandizing, product placement, etc.
After a certain time movies stop ageing. The Godfather will always be one of the best movies ever, an all-time classic, Coppolla´s masterpiece, Brando´s comeback movie, Pacino´s way to the top, whatever. (-> target audience for back katalog!) Zork however is just worthless. Hardly anybody would spend a few cents on a copy of Zork in a new DVD box.
Film studios can afford to invest in long-sellers in addition to blockbusters because (a) they´ve learned over the last 80 years how to assess risks and sales potential. (Example: a 50M$ Clint Eastwood movie is always a safe investment.) (b) They minimize their risk by pre-selling the movie and using external investors for funding. (Lord of the Rings was funded with stupid German money, based on an immediate tax write-off.). Collecting advances on some of the channels listed above makes them sleep much better.
Furthermore investing in a bunch of promising low or mid budget movies can be a worthwhile strategy because they can make big bucks if only one of them becomes a surprise hit. The guy who spent 2M EUR on this year´s foreign language Oscar winner The Lives of Others will probably be more than happy. It´s currently at 40M$ worldwide, only counting cinema.

Games lack most of these income sources. The business is growing up, now we have Steam, etc. , but it will take a long time until the gap to other entertainment industries is closed.
Last edited by Gorath; April 1st, 2007 at 05:46.
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