The More, The Merrier: The Power of Video Game Brands

By Vergel Marinas - August 28, 2012 | Tickers: ATVI, EA, SNE, TTWO | 0 Comments

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As a video gamer, I like to stay with the current tides of the video gaming industry as it flows. Based on recent financial reports, however, it seems that the hard gaming industry (consoles, paid MMORPGs, etc.) is in dire straits. Publishers such as Electronic Arts (NASDAQ: EA) are reporting large net losses and lower revenue, even if it is expected. Console manufacturers are also not immune from this downturn, with companies that include Sony, (NYSE: SNE) whose gaming division saw sales decrease by 14.5% to about $1.5 billion and operating losses amount to $45 million in the first quarter or 2012. However, not all is lost yet. Based on what we have seen in the past, juggernaut video game brands such as Call of Duty and Grand Theft Auto have always pulled both publishers and console companies out of troubled waters. Their brand names, along with the opinions attached to them, have always drawn in gamers such as myself back to the console, even when the rest of the year has seen less than stellar content.

It is true that video game brands can get very stale as time passes. We have been given yearly Call of Duty games ever since the explosion in popularity since Call of Duty 4: Modern Warfare, and every year general opinions among gamers seems to get worse and worse. Complaints of repetitive multiplayer format and lack of technical support from its publishing company Activision (NASDAQ: ATVI) are common among the video gaming community such as myself. Yet, even with widespread discontent, the Call of Duty series always makes more and more money as more games come out. Since Call of Duty: Modern Warfare 2 has come out, every game in the series has generated at least 7 million units sold and $1 billion in revenue created. Activision's foray into the premium subscription, Call of Duty Elite, has shown success as it has managed to obtain over 2 million paid subscribers into its service. Anticipations for the next Call of Duty release, Call of Duty: Black Ops II are already high, and we can expect to see the current financial trend in the series carry over to their next big hit.

While Call of Duty is arguably the largest and most well-known video game brand out there, other companies have brands of their own that have been shown to withstand the test of time (and short attention spans). Grand Theft Auto, while constantly battling controversies with its violent content, "glorification" of criminal elements, and gross sexual humor, has been one of Take Two Interactive's (NASDAQ: TTWO) best money makers, with booming sales for every game since the release of Grand Theft Auto III. Grand Theft Auto: San Andreas also has the title of the best selling game ever on the Playstation: 2. The next anticipated release in the series, Grand Theft Auto V, is already generating major buzz across the internet, with the possibility of claiming the title of the best selling game for its year.

Branding can carry major effects on not only the video game industry, but the entire entertainment industry as well through cross promotion. Relying on other existing brands such as sports and movies to produce video games can be a tricky gamble, as we have seen throughout the history of video games. There have been major successes in carrying one popular brand to another, such as the Madden and FIFA series produced by Electronic Arts. However, there have also been duds, one famous example being E. T., which brought about a major crash in the video game market in the 1980s that still sets examples for what to do and what not to do when it comes to branding video games. Mike Tyson's Punch Out!!, for those lucky enough to play it on the NES in the late 1980s, is a great example of the hurdling involved in cross promotion. The original Punch Out!! game received rave reviews and buzz for not only its gameplay, but its inclusion of superstar Mike Tyson as its mascot. When the Tyson brand disappeared, so did the customers and buzz.  Cross promotion, even today, is still murky waters for many companies to tread on.

While I believe that branding is such an important part of what makes a video game unique, it is not to say that games cannot stand without branding. One of the most talked about games over the past year has been Minecraft, an independently developed game that spread through word of mouth. It has enjoyed millions of sales since its release and has done it all without large scale branding and advertising. However, it is safe to say that in many cases, branding plays one of the largest roles in determining not only the general opinion on your game, but also the amount of sales as well. Having control of the largest brands in gaming gives companies such as EA and Take Two a major leg up in the video game industry, and future sequels to existing brands will definitely boost up their revenue and sales in the coming future.

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