That’s not to say the US’ growing preference for digital products doesn’t come with advantages. Says Mulligan: “From a publisher’s perspective, amongst other things, this means no inventory risk, minimal sales force expense and no markdown costs or exposure.
The US market is viciously competitive and expensive.
Geoff Mulligan, Deep Silver
“However, it also means more and more games will become accessible to the end user. No longer having a finite number of SKUs available at retail will create new marketing and PR issues when ensuring your title has consumer share of mind.”
A MATTER OF TASTE Consumer tastes are almost identicial to that of UK gamers, with the usual blockbusters ruling both the UK and US charts each month. The only major cultural differences are around each nation’s preferred sport: Madden, inevitably, far outperforms FIFAin America. As a result, it means the titles that struggle to achieve high sales over here will also have trouble stateside. “The US market is viciously competitive and expensive,” says Mulligan. “It is now said that there are no longer any ‘B’ or ‘C’ titles in the marketplace – only triple-A
July 27th 2012
titles that didn’t make it. If you’re spending $20m, $30m or $40m on developing a title, how many millions of units do you have to sell just to break even? And in today’s market, how many titles a year sell four or five million units? As a percentage of the total titles released, very few. The old adage that 20 per cent of games do 80 per cent of the business needs to be updated to more like five per cent covers 95 per cent.” But that hasn’t scared publishers away from the market. The US remains a vital territory to any company trying to create a global smash hit, and smaller firms continue to seek new ways to establish a foothold in the region. Earlier this year, for example, British publisher Rising Star Games opened RSG Inc., a new division that will handle its releases in the US. Any publishers looking to follow Rising Star’s example should examine their prospects carefully before doing so.
“If I were entering the US market today, I would do so with extreme caution,” says Mulligan.
“Find a good distribution partner, definitely establish a US base but keep your overhead to an absolute minimum. Keep control of your marketing and PR. “Also it’s important to be realistic with your selection of products for the US, both in terms of quality and sales expectations. The balance of power has shifted from the publisher back to the retailer. “In days past, the retailer would ask the publisher how many units he should take in. If the retailer took