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Saturday, June 24, 2017

The Way I see It: The Value of Exclusive Games

The Way I See It is a category of pieces that represent my personal opinions or reasoning on subjects I enjoy or have a lot to say about. Though at times the write-ups may be built on well-researched and verified information, as a general statement, I do not speak with absolute authority on any given matter covered. Thank you for your time.


In the ever growing dialogue of the games industry today, it isn’t uncommon to see positions evolve or shift in unexpected ways as things trend away from what we’re familiar with. One of the stranger things I’ve been seeing more commonly written and said is that exclusive titles don’t matter: that they aren’t notable in the grand scheme of the gaming space.

I disagree with this perspective in most regards.

Today, I'll be presenting my views on the matter.

An Elaboration

I believe that exclusive software has an inherently important role in upholding and establishing the value of a console, as there's nothing more important in incentivizing the purchase of dedicated gaming hardware than the games it allows users to play. I'll be detailing my reasoning by answering the most common statements made to undermine exclusives as I've seen them said.

Exclusives don't sell consoles.

It's true that console sales don't necessarily spike when an exclusive comes out, but the reality is that not even massively successful third party titles will typically do this. In other words, your console sales aren't booming directly because the big Call of Duty came out, but the big Call of Duty is released when it is because that's when console sales start to really pick up.

With holidays, tax breaks, and sales seasons, there are times of the year when consumer spending really explodes. This is why you see some games release within the same week as something like Call of Duty and get "sent out to their death" as might commonly be said. Not to be brave, subversive, or put up a front, but because it's the period wherein the highest potential lies for well marketed games to sell.

Leaving this digression aside, let’s look at how software does affect sales.

Some like to say that exclusives don’t sell consoles and that the system-seller as a concept is all but dead. It isn’t unreasonable to observe that these have become less common, but the fact of the matter is that the present isn’t the only period of interest when regarding how these titles affect the market: there are past and future sales to consider as well.

Outside of the ever rarer circumstances where a game comes out and has folks buying hardware in droves, most people make their purchase decisions in more dynamic terms. Many folks purchase a console immediately at release or when they're financially able on the promise of games that haven’t been released or even announced. These preemptive sales are an example of consumers that are attracted to the potential library when looking at the pedigree of first party releases on previous consoles. Many other folks stay in the market for years without picking up hardware, waiting to choose the system that represents the more attractive established library of software to suit their interests.

All this is to say that while, yes, there are other factors involved, successful exclusives do have their own role in incentivizing the purchase of a console, whether or not it’s linearly apparent.

The attach rate for exclusives isn't that high, so what's the point?

Some bring up the idea that individual exclusives don't typically maintain the highest attach rates as an argument for their lack of worth, but an immense attach rate isn't necessary for individual or collective success. In fact, there are actually a number of reasons that exclusives are valuable outside of a direct relationship to hardware sales.

The individual profits of these titles aren't negligible and bring with them further opportunities for the development of future software. Within a circle of first-party development studios, certain exclusives maintain success so great that they can cover the costs of lucrative endeavors, allowing first-parties to invest in creative and unusual projects that wouldn't otherwise be made in such a high-risk environment.

First party exclusives are also typically the software that best exemplify the capabilities of the hardware that they're on, serving as an example for the rest of the industry and a great backbone at the start of a console's life-cycle as third party developers familiarize themselves with the potential of the devices and their features.

Another important consideration is that the most powerful form of marketing next to a vocal consumer is the software itself. While the success of an individual game may at times seem meager, the collective library of unique content built overtime serves as an attractive incentivization for consumers late in a console's life cycle. It also bolsters general perception of the brand on multiple fronts and demographics through specific experiences that resonate with different groups, casting a wide net in the market.

Exclusives are bad for the industry.

This is a strange statement that has little basis in economic reality. It seems to define the industry as the consumer in specific, when it’s actually an ecosystem that includes the consumer and the competing corporations vying for their interests.

It isn't personally convenient to have to purchase a different console than the one they have in order to enjoy certain software, but it is specifically that longing that serves as the basis for an exclusive's value. Any given first-party wants to incentivize their own hardware in particular with exclusive games and services so that you choose their device over the alternatives in the market, furthering their success as a company.

The closes thing to a reasonable argument for this position that I’ve seen is the suggestion that exclusives would sell better if they were available on competitor consoles, yielding a greater deal of profit. This is a very simplified perception that doesn't recognize the complexities of the market.

Every game on a given platform provides a bit of profit to the console maker, who collects a licensing fee for each unit sold. The more successful a console, the more consumer software purchases exclusive or otherwise will be made for that particular hardware, exacting a healthy stream of revenue to that first-party. By throwing away software exclusivity, a valuable incentive in making consumers consider one console their primary gaming device is lost. This is aside from the fact that profits per-unit would be less lucrative anyway thanks to one first-party having to pay another first-party a portion of their earnings. This is also why third-party partnerships are also so notable in recent generations: exclusive content or early launches are meant to encourage the player base to choose one system over another, benefiting the developers through big marketing pushes and the console maker through our patronage.

This is a market of companies fighting for consumer interest using many parameters, of which exclusives are one. This competition breeds cheaper hardware costs, better services, the development of unique software, and more variety in the market. If anything, exclusives have a hand in making the industry better on most fronts.

Closing and Afterword

Exclusives are an important part of how the industry operates. Though this is true, I do recognize that they aren't the singular factor in what makes one console attractive over another. Pricing, marketing,  third party support, hardware functionality, dependability, and convenience all have their place, and as time has gone on, many new parameters like social services and online functionality are added to the table for customers consider.

These all feed into the one thing that truly does matter most: perceived value.

The Xbox One has a limited pool of exclusives but reasonable third-party support and sits at a distant second. The Wii U has a wealth of critically and commercially well received first-party exclusives, but almost no third-party support whatsoever. It's widely considered a failure. The PS4 represents a varied and ever expanding pool of first-party exclusives and big third party support with pivotal partnerships as well. It maintains more than double the sales of its closest competitor.

Though a fairly simplified example that doesn't lay out every factor, this generation stands as a strong allegory to a very important fact: Now more than ever, a good foundation and a strong balance of support are needed to stay relevant in the consumer mindshare and flourish in the market.

Exclusive games are a notable part of those needs.

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