Summer 2013 Video Game Consumer Survey

7/27/2019 Summer 2013 Video Game Consumer Survey

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SUMMER 2013 CONSUMER VIDEO GAME SURVEY

We recently conducted a survey of over 1,500 gamers in an attempt to gauge awareness and purchase intentions

for hardware, software, and peripherals through 2013 and into the release of next-gen consoles. If our previoussurveys are any indication, the responses from our participants are a strong directional indicator of upcoming

trends within the video game space. Whereas this report focuses on video game publishers and the positioning of

software titles in the wake of E3, we also asked our respondents a series of bigger picture questions related to

next-gen preferences, digital downloads, etc., the results of which we will publish at a later date.

Consumer Awareness of Upcoming Software Titles

A lot has changed since our last survey which was conducted in mid-March, namely the official announcement of

some widely-expected but yet-unannounced sequels such Call of Duty: Ghosts and Battlefield 4, as well as first

looks at some compelling new IP such as EAs Star Wars Battlefrontand Titanfalland ATVIs Destiny.

Our first question was an attempt to gauge consumer awareness of nearly 70 upcoming video games expected in

2013/2014. We simply asked consumers to identify which games they had previously heard of.

Top Fifteen Upcoming Games Consumer Awareness

CallofDuty:Ghosts

Assassin'sCreedIV:BlackFlag

Battlefield4

GrandTheftAutoV

Batman:ArkhamOrigins

ElderScrollsOnline

SaintsRowIV

KingdomHeartsIII

Halo5

StarWars:Battlefront

DarkSoulsII

WatchDogs

Mirror'sEdge2

DeadRising3

SuperSmashBros.WiiU

Destiny

FIFA14

Plantsvs.Zombies:GardenWarfare

Infamous:SecondSon

ForzaMotorsport5

0%

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90%

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(%responden

ts)

Top Twenty Upcoming Games - Consumer Awareness

Topping our list of games from an awareness perspective are the latest iterations of four of the industrys most

successful and high-profile franchises: Activisions Call of Duty: Ghosts, Ubisofts Assassins Creed IV: Black Flag,

EAs Battlefield 4, and Take-Twos Grand Theft Auto V, all registering around 92% awareness among our survey

respondents. Whereas sequels to the two mega-blockbuster shooters Call of Dutyand Battlefieldwere no brainers

for 2013, they were not yet announced as of our last survey, and therefore placed #13 and #8, respectively in

terms of awareness. The two games placed #1 and #3, respectively, in our current survey, evidence of the level of

marketing support that these two games bring to the table.

Interestingly enough, we would argue that Grand Theft Auto V has actually seen less marketing support at this

point than the three games ahead of it on the list, with more of a guerrilla marketing campaign thus far as opposed

to a mass media strategy being employed by industry giants Activision, Ubisoft, and Electronic Arts. Amazingly


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enough, Grand Theft Auto had almost no presence at last months Electronic Entertainment Expo (E3), with TTWO

management not even meeting with investors at the show.

We would expect a more widespread marketing effort for GTA Vto be employed as we work our way toward the

September 17 launch date. That said, the sheer magnitude of this release has put it squarely on the radar of most

hardcore gamers, and so incremental marketing will likely focus on the more casual consumer, which GTA Vwill

clearly need to win over to reach its potential.

As always, the responses underscore the importance of sequels in the video game market, although new IP

represented three of the top twenty. While Ubisofts new IP Watchdogs (#12 with 76% awareness) has made the

most progress of the three, it has also been around for the longest. Similarly, Activisions Destiny(#16 with 71%

awareness) is outdueling EAs Titanfall(#26 with 61% awareness) on this metric, although Titanfallwas officially

announced for the first time at Microsofts E3 event (June 10th) whereas we got our first look at Destinymuch

earlier at the February 20th

unveiling of the PS4.

Upcoming Software Purchase Intentions

Our second question asked consumers which of the same ~70 games they planned to own, on a scale of one(would most like to own) to five (would like to own, but lowest priority), respondents were also given the option of

answering N/A if they were unaware of a game or had no interest in owning it. The chart below illustrates which

games ranked highest based on our weighted scoring system, in which we awarded games five points for each

response of most like to own and one fewer point for each progressively lower response (ie. four points for a

response of two, three points for a response of three, etc.).

Top 15 Purchase Intentions

GrandTheftAutoV

WatchDogs

StarWars:Battlefront

Batman:ArkhamOrigins

Destiny

Battlefield4

Assassin'sCreedIV:BlackFlag

Mirror'sEdge2

ElderScrollsOnline

TomClancy's:TheDivision

Halo5

SaintsRowIV

Infamous:SecondSon

KingdomHeartsIII

SuperSmashBros.WiiU

MetalGearSolidV:ThePha

ntomPain

MarioKart8

CallofDuty:Ghosts

SouthPark:TheStickofTruth

Titanfall

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"Weighted Score" of Most Desired Games


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For the second straight survey, TTWOs Grand Theft Auto V finds itself at the top of the heap in terms of most

wanted games, successfully translating a high level of awareness into real purchase intentions. We believe this to

be a resounding answer to two questions we have continually gotten with regard to Grand Theft Auto in recent

months and over the years: (1) whether or not the five year layoff has had an impact on the appeal ofGrand TheftAuto and the draw of the brand, and (2) whether or not the recent attention paid to violent video games in the

wake of the Sandy Hook tragedy has suppressed interest in a game like GTA V. In both cases, the above results

suggest that the answer to both questions is a resounding no.

Ubisofts Watch Dogs took the second spot on our list, which is an impressive feat for an all new IP. With many

parallels being drawn to Grand Theft Auto, Similar to Grand Theft Auto, Watch Dogs is an open world action

adventure game being developed by Ubisoft and being released this November.

Coming in at #3 on our list was EAs Star Wars Battlefront, the first game expected from the recently signed

agreement with Disney for EA to develop a series ofStar Wars games concurrent with (although not directly based

on) the theatrical release of the next Star Wars trilogy. This was a big surprise given the fact that the only details

currently available on the game are its name and one very brief trailer.

Activisions Destinycame in at #5, an extremely impressive feat for a new IP, especially one (unlike Battlefront)that has no name brand recognition and was only recognized by 71% of our respondent group. Conversely, EAs

Titanfall came in at #20, a solid showing for IP less than a month following its introduction but nonetheless

pointing to the substantial work ahead of EA to make up for lost ground. As we will discuss, we believe that

Titanfall, as an Xbox exclusive, is also suffering from the negative fallout from Microsofts recent missteps.

EAs Battlefield 4 came in at #6 on the list, a notable 12 spots ahead ofCall of Duty: Ghosts, the game against which

Battlefieldwill be most closely compared. It is important to note that neither of these games is likely to finish

outside of the top four, with Call of Duty the odds on favorite to again lead the pack. However, it is clear that

Battlefieldhas overtaken Call of Dutyamong the avid gaming community, likely due at least in part to the annual

release ofCall of Duty. And while both games will rely heavily on mass-market gamers to reach their full potential

(15+ million units each), Call of Dutys precipitous decline among these avid gamers (more on this in the Activision

section) is nonetheless concerning.

While many of the highly-anticipated games on our list arent expected out until 2014 (and in some instances

2015), we believe that this is arguably the most impressive holiday lineup ever. Following a string of annual sports

titles (NCAA Footballin July, Madden in August, FIFA in September) an unprecedented holiday slate of blockbusters

begins with Grand Theft Auto V in September, and is followed by Battlefield 4, Batman: Arkham Origins, and

Assassins Creed IV: Black Flag in October, followed by Call of Duty: Ghosts and Watch Dogs in November. Each of

these games has aspirations of selling at least five million copies, with some (Call of Duty, Grand Theft Auto, and

maybe even Battlefield) having goals of topping 15 or even 20 million units sold.

And while any publisher that has paid attention to seasonal trends over the past few years would have to be

hesitant to put a major game out during the first (calendar) quarter of the year, the spring of 2014 (presumably

2Q) promises to deliver two of the most highly anticipated games (so far) of the next generation: Destiny and

Titanfall.

When we look at these results through the lens of our covered publishers, we believe there are (sometimesisolated) reasons for optimism for each of the publishers, although we believe the data is most positive for Take-

Two and EA. While TTWO boasts the clear cut #1 most wanted game in Grand Theft Auto V, Electronic Arts has

three of the top ten and four of the top twenty most wanted games on the list.


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u s er e e ease a e ware ans o uy an

Activision Destiny 6/30/2014 71% 5

Activision CallofDuty:Ghosts 11/5/2013 92% 18

Activision TeenageMutantNinjaTurtles:OutoftheShadows Q32013 21% 58

Activision SkylandersSwapForce 10/13/2013 22% 66

ElectronicArts StarWars:Battlefront TBA 78% 3

ElectronicArts Battlefield4 10/29/2013 92% 6

ElectronicArts Mirror'sEdge2 TBA 75% 8

ElectronicArts Titanfall Spring2014 61% 20

ElectronicArts Plantsvs.ZombiesGardenWarfare Spring2014 68% 27

ElectronicArts DragonAgeIII:Inquisition Q32014 54% 28

ElectronicArts NeedforSpeed:Rivals 11/19/2013 42% 45

ElectronicArts MaddenNFL25 8/27/2013 54% 47

ElectronicArts FIFA14 9/24/2013 69% 50

ElectronicArts NHL14 9/10/2013 42% 56

ElectronicArts NCAAFootball14 7/9/2013 40% 60ElectronicArts UFC14 Spring2014 30% 64

ElectronicArts NBALive14 TBA 39% 65

Take-Two GrandTheftAutoV 9/17/2013 92% 1

Take-Two TheBureau:XCOMDeclassified 8/20/2013 32% 48

Take-Two NBA2K14 10/1/2013 48% 57

Take-Two Agent TBA 15% 63

Take-Two WWE2K14 10/29/2013 23% 67

Consumer Survey Results: Most Desired Upcoming Games by Publisher

Electronic Arts

Whereas TTWO unsurprisingly took the top spot with Grand Theft Auto V, we would argue that Electronic Arts was

the winner of our post-E3 survey with three games in the top ten and four in the top twenty.

Arguably the shocker of the survey was the fact that EAs Star Wars Battlefronttook the third spot on our mostwanted list. Despite cant miss games like Battlefield 4 and FIFA 14 as well as the significant potential represented

by Titanfall, by far the most excitement generated at EAs E3 media event was with regard to a 29 second trailer

(the vast majority of which was just snow) that teased Star Wars: Battlefront, the first game expected from the

recently signed agreement with Disney for EA to develop a series ofStar Wars games concurrent with (although

not directly based on) the theatrical release of the next Star Wars trilogy.

Being developed by EAs Dice studio (the makers of Battlefield), EA appears to be putting its best talent on this

deal, which also includes games being developed by Visceral (Dead Space) and Bioware (Mass Effect, Star Wars the

Old Republic). Although we do not yet have much of a timeline with regard to when the first of these games

should be released, the first of the new Star Wars movies is expected in the Summer of 2015, although EA could

certainly use some help during holiday 2014 given the difficult comp that will be created by this years Battlefield

release, assuming EA does not opt to convert Battlefieldinto an annualized title.

Coming in at #6 on the survey is Battlefield 4, down one spot from its #5 placement on our winter survey butnonetheless twelve spots ahead of its closest competitor, Call of Duty: Ghosts. Though unlikely at this point, it is

possible that Battlefield 4 could give Call of Dutya run for its money this holiday.

Two years ago, Battlefield 3 proved to be one of the most successful titles in EA history, selling a combined total of

~15M units during FY12, shattering all expectations. Although historical patterns are never any guarantee of the

future, it is worth noting that the release of Battlefield 3 in October 2011 was the primary driver behind the best

holiday quarter that EA has ever had and a nice run in EA shares.


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We would expect to see Battlefieldclimb the list as we get closer to its October release date and further from the

excitement generated by this years E3, which has clearly helped to elevate games like Star Wars: Battlefrontand

Destinyahead of where theyre realistically likely to finish. Either way, Battlefieldappears to be in a peer group

that is going to do exceedingly well all told, and this is one of the most important catalysts for investors in EAshares.

Coming in at #8 on our plans to buy list was Mirrors Edge 2, a sequel to the 2007 game that was a cult favorite but

never really achieved much commercial success. In our opinion, it is unlikely that this game will ever live up to the

company it finds itself amidst on our survey, even assuming a material increase relative to the disappointing 2.5M

units sold by the original game. Given the surprisingly high finish in our survey, however, this is a title that we will

continue to watch closely.

Rounding out the top twenty most wanted games on our list was Titanfall, the long-awaited game from Respawn

Entertainment (a studio run by departed heads of Infinity Ward, who spearheaded the Call of Duty: Modern

Warfare series). While ATVIs next best bet for the next generation, Destiny, place much higher on our list, it is

worth noting that Titanfallwas for the first time announced at last months E3, whereas Destinywas first unveiled

at the PS4 launch event all the way back in February.

Along with the unveiling ofTitanfall, EA announced at E3 that the game would be a Microsoft exclusive (both Xbox

360 and Xbox One) at launch with other platform availability likely to follow after a set amount of time. While

going this route would seem to have been a safe bet just a few short weeks prior to E3, gamers and investors cant

help but question this decision in the wake of the severe negligence with which the Xbox One launch was handled.

To that end, given the degree to which gamers have placed Microsoft in the penalty box, we believe that Titanfall

is also being punished with respect to the purchase intentions of our survey respondents.

In stark contrast, it is important to note that Titanfall was the undisputed winner of E3 in terms of critical

reception. Each year, we compile a list of E3 awards from major publications, which this year included Game

Critics Awards, IGN, Game Informer, Digital Trends, Machinima, GameSpot, and EGM. As shown in the following

graphs, Titanfallwon a whopping twenty awards in total, five times that of any other game.

Equally impressive, of these seven publications, five chose Titanfall as their best in show (or some comparable

award) with the remaining two awards going to Battlefield 4 and Sony (based on its decisive PR wins over

Microsoft). Largely due to the dominance of Titanfall, EA picked up a total of 32 awards among these seven

publications, nearly three times Ubisoft and Sony, which tied for number two with 13 awards each.


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EA Dominates E3 Award Count on the Strength of TitanfallPerformance

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Warner Bros. Disney

E3 Award Count (By Publisher)

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Titanfall Battlefield 4 Sony

E3 'Best In Show' Awards

The biggest variable driving whether or not EA misses, meets, or exceeds this years guidance is the performance

ofBattlefield 4, with the current assumption being that the game will sell on par with Battlefield 3 (two years ago)

in terms of units sold this fiscal year (15M units). Based on the quality of gameplay, a 25% larger console installed

base, and a plugged in base of millions ofBattlefieldpremium players, we would think that Battlefield 4 is destined

to materially outsell Battlefield 3.

However, when we look at what appears to be an unprecedented slate of holiday titles, there is likely to be some

limit to how much aggregate purchasing power video game consumers possess, which would seem to suggest that

one or more of these extremely highly-anticipated titles will ultimately disappoint.


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Take-Two Interactive

Once again, Take-Two Grand Theft Auto V was the most wanted game among our survey respondents, with a

comfortable lead over every other game on the list. This despite the fact that GTA Vwas only the fourth highestgame in terms of awareness, which we attribute to a much more understated marketing campaign thus far relative

to some of the games ahead of it on the list (Call of Duty,Assassins Creed, and Battlefield).

With highly successful titles Bioshock: Infinite (#2 in plans to buy in each of our previous two surveys survey ahead

of its March release) and Borderlands 2 (#4 in our Summer-12 survey ahead of its September release) now in the

rearview mirror for Take-Two, Grand Theft Auto becomes the primary focus of the company and investors alike.

For quite some time, there have been concerns that the extended wait for Grand Theft Auto V(GTA IVcame out in

April of 2008) may have dampened the interest in this franchise, once arguably the biggest in the video game

world. GTA IVbroke all sorts of launch records in 2008, although all of these records have since been topped by

multiple Call of Dutygames. If our survey results are any indication, GTAs absence has only made gamers more

excited to get their hands on the game.

The Grand Theft Auto franchise is remarkable in its ability to not only open at a record level, but also its ability tosell millions of units years after its initial launch. Each of the past two titles, Grand Theft Auto San Andreas

(October, 2004) and Grand Theft Auto IV(April, 2008) have sold north of 25M units to date (27.5M reported for

San Andreas as of late 2011; 25M reported for GTA IV as of late 2012). GTA IV got off to a much quicker start,

however, despite utilizing an installed base that was dramatically smaller.

After initially being pegged for an October 2007 release, GTA IVwas released on April 29, 2008. The game posted

the best single-day and seven-day sales totals for a video game, with more than 3.6M units sold on day one and

more than 6M sold during week one, the equivalent of $500M. By the end of May, GTA IV had sold 8.5M copies, a

total that would reach 10M by mid-August, 13M by the end of Jan-09, and 15M by March-09.

This performance was all the more impressive when we consider the fact that as of April 2008, the combined

installed base of Xbox 360 and PS3 was just 30M. Hence, within four months of its release, nearly one in every

three owners of an Xbox 360 or PS3 had bought a copy of GTA IV. When we consider a worldwide installed base

today that is 5x as large (north of 140M) the opportunity for GTA Vseems nearly limitless, even after factoring inwhat will inevitably be a much lower tie ratio (the number of software units sold per owned hardware unit), and a

much more competitive slate of games (GTA IV had the spring of 2008 nearly to itself, whereas GTA V is being

released just ahead of arguably the most impressive holiday slate ever).

Take-Two management has yet to confirm whether or not GTA V will be made available on next generation

platforms. While we believe the game will inevitably be on both the PS4 and the Xbox One, it does TTWO little

good to announce such an intention and give gamers any incentive to hold off on their purchase of the game.

While the late release of GTA Vcould suffer from some level of consumers amassing their funds ahead of a new

console purchase, it is also possible that some consumers will ultimately pay for two separate versions of the game

(before and after the next gen consoles are released).

The recent gameplay trailer of the game showed just a glimpse of what appeared to be an expansive online player

mode, and while it is unclear whether there will be any sort of fee associated with this mode, it seems likely thatTTWO will somehow expand its revenue opportunities given the thousands of hours that must have been involved

in this game mode. In-game purchases seem to be a cant miss way to grow the revenue per user (RPU) for GTA V.

Whats more, if the recent Borderlands and Bioshockreleases are any indication, Take-Two will look to bundle its

downloadable content in some sort of a season pass, which we believe is likely to be immensely popular given

prior DLC for GTA IV. We believe that the Street is likely underestimating the revenue opportunity of such add-

ons, although the timing, pricing, and overall specifics have yet to be announced.

We have long since liked the Take-Two story in large part because the company was in the process of diversifying

beyond the huge contribution represented by the Grand Theft Auto franchise. As we sit here just a matter of

weeks ahead of the Grand Theft Auto release and with both Borderlands 2 and Bioshock: Infinite now in the rear-

view mirror, the focus is undeniably on GTA.


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Activision

In what appears to be a growing trend, Call of Duty continues to fall further and further down our list of most

wanted games after holding an untouchable grip on the #1 spot for three straight years. This time, Call of Dutycame in at #18, worse than the #11 spot during our spring survey, the #9 spot in our Fall 2012 survey, and the #11

spot in our Summer 2012 survey. In each of the four surveys prior to that, Call of Duty(Modern Warfare 2, Black

Ops, and Modern Warfare 3 twice) held the top spot, usually by a comfortable margin.

To be clear, there is no chance that this years iteration of Call of Dutywill be the eighteenth best selling title this

year. In fact, we would be shocked if the game was not among the best selling games of the year (although both

GTA Vand Battlefield 4 could give CoD a run for its money for the first time in a long time). However, given a fall

from #1 in most previous surveys to #18 in this survey is likely an indication of some level of Call of Dutyfatigue,

making it increasingly difficult for this years game to set all-time opening-day and opening-week records.

This is especially true given a particularly challenging slate of competitive releases this year. The release of new

consoles could prove to be a challenge for this franchise and others as they balance targeting the large installed

base of current-gen consoles while not forgetting about next-gen console early adopters expecting a superior

version of the game. More important, in 2012 Call of Duty: Black Ops II went up against Halo IVand Assassins

Creed III, but was spared having to face a truly competitive military FPS as it saw in 2011s Battlefield 3. This years

competition could prove to be its most difficult to date with Battlefield 4 set to be released, not to mention the

first Grand Theft Auto title in five years,Assassins Creed IV: Black Flag and next-gen titles such as Watch Dogs and

ATVIs own Destiny.

Historical Purchase Intentions for Call of DutyGames by Survey Ranking

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Destinymay have had the most impressive results among ATVIs titles, placing fifth on the plans to buy list after

debuting at #8 on our prior survey. This is even more impressive when we put it in the context of the games

awareness, which was #16 overall with just 71% of our respondents aware of the game. This implies that of those


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that do know about the game, an exceedingly high portion of them have interest in owning the game. Once

awareness of the title grows the game would seem to have the potential to climb the list even further.

This should be no surprise as it is being developed as the first installment of a trilogy by Bungie, the development

team behind all but the most recent Halo titles. If the success of the Xbox-exclusive Halo is anything to go by, a

multi-platform trilogy from the same developers has huge potential.

Although Skylanders: SWAP Force was way down the list, this is hardly a survey to capture the potential of a game

like Skylanders, which is clearly targeted toward young children (of which there were very few among our

respondent group). However, this will be the first year a Skylanders game will have competition in the

toy/interactive video game market that it pioneered. Disney is set to release its figurine/video game franchise,

Disney Infinity, on August 18. This would be about two months prior to the expected release date of Skylanders:

SWAP Force and would feature much more recognizable characters and brands from the vast Disney universe. In

addition, there has been controversy surrounding this years Skylanders game as it is not compatible with the

portals (the peripheral required to read data from the figurines) of the previous two installments, requiring players

to buy the more expensive ($15 more) starter pack.

Overall, the most positive surprise coming out of our survey for Activision was with regard to Destiny, and so wewill continue to closely watch the progress of this game with the hopes that it can provide ATVI with the type of

contribution needed to plug the gap coming from accelerating declines in its World of Warcraftbusiness. While

the Call of Duty juggernaut has shown no signs of slowing year to date, the growing enthusiasm gap among avid

gamers in our survey is at best a yellow flag and at worst a sign that this games dominance is waning.

Summer 2013 Video Game Consumer Survey

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