Deciding The Fate of Dante and ‘Phoenix’ — How Capcom Predicts Game Sales

Phoenix WrightRemember how difficult it was to find the first “Phoenix Wright: Ace Attorney”? Contrary to message board conspiracy theories, that wasn’t actually Capcom’s fault.

When I tried (and failed) to buy “Tetris DS,” it made me wonder. How does a publisher predict demand? How do they figure out how many copies to manufacture and ship, and when (and why) do they halt production lines?

I’ve been speaking to different companies to figure that out. One of them was Capcom, a company with strong Japanese roots and a large Western audience. They, along with the rest of the industry, wrestle with this every day.

Christian Svensson, Capcom’s VP of business development and strategic panning, admits it’s extremely complicated. Not only does Capcom have to convince retail to order en masse at launch, but the sales cycle itself is changing as the industry grows bigger and bigger.

“The sales life cycle of a product is shrinking,” said Svensson. If a game undersells its first month at retail, it’s finished at retail. Often, though, it’s quicker: if a game underperforms its first week, it is more than likely “dead on arrival.”

Here’s how Capcom tries to prevent being in that position.

Devil May Cry 4The original “Phoenix Wright” proved problematic for Capcom. Despite rabid anticipation among fans for its English release, retail didn’t care. No one besides GameStop ordered copies at launch. Wal-Mart, Target and Toys ‘R Us all passed.

Despite this, the game performed well. Capcom went through 9 or 10 production runs of 3-4,000 units before Toys ‘R Us took notice and asked for 15,000 copies out of nowhere. Of course, that didn’t stop fans from complaining that the game was impossible to find.

Capcom didn’t really have a choice. They weren’t creating artificial demand. “We have to be more conservative because, believe it or not, these games cost money,” said Svensson.

On the Nintendo DS, for example, the challenge is significant. It takes 50 to 75 days for a production order on a DS title to reach the US, longer during the holidays. Capcom must anticipate demand in the first week, first month and beyond. If a game is successful and supply dries, it could be two months before another copy shows up.

Long before the big retailers passed on “Phoenix Wright,” however, Capcom had — right or wrong — internally predicted its sales cycle. That’s the case with every Capcom title. Before “Devil May Cry 4″ was green lit for production, Capcom had already assigned it sales projections. Years before the title would even be announced, Capom had a number.

Each of Capcom’s titles has sales projections before development. At this early stage, they’re taking into account a variety of factors: market preference, if it’s a brand (i.e. sequel), the outlook of hardware platforms, the game’s desired feature set and more. Whatever the case, it gets a number. Sometimes it’s broad; most times it’s very specific.

Capcom does the math and projects the game’s budget and potential revenue to determine how much profit they hope the game will produce. If it clicks, the game’s green lit.

deadrising1.jpg

That sales number is going to change, though, as development moves forward. Take “Dead Rising,” widely considered a surprise success for the company. Six months prior to launch, Capcom wasn’t sure what to make of it. They knew “Dead Rising” would sell simply because it was their Xbox 360 debut, but was it any good?

For a while, admits Svensson, they honestly weren’t really sure. It wasn’t until E3 2006 that Capcom saw the game finally start to come together. As a result, they threw their old sales projections out the window. That sales forecast continued to change before release.

Okami“Dead Rising” and “Phoenix Wright,” however, are smaller titles compared to some of Capcom’s bigger franchise releases, but Svennson said the company is even more cautious when finalizing orders for a sure-fire blockbuster. Being accurate on big releases is “that much more critical because you are producing so much more.” Being off by 10% on “Okami” is much different than missing the mark on “Resident Evil 4.”

Every time Capcom orders a production run, there’s a risk those games will either never be ordered by retail or arrive at retail and stall on shelves, forcing price reductions.

Capcom keeps a warehouse of additional units in case a game has a surprisingly strong launch or sudden surge in sales. They have extra “Devil May Cry 4″ inventory just sitting around in case a retailer calls up and says they need another 30-40,000 units.

If they don’t have those units immediately available, the retailer may just cancel the order entirely and move onto the next big game. “Demand may not be there [anymore] if a request goes a week ignored,” said Svensson.

As for what happens to extra copies of games that never make it to retail…well, ever seen the weird three-for-one bundles that appear at Sam’s Club and Costco? Bingo. Extra inventory is eventually passed on to liquidators, whose job is to get rid of the excess inventory, even if it’s not through the usual channels or pricing scheme.

And that, readers, is how Capcom releases a video game. Tomorrow, I’ll look at how Atlus, a publisher dealing exclusively in the market of niche games, does the same. I feel like I’ve just solved a case in “Phoenix Wright.”

***
Have a hot tip? Is there a topic that Multiplayer should be covering and isn’t? Maybe you have a “missing game” story to share. Drop me an e-mail.

13 Responses to “Deciding The Fate of Dante and ‘Phoenix’ — How Capcom Predicts Game Sales”

  1. EightBitJustice says:

    Are video games sold on a return policy like music to retailers? If a CD flops, the retailer can send them back to the label for a full refund. Is this the case with video games, or are the retailers stuck with their orders no matter what?

  2. Hembree says:

    Is this why Electroplankton is flippin $70 on ebay right now?

  3. adrian says:

    electroplankton is hardly worth 70 dollars. if you haven’t played it, i would not suggest spending that kind of money on it.

  4. James says:

    Electroplankton is $70!?
    I got it for £15 in the UK online when it first came out and I’ve seen copies over here in Japan or under 2000 yen.

  5. Klaus says:

    Since most games are completed within hours and offer no replay value (grinding is not replay VALUE!) whatsoever the forums are filled with people saying “meh, finished it, don’t like it no more” from day one. How are games supposed to sell for a month if they don’t last a month and do not keep buyers excited and positive?

    Look at CoD4, it offers fun for more than eight hours and it sells well even today. Look at Guitar Hero and Rock Band, those are games that last and which continue to sell.

    Then look at Lost Planet and the upcoming Bionic Commando. Those games are classic 8h material which every player tosses into the corner after completing them. Of course people do not need to buy that after the first week, here, I lend you my copy.

    Good games offer more than a few hours of entertainment and a “single use rollercoaster story line”. But that’s exactly what Capcom is producing these days. No wonder they think the market is changing. Their games are not up-to-date if they want sales to remain high.

    Instead of precalculating their sales, they should precalculate what players do so that they play the games longer and jealously keep them. If gamers don’t lend their copy to friends, those friends will see it’s a great game and buy it too.

  6. meeh says:

    @Klaus

    Funny, CoD4 and Guitar Hero is up-to-date??? What kind of innovation did they bring for them to become up-to-date outside of graphics.

    You make it sound so simple. Precalculate what players do? These are multimillion dollar companies, you think they became like that without knowing that. It really cracks me up when kids on the internet suddenly feel so high and intelligent.

  7. FuKuy says:

    PC Games have a larger lifetime on the market.

  8. Klaus says:

    @meeh

    In fact, it is very easy to go and see what the buyers will do. They will complete a game and then file it amongst all the other games put to rest. At any given day in any given school some kids will be trading their games borrowing them to a friend. Lending games to friends you trust is a natural thing that happened with all media since the dawn of books.

    Usually games have a copy lock that is preventing illegal piracy, but some games need more than that. They need a “lending lock” that provides an incentive for the player not to give the game to a friend. If one denies the player the sense of completion (grind MMO) or simply offers him enough or ongoing DLC content, then nobody will lend the game to a friend and that friend might translate to another late buyer. I know I won’t need to buy DMC4, because one of my good pals has bought it and in two weeks he will played the hell out of it and then I can pick it up. He also picks up one of my games, that’s how things work. If you are patient you don’t need to buy every game, or buy every DVD. Some games have no “lending lock”, no motivation beyond first completion and this fact impacts the sales negatively.

    Top sellers such as COD4 and GH have that lending lock. While these games may superficially not be innovative in any form, they hit the nail on the head when it come to motivating the player enough so that the game does not get filed, free for borrowing, or simply ends up at GameStop. Especially GameStop turned the idea of “throw away games” into a business for themselves. If companies want to sell as many copies as possible, their games got to have something to prevent people from tucking the game away somewhere.

    Which brings me directly to Bionic Commando. Even if it is a great game, it will also be a disposable game that you won’t play every week. No need for all my friends to buy it then. They can play my copy after I completed it. If it had some innovative element to keep me playing I might not lend it. But it has no such thing. Maybe Capcom did look the wrong way for innovation, it can be found in small things too. Not just in new texture filters and ways to shoot people in the head.

  9. Aaron Rudkin says:

    Interesting that the article repeatedly refers to Publisher-Retail relations without ever discussing Publisher-Distributor relations. There are only ten or twelve retailers and chains large enough to stock directly from the publisher without going through a distributor.

    I guess it’s true; publishers don’t give a damn about independent retailers.

    Last Christmas there were massive supply problems at most independent retailers from several publishers because they focused on serving the direct-to-retail channel at the expense of the distributor channel.

    It’s really quite sad.

  10. LoopyChew says:

    @meeh:

    “These are multimillion dollar companies, you think they became like that without knowing that.”

    Becoming a multi-million dollar company is one thing. Being able to stay there is completely different. Think of all the companies that went from being top dog to vanishing off the face of the earth (Atari, the original King of Games, having just been delisted from NASDAQ, for example; CORE games running the Tomb Raider franchise into the ground on their simple belief that the TR games were all about T&A and pretty pretty graphics). While I agree that the word “precalculate” in terms of players is a fairly odd word to use, it’s pretty obvious that English isn’t Klaus’s first language.

    All he’s saying, simply, is that instead of rehashing the same old formula in creating games, try to figure out exactly what the players WANT out of them, particularly if they want those games to have an extended life cycle.
    * Having not yet picked up a copy of CoD 4, I’m only assuming that the multiplayer game is mind-blowingly fantastic, which is what keeps people playing that. I understand that the single-player campaign is also excellent, if short.
    *Guitar Hero is a pick-up-and-play line where you can turn it on, play a song, and turn it off if you so desire, or you can choose a number of songs to play instead, allowing you to play whenever the heck you want, for more or less however long you want.
    * The Ace Attorney games would be a good example of “rehashing the formula” if it were actually a series of games; people keep them around afterward because they’re actually interactive storybooks disguised as games, and people love checking out their favorite scenes from the different titles. (It also has the added benefit of being on the DS, which further emphasizes the “pick-up-and-play” aspect of the game.) Even so, though, they’ve decided to add some new content with the DS generation (i.e. the Apollo Justice era) to give it the little extra zing people want.

    By contrast, games like Stranglehold I enjoyed for a few hours and get relatively little replay. I got frustrated with Assassin’s Creed when I kept falling into the water during the assassination of one target, which put me off of it for a few months (I just picked it back up), but I’m sure once I’m done with it it’ll be a long while before I play it again–why wouldn’t I hawk it off in exchange for a different game?

    @ Klaus:

    I don’t think Bionic Commando is going to come out on disc, but rather as a direct download. They may not be able to play it but on your console of choice.

  11. Klaus says:

    @ LoopyChew

    I am not referring to the 2D remake, but to the full 3D Ps3/360 version.

    http://www.gametrailers.com/player/26582.html

    On the other hand Capcom seems to be lightning fast in developing stuff. That has to save some costs. Street Fighter 4 went from quote “20% done” in October ‘07 to ’semi-publicly’ playable demo in Feb ‘08. Either the Japanese are good at keeping secrets or their cycles are well below 24-36 months.

  12. theBigSmoke says:

    @Klaus / Loopychew

    To some extent you’re right - the biggest sellers in videogames often have extensive sandbox or multiplayer components to encourage people to hold on to their copies so they don’t enter the trade/used market… but you also need to take into account that the entire market is very large and supports a wide range of “average” gamers.

    ESA studies in North America (and I’d assume the same would be true in Europe/Asia) show that the average videogame player is 33 (and has been playing for 12 years) and that the average videogame purchaser is 38. For many of these players the cost of most mainstream games is trivial compared to the hassle of buying used/trading games.

    Absolutely there’s a huge “grey” market (in the real sense, not in the sense that Nintendo uses the term to mean out-of-region) for price concious consumers (who tend to skew younger, and therefore with less disposable income). However older players (with more disposable income) price is less the limiting function than time required to enjoy the investment. Personally, I actually seek out shorter / limited / finite games. I have limited playtime, and would rather play a polished single (or co-op) campaign that I know I will be able to finish. I actually avoid buying games with lengthy requirements (or multiplayer in general), as I know it’s not likely I’ll have enough time to acceive any profficiency in it.

    However, regardless of how you (or I) purchase as individuals - publishers have to analyze the *entire* market. Games can absolutely be targeted to specific sub-demographics - just in the same way that books or movies aren’t designed for everone. It would be silly to expect publishers to release books that would appeal to everyone who can read books. By the same token there’s no “magic bullet” for videogames.

    Absolutely there are many gamers like you who are drawn to longer gameplay, and will spend their limited funds accordingly - but by the same token there are also a large number of consumers who are exactly the opposite.

  13. vegaszombie says:

    This is why the future is downloadable PERIOD. EA come on put out that console!! 400 GB hard drives are less than $100 bucks!!! in bulk and at cost i’m sure that less than $50. CMON!!!!!!!!! THis is where we need to be. Add HD capability and we are where we need to be!!!! Keep track nad you don’t even have to have it on your native machine. Netflix should avoid 360 and go str8 to EA! Bring that baby out Xmas 09 (maybe this year?) With online mandatory for download and you own the market. Of course if your in the dark ages without broadband…u screwed. LOL

Leave a Reply

Close
E-mail It