The Year Ahead: 2017 Predictions from NPD's Mat Piscatella

12.19.16

With 2016 behind us, it’s time to look ahead: NPD’s new Industry Analyst, Mat Piscatella, provided us with his predictions for 2017. Mat has a long history in games before joining NPD, having held senior Business Intelligence positions at Activision and more recently as VP of Sales Planning & Analysis at Warner Bros. Entertainment Group. Here are his thoughts on the coming year in gaming:

 


 

Consumers of Console and PC video games have never faced a more overwhelming level of choice.  There are more games, and more opportunities to spend money, than ever before.  Iterative console hardware, digital distribution and subscriptions, the prevalence of Free-to-Play monetization models in full-price games, and multiple SKUs with competing offers across digital and retail have already been impacting the market (and confusing consumers) for some time.

This overwhelming amount of choice will only grow in 2017.  Even more options, across more platforms, with more price points will appear and leave consumers more confused than ever before.  Here are a few things that will happen in 2017:

  • Over 5k games will release on Steam in 2017.  For every title released on Consoles or Handhelds at retail, at least 25 titles will be released on Steam.

This is, of course, a double-edged sword.  It brings far more variety to the PC platform, and allows for developers of all sizes to get games into distribution.  On the other hand, this tsunami of releases will make discoverability an even more daunting challenge for both developers and consumers.

  • Users, not Units, will be firmly cemented as the planning currency for Console game publishers, so expect more incentives to stay with one Console game longer.

Topline planning at publishers used to be simple: Units and Average Price for sales of a Console game at retail or digitally.  Now, the shift towards ARPU-based planning is rapidly occurring.  Retaining and growing the player base for a game, while offering that base more opportunities to spend, is what consumers should expect.

  • Virtual currencies and consumables will be baked into most Console games.

Adopting Free-to-Play monetization in full-price Console titles will become more prevalent.  Accelerators, cosmetics, loot crates and boosts purchased with real money will become a normal and expected component of most major Console releases.

  • Gold editions will become more prevalent, lifting average selling prices well over $60.

Game base retail prices have held at $60 largely because consumers have purchased enough DLC and MTX over the past few years to make the model hold.  Now, given the success of titles offering Gold Editions (versions of the game that include bonus content like Season Passes, virtual currencies or exclusive content) effectively raising the ARPU well over $60, expect most major Console titles to bring this type of offering in a SKU mix.  Certainly, expect more exclusive content in these higher-priced versions.

  • Nintendo’s lead up strategy to the Switch will prove successful, altering the Console landscape

Nintendo has very quietly been experiencing a sales resurgence.  3DS hardware and software sales have been on an extended year-on-year growth run in the US market, while Pokémon Sun and Pokémon Moon were the best-selling launch Pokémon combo in history.  Strong 3rd party support for the Switch is progressing, and the launch of Super Mario Run will re-engage the brand with a mass market that largely avoided the Wii U. Mario Run will be a source of retro nostalgia for lapsed gamers and a fresh introduction for the younger generation of gamers that haven’t played Nintendo games frequently over the past 5 years.  Combined with extended success for the NES Classic, Nintendo will re-establish itself as a mass market brand and will once again come back to compete strongly in the retail market.  “Never count out Nintendo” is the oldest mantra in the video game industry.

 

Mat Piscatella 
Industry Analyst, NPD Group

 

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