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Why GTA IV Was the Beginning of the End

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I think it’s safe to say that the era of next-gen gaming as a driving force is over. Why? As of the week ending June 7th (the most recent tally available), just over 9 million copies of the highly touted Grand Theft Auto IV had been sold worldwide for the Xbox 360 and Sony PS3 combined, according to VGChartz.

That may seem impressive, until you start looking closer — which Microsoft, Sony, and the many publishers who develop for their respective consoles are surely doing now. For one thing, its predecessor, 2004’s GTA: San Andreas, sold 21.5 million copies. With GTA IV sales already plummeting, the franchise’s latest installment from Take-Two Interactive will be lucky to move 12-14 million copies total. What’s more, it cost a record $100 million to develop.

But it gets worse.

Despite being part of one of the most popular video game series of all time, the arrival of GTA IV failed to boost sales of new next-generation consoles. (PS3 and 360 are defined as “next-gen” for boasting the best and latest graphics features.) Meanwhile, sales of the non-next-gen, GTA IV-less Nintendo Wii were double that of PS3/360’s numbers combined. If Grand Theft Auto can’t move more machines, nothing can. Which not only suggests that the market for next-gen consoles has been exhausted, but that the audience for big budget, AAA next-gen titles has been tapped out, too.

Which is why I think GTA IV is next-gen’s siren song, and a sign of drastic changes to come. Expect to see games made for lower budgets, targeted at wider audiences (ones that aren’t fixated on high-end 3D graphics) and delivered over broadband with a micropayment program in place. Don’t expect a follow-up to the 360 or PS3 anytime soon, either. In other words, the days when so-called “next-gen” gaming reigned supreme are coming to end — instead, the industry’s future will be shaped by games like Rock Band.

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98 Responses to “Why GTA IV Was the Beginning of the End”

  1. James,

    you’re on crack. ps3 is the best gaming console ever. the only thing that wii has over it is the physical interaction of the player and that is about to change when sony releases their next gen controller. wii sucks when it comes to graphics… try playing cod4 on the ps3 with a high end monitor and high end hdmi cable. it’s unbelievable. just because the games haven’t caught up with the potential doesn’t mean the foundation sucks….if that were the case there would be no $15B valuation for facebook and google wouldn’t be selling however many billions of dollars in advertising every year.

  2. shawnroos

    In all honesty, i think this ARTICLE FAILS. We’re in the middle of a global economic recession, compared to the boom times of San Andreas. It’s a bit of a sweeping statement to make prematurely.

    I think Next Gen Gaming has maybe reached a peak, but it’s not the end of it.

    Mind you, judging by the flurry of posts here, the article is having its desired effect – getting us all onto GogOM’s site.

    Now i’ll click on a google ad, just like you want me to.

  3. I notice you don’t respond to the fact that GTA:SA sold only 6 million copies in 10 months after it came out, despite having an exponentially greater PS2 installed base. Probably because it completely contradicts your point.

    So you think casual games are going to rule the roost? How about some evidence – where are the blockbuster casual games? Has there been a single one that has earned $100 million?

  4. Intosh

    WJA, consoles sales curve goes through peaks and valleys; just because sales seems to stagnate during these last few months doesn’t mean it will never surge again. Wait until the holidays. Also, the rather poor economic climate may play a role in the lackluster sales — it’s not necessarily the technology itself that is the problem.

  5. OffBase

    Typical breathless blogger hyperbole. The analysis in the comments (compare GTA IV to GTA III NOT VC or SA) is better than the main article.

    GTA IV is a blockbuster. Gears of War was a blockbuster. These games are cultural events in much the same way that summer movies are. 360 and PS3 are in their early stages of adoption as the prices are just wayyy too high for broad adoption. As the prices fall, adoption will increase and units sold will rise. I agree there is a new niche for mobile games and lightweight, micropayment driven games (a la high margin slasher flicks). But let’s wait a bit before we write the epitaph for the gaming console.

  6. Mike B

    Congrats! This has to be one of the most poorly thought out articles I’ve read on this site. That must’ve taken a lot of work, so you are earning your pay!

    You do realize that next-gen consoles are still something of a luxury item, don’t you? These things have yet to see a serious price drop. When they drop to the $199 level, the audience will be huge (just like PS2), and the number of blockbuster $100 million+ games in production will most likely INCREASE to take advantage of the huge audience.

    Reading the many comments here was much more informative than the actual article. Thanks commenters!

  7. Anonymous

    I finally took the plunge and bought my 360 for GTA4. I’d been thinking about buying one the last 5-6 months for casual gaming and its media center extender capabilities. GTA4 was the tipping point for me. I’m thrilled about my 360 Elite and love playing GTA4. I also love playing many other games on the 360 (even Uno!) and can’t believe I waited so long to buy it for the media center extender capabilities alone.

    All in all, I’m a very happy camper.

  8. “For a far smaller install base GTA:4 has done pretty good”

    That actually helps prove my point; PS3 and 360 have a far smaller install base than PS2, and it’s not substantially growing, even from games like GTA IV. As it happens, the PS2 is *still* selling, and the PS3 only started selling slightly more A FEW MONTHS AGO.

    I prefer citing VG Chartz over NPD for several reasons, but O’Reilly’s blog makes a better case, so I’ll just cite them:

  9. Richard

    Don’t use VG Chartz. They are not exactly the most accurate source.

    Also GTA: SA came out at a time when the PS2 was a far lower price($300). Maybe you should be comparing GTA:3 instead.

    For a far smaller install base GTA:4 has done pretty good.

  10. I notice some skepticism about GTA IV’s sales in Comments above. Here’s the sales pattern for the 360 version, US market; this steep decline is very similar for all the other regions and for the PS3. There’s long tails and then there’s long tails, but at this rate of descent, it’s difficult to see more than a few more million sales coming from GTA IV’s next-gen market:

    Week 1 2,317,774
    Week 2 703,783
    Week 3 318,653
    Week 4 184,112
    Week 5 105,390
    Week 6 74,732
    Week 7 50,950

  11. I very rarely comment about the author, but I feel compelled to do so only because I’ve seen a number of your articles now…your gaming articles are supremely biased and cherry-pick information to support whatever conclusion you like. I’m sure Om doesn’t mind as it seems to pull in the pageviews, everyone likes a controversy and the number of comments here attest to that.

    Anyway, many other commenters have already poked holes in the argument, so I’m going to go more philosophical.

    1) We get it…you’re bullish on casual games. Great. But is the rise in their popularity coming at the expense of hardcore games, or is it simply expanding the pie and bringing more new gamers into the fold? My guess is the latter.

    2) While hardcore gamers as a percentage of overall market share will probably decline due to the expanding pie, I don’t see any indication that the raw number of hardcore gamers will decline. If anything, Gen Y will soon have money to burn as more of us reach our 20’s and enter the workforce, and the next generation will be even more tech-ready than we are.

    3) The PS2 sold appx 127MM units over its lifetime. What percentage of PS2 best sellers were casual games:

    …pretty much all would fall into the action, arcade, or AAA game territory, save for a few anomalies. Was it a fluke? Did people buy those games solely because of a lack of choice? Did the buyers of all those games simply vanish or convert full-force to the Wii?

  12. In addition to what Niraj said, you haven’t even considered the fact that GTA IV hasn’t reached a holiday season yet, where it will probably gain more sales than the rest of the year combined.

    In addition, the game is selling strongly in Europe, where – due to the strength of the pound/euro – people are paying up to $95 per copy.

    And even if it didn’t sell another copy for the rest of the year, it would be absurd to say that a return of 700+ million dollars on a game that cost $100 million to produce is a failure.

    I think this article is a bit short-sighted. There have always been simple games which have sold well and captivated a broad audience. And the Wii has extended its reach to people who had never previously been interested in video games; it is not going to hurt Sony/Microsoft as much as it helps Nintendo.

    There will always be a desire to see more detailed and realistic games which push the boundaries of hardware. This is especially true in the genre of games that EA makes (mostly sports), but the same applies to GTA, MGS, and first-person shooters. It’s much too early in this next-gen gaming era to make absurd predictions about its future.

  13. As others above have pointed out, your numbers don’t add up. If anything GTA IV is selling faster than SA. This is just another feeble attempt to create contraversy in order to drive up traffic.

  14. Cade Roux

    All it shows is that a company can waste money making things people don’t want, or which don’t justify extra expense (like blu-ray vs. DVD). This has nothing to do with the capability or desirability of newer and more powerful consoles (which are always arguably better), and whether you can make a compelling game.

    Of course, compelling games have been around since Pong, so there is no relation to the power of the hardware and the power of the game to capture people’s imaginations.

    You can certainly make a compelling game today which would run on something as simple as a NES, sell it only for PS3 for $20 and it would still ship tons more PS3s. Sometimes instead of spending money to make money you need to use your brain.

  15. Great analysis from the comments posted to the original topic. One data point I didn’t see addressed is the current online activity that the top ‘next gen’ games see per platform.

    You should be aware that Call of Duty 4 continues to experience days of over 1m unique players online @ Xbox Live. Call of Duty 4 was releases in November ’07, has sold over 10m copies world wide and is not slowing down. GTA IV stole the thunder for roughly 25 days post-launch. Add data from Halo 3 on the 360 and you are seeing engagement rates that blow the away other social games outside of the ‘next gen’ console.

    Also, why not include the Wii as a ‘next gen’ console in the argument?

  16. One thing to consider: It took me two weeks to actually find a copy of GTA4 for PS3 in store in London. That doesn’t sound like something that would happen with a game that isn’t meeting its sales targets.

  17. There’s a couple of problems with this article. You say GTA IV sales are plummeting and it can never reach the 21.5 million mark that GTA San Andreas did, but San Andreas only sold 6 million copies in the first 10 months it was out! (and the PC version in that case had just come out)

    On top of that, you’re not considering the PC sales of the game. I think it’s not going to be out until October, but I guarantee there’s plenty of people choosing not to buy a PS3/360 just so they can play this game when there’s a PC version on the way. Like I mentioned above, San Andreas only sold 6 million between Oct. 2004 and July 2005. Then the PC version came out and obviously sales did well.

  18. Bob Smith

    You’re completely skewing the facts to reach a desired conclusion.

    GTA San Andreas sells 12 million copies between October 2004 and March 2005. That is 5 months.

    GTA IV sells 9 million copies between April 29 and June 7. That is less than 1.5 months.

    Hmmm, do you think in 4 more months they can sell 3 million copies to surpass their previous record? It’s pretty obvious they will.

  19. “PS3 and 360 are defined as “next-gen” for boasting the best and latest graphics features.”…”the non-next-gen wii”

    You keep using that word “next-gen”. I do not think it means what you think it means.

    @roman – Spot on with your analysis; San Andreas was released into a market that already had more than 70 million PS2s ready to play it. (Probably more, San Andreas was released in October 2004, while the 70 million figure is from January 2004 ( )

  20. Very insightful article. With the current gen high definition consoles (xbox 360 and PS3) being relatively expensive, game development costs soaring, and games having a base price of $59.99…something has to give. Especially since high definition TVs aren’t all that common yet, why invest in expensive hardware that you can’t fully utilize.

    Nintendo selling souped up GameCube hardware in the Wii meanwhile, has a platform that’s cheaper to develop for without a learning curve (since it’s old GC hardware). More casual fare, simpler control, cheaper console, cheaper games, cheaper development, broad marketing… no wonder Nintendo has such a huge lead.

  21. DloBrown

    Where do you get those info? How can you compare a game that came out not even 2 months ago with one that came out years ago…9 millions in 2 months do the math at 50$ a copy 9million is 450 million not enought for you? I think you just writting this to get some attention…

  22. I would throw a couple curveballs at your thesis as someone who got sick of GTA San Andreas and very much enjoys GTA4.

    In the first place, I cannot recall there being as much advertising of GTA4 as SA. I get the distinct sense that the audience for gangsta culture and games was a lot stronger when SA was announced. In short, there was always a broader demographic for SA than for GTA4. GTA4 is more for gamers who already know SA and the series – it’s not a platform mover so much as it is a (very good) sequel.

    I think if you compared the numbers of the people who bought SA and the platform vs people who bought SA who already had the platform and had already played an earlier GTA (Vice City) or the original, you’d see that San Andreas was more of a cultural phenomenon than a game phenomenon. There was a magical convergence for SA that doesn’t exist for GTA4.

    A lot of very good games, like a lot of very good books, are probably not going to be platform movers. I don’t think the builders of platforms should leverage their costs on the success of titles any more than builders of libraries or theatres on their content.

    I am convinced, furthermore, that if XBox Live went to a micropayment schedule it would shock the industry and basically kill it for a generation of gamers.

  23. Joshua Koopferstock

    “the days when so-called “next-gen” gaming reigned supreme are coming to end”

    Maybe, but the market segment that bought those games isn’t going anywhere. Today’s gaming market (driven by the Wii, free online gaming, amongst other things) is broadening out, and those in the industry are finding that, right now, it pays more to go wide (reach new market segments) than go deep (make the absolute best tech-specced console). Like most things, this will probably come back around when the broad limits of the market are about reached and the industry feels like it needs to push the technology to maintain its margins.

  24. Interesting view — however, I don’t think it’s very fair to compare sales of GTAIV (which came out 1-2 years in this generation of consoles) with GTA San Andreas which came out about 4 years into the last generation when a LOT more people had consoles.

    A much more accurate comparison, IMO, would be with GTAIII which sold 11.6 million total on the PS2 when it came out in 2001 — not counting the various versions/packages that came later on.

    We’re still very much in the early adapter stage of next-gen, and in the middle of a recession on top of that. The fact that GTAIV has already sold 9 million copies is pretty astonishing I think given the amount of next-gen consoles currently in homes.

  25. mrspin

    How depressing :(

    I’m really enjoying GTA on the PS3, though it’s a hire not a purchase, and I already had bought my machine.

    Not been impressed by the games in the PS store.

  26. cirej2000

    I disagree…there will always be highly produced blockbuster games. However, there are going to be a hell of alot more games that cater to a wider variety of tastes and skill levels.

    You’ll also start to see more titles in the casual genre that are of higher quality as those gamers start to become more sophisticated…in fact they probably are less willing to continue buying subpar quality games.

    The Wii has and probably will continue to kick ass this gen. But I would say that the next 12 months are going to be key as some developers actually start to put quality core titles out for the Wii (along with quality casual titles).

    I didn’t realize that GTA III sold that much, but I’ve never been a fan of those games. But let’s see how MGSIV and Final Fantasy sell on the PS3. Then things like Little Big Planet and Home on the PS3 and Banjoe Kazooie on the 360 should also be observed for their impact.

    Will next gens consoles be able to cater strictly to a hardcore audience and succeed? Probably. But they shouldn’t expect to come out on top…and if they’re making profits, that might not be a horrible thing.