Why GTA IV Was the Beginning of the End

98 Comments

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.


Image credit: www.rockstargames.com/IV/

98 Comments

dimasok

Fuck Rockband, fuck Wii Fit and all this casual crap. The second they start making these games is the second I sell my ps3 and x360 and actively join a campaign to boycott all game companies and burn all of the assholes who like casual gaming over the world.

Strikerzex911

Damn… If they spent 100 mil for gta 4, and take two sees how much they have made, I doubt we are gonna see another (good) gta game again. =(

slyrunner

I disagree too, look at ps3’s Metal gear solid 4, its a AAA title and by far the best game ever to be release for the ps3, gta4 was a good game, yet it didn’t deserve the hype that it received, that game wasn’t that good, the thing that kept it a top was its predecessors. and thats a facr, i dont care about the graphics or anything. the only games that were brought out of its sheel were bioshock,mgs4,uncharted,gears and resistance. those are the titles that made the system unique and gave it a second look at what the games like sonic,mario,zelda,pac-man, and many other titles did for those systems.Gta4 was nothing but a halo, it starts off good with the first to games and then ends bad with the last games. rockstar is a fool to think that its next gta5 will get a second taste of victory, “learn from bungie, stop giving us the expansion packs (or your so called next gen titles) and give us something we have never seen before!!!, this isnt about whos game is more populuar, its about which game has more to offer. remember, any new game can jus be brought up (like bioshock) and still deliver the same amount of damage halo or gta4 or mgs4 can

HappyCamperJack

This is definitely a very poorly thoughtout article with very little facts to back it up. Obviously the writer only see what the media is hyping, not the actual data.

GTA3 sold about 14.5 millions in its lifetime, which is comparable or less than what we can expect GTA4 to sell. By the time that San Adrea is out, there were over 50 millions of consoles that could run the game, of course it’s gonna sell well. It’s all about install base. Plus a huge part of the development fee for the next GTA will be saved as the developers become familiar with the console. We can expect the next GTA to take about 50 millions or less to develope, and next next GTA to be 30 millions or less. Overall, even at 10 millions copies, GTA4 still earn Take Two profits, lots of it!

Why other big companies won’t be focusing on low budget games? All you need to ask is Ubisoft and EA games. Those two companies have been making games for all the platforms. Wii + DS games for ubisoft last year have only took about 10% of their revenue. They stated that they’ll continue to make big budget games because that’s the way for them to earn money, that simple. EA’s Wii and DS effort suffered similar fate, that’s why they’ll continue to do what they do best, make big budget sports games and other next gen games. Of course they are gonna try to add something differet once in a while, but mainstream games are here to stay. These companies are not idiots, they study real data and market shares.

I hope the writer of this article realize how little does he understand the video game market and perhaps read more next time before posting.

Nels

I agree with your point about not moving hardware. Earlier this year I was telling everyone just to wait, that systems would start selling once GTA IV was released. Boy, was I wrong.

However, there are several points I’d make. The systems are still priced too high, certainly much higher than it cost to buy a PS2 or Xbox at the time of San Andreas. Also, or as a consequence of that, the install base is much lower than it was for San Andreas, explaining the lower sales for GTA IV. Finally, how many of those 21.5 million copies were sold as Greatest/Platinum Hits, or at a reduced price? Total sales figures in dollars is a more valuable measurement than units sold.

John

Quite the contrary. The only thing that fails are these kind of nonsensical articles by people trying to make their claim at life.

The industry is at an all time high. Ever wonder if GTA didn’t live up to the extreme expectations due to the fact that maybe people are sick of GTA’s last gen formula? Something that was so fresh last gen ain’t quite cutting it this gen. Plus even if GTA fails to sell as much as the last one or up to the extreme expectations, and even though the coast of development has risen they’ve still made their money back in truck loads. Lets see if I did my math correctly even if they didn’t sell a copy more than the supposed 9 mill they’re at now they’re still looking at a 485 profit. I’d say that’s more than enough mouths to feed.

Lastly why do people think games are the selling point for moving consoles? People who are really into games or certain series are the first adopters, and basically everyone else are casuals that only care about the price tag. 21 mill units for SA is over a 3 year life span with approximately 144 million console availability between ps2/xbox. Not really the fairest of comparisons I’d say.

Adam

When san andreas came out there was over 100 million ps2’s and xbox’s in the market. Right now there is like 30 million PS3’s and Xbox 360’s to market. When the ps3 and 360 hit the magic $199 point and there is 100million of the next-gen consoles out there the the sales figures will match.

Besides, GTA4 has been out for what, 2 months? While San Andreas has been out for 3 years now? So this is a unfair comparison, how many copies did San Andreas sell after 2 months on the consoles it released on?

They may be at 9 million after 2 months but there is no indication that GTA4 sales are dead, and price drops in consoles will lead to GTA4 sales, as well as price drops in the game, as well as all the DLC profit that will happen, and new games being sold due to release of DLC packages.

Besides, they’ve only profited like $400 million so far, and set a record for highest grossing entertainment product in it’s first week. I guess it was a huge failure, there is much more money in making new versions of frogger.

PS3 Auction

I agree its not completely up to Rockstar, and I agree with the comments above, the Wii is selling like hotcakes because of the backwards compability and the classic games that it plays. People are feeling retro in their game choices, like arcade classics, super mario brothers etc..

PS3 Cheat Codes

GTA4 is an excellent game it is a worldwide hit, it may not save the PS3 but its done its fair share. The price point of the PS3 is probably its biggest weakness, and why Wii is crushing it in sales. Just check out youtube for ps3 cheat codes, you find more GTA4 codes, cheats and tips & tricks than any other game. Rockstar has made quality games its time for the rest of the companies to step up and make the next big blockbuster that can save the “next gen” consoles, Rockstar should not have to do it on its own.

elle

Apples and oranges.

1.) This is a different market than GTA:SA.

The console markets aren’t saturated, _but they are at the current price point._ Everybody who will only buy one console at the current prices bought theirs already, and chances are they bought a Wii – the one platform GTA4 did not release on. People who are waiting to buy a PS3 or 360 aren’t buying until the price comes closer to the price the PS2 was at when they bought it well into last generation – probably even when GTA:SA came out.

When GTA:SA came out, the PS2 was at maturity. Next-gen consoles were on the horizon. Console sales weren’t a priority because Sony had already spit out millions of them and were redesigning the system and cutting the price further. Nintendo wasn’t a player and had already moved on. Microsoft was getting ready to roll out GTA:SA _on the 360_ – and many people who bought the game for PS2 or Xbox bought it again to see it on a next-gen console (or continue playing it after they got rid of the last-gen console, since GTA:SA backwards-compatibility wasn’t available for the 360 at its launch).

GTA4 will still drive PS3 and 360 sales, just not until their prices are more in line with the prices of the PS2 and Xbox when GTA:SA came out – IIRC, they were at or less than $200, about 20%-40% cheaper than the current gen even if you count inflation.

People aren’t going to spend a _minimum_ of $280+$60(+$X/month for Live) to get in on GTA4 when they clearly remember only spending a _maximum_ of $180+$50 to get in on GTA:SA. Economic factors and console costs are holding back console sales more than the lack of a killer app. Halo 3 and CoD5 showed this already – that point is neither newsworthy nor insightful.

There wasn’t a jump in console sales when Rock Band came out for three platforms, and that wasn’t a sign of systemic failure for the game industry. It was a sign that Rock Band came out at the right time, when there was an installed base of consoles and a market niche screaming for a product. GTA4 is the same. GTA:SA is an exception, not the rule, and not matching its performance is not a sign of failure.

2.) You ignored GTA4’s DLC. There’s none yet, sure, but consider this: If sales stop, right now, at 14 million, and just half that install base buys $50 of DLC over the lifespan of the game, that’s easily the equivalent of 21 million copies of GTA:SA in gross.

Chances are, most people won’t buy $50 worth of DLC. But chances are, GTA4 will break 20 million in lifespan software sales, and – if the quality of the content is as good as rumored – most people will buy $10-$50 of GTA4 DLC over the game’s lifespan.

It’s even feasible that the “expansions” to GTA4 – just like Vice City and San Andreas were expansions on GTA3 – will be DLC for GTA4 instead of (or even in addition to) boxed software.

So even if we take your slippery slope all the way to the bottom and assume that both console prices will never go down again and that nobody else wants GTA4, the game still has an excellent chance of being both a financial success and an adaptable, truly next-gen product – in that it makes its best bread on DLC and community features.

3.) The PC version isn’t even out yet. That’s 1-3 million more sales that the consoles won’t ever have.

If your point is that “next-gen” means that more accessible games with DLC are better platforms than physical media sales, I agree. But GTA4 is poised to make that point as well – something you completely, and conveniently, ignore.

If your point is that “next-gen” consoles failed to capture the same audience that last generation’s consoles did, I would agree. But GTA4 is irrelevant to that point – that’s about the price of the console, an argument you couldn’t make if the PS3 and 360 cost the same as the Wii.

DJH

Write controversial premise, get hits, keep job. Apparently it doesn’t matter if your argumentation is specious.

This article is indefensible. Never publish Au.

Hassan Maynard

I agree in what the author is mentioning is this post.

I was once driven by GTA Vice City to buy a Sony PlayStation II, prior to that I was using my PC to play GTA III.

The desire is still there but no longer a necessity as I find myself growing up and the investment is not worth it money. I will purchase GTA IV when it arrives to the PC platform, however for now there is no rush.

Wagner James Au

“What did it cost Activision to make, produce and license the various songs and technologies (guitar).”

The first Guitar Hero cost Harmonix $1 million to develop (Red Octane had already created the guitar hardware):

http://www.gamasutra.com/php-bin/news_index.php?story=16510

Since the sequels are pretty iterative, I’m guessing GH3’s budget was somewhere around $20-30 mill, if that. The franchise has grossed over a billion dollars.

But leave that all to one side: the crucial point is still that GTA IV isn’t measurably selling more next gen machines that future next gen games depend on for a market– while games like Guitar Hero and Rock Band are still quite popular on PS2. (Check the figures you cited.)

Johnathon

James,

You are missing the point. It’s been on the market 7 weeks and sold 9 million units. Guitar Hero 3 has been on the market how many months now? Beyond that we have a clear production figure for GTA. What did it cost Activision to make, produce and license the various songs and technologies (guitar).

Plus, that 100 million dollar price tag on GTA 4 includes the production of the digital content. This and the PC release are going to blow away Guitar Hero. Moreover, when we look at time frames, when all is said and done GTA 4 will far outstrip (over the course of the same life of GTA 3) the sales of the original and probably Guitar hero etc.

Also, the decline in sales is a standard trend across the industry. The million dollar figure isn’t sustainable over a long period and, as such, sales scale down to a more stable level. It’s basically the Beta equivalent in the stock market, we have some degree of volatility and then it levels off to an average of sorts.

-J

W. James Au

“Total sales in 7 weeks (Global [Combine XBOX 360 and PS3]):
9,251,625 units”

That sounds right. At the time we posted this, week 7 results weren’t available, which is why I said “just over 9 million copies” (I believe it was around 9.15 mill at press time.) Week 7 apparently added about 235K more sales… which again, confirms my point that sales are plummeting, and will be lucky to sell 2-4 million more copies total at the end of its run. GTA IV cost about twice the budget and stands to make about 2/3rds the profit of its predecessor. Sure it’s still making a lot of money, but the general economics are crazy and unsustainable.

Johnathon

Author is again an idiot in the numbers he/she is citing are purely those of the XBOX 360 and only looking at the US. The combined true figures (GLOBAL) are as follows:

XBOX 360:
Week 1: 3,338,629
Week 2: 888,999
Week 3: 451,877
Week 4: 279,421
Week 5: 198,008
Week 6: 131,072
Week 7: 94,578
7 week global XBOX 360 sales: 5,382,584
Source: http://www.vgchartz.com/games/game.php?id=7103

PS3 (Global):

Week 1: 2,424,258
Week 2: 602,077
Week 3: 304,966
Week 4: 210,367
Week 5: 148,132
Week 6: 102,179
Week 7: 77,062
Total: 3,869,041

Total sales in 7 weeks (Global [Combine XBOX 360 and PS3]):
9,251,625 units

9,251,625

Of which:

XBOX 360 Total European Sales:

1,780,034 Units.

Assuming 50 Euros (Based on the conversion of the current price in pounds (39.48 pounds = 49.98 Euros).

=Euros $89,001,700 which is $138,967,254 million USD

PS3 Total sales converted $193,452,050 Euros = $302 million USD

My calculations are a bit sloppy but basically you’re looking at:

5,460,000 units moved in the US

$273,000,000 USD.

Total sales:

273 mil + 302 mil + 138 mil = USD $712 million in 7 weeks.

Guitar hero 3:

Wii:
Total US Sales: $158 mil
Total Euro Sales: $62 mil
Total Sales: $220 mil

XBOX 360:
US: $247 mil
EURO: $ 92 mil
Total: $339 mil

PS3:
US: 69 mil
EURO: 37 mil
Total: 106 mil

PS2:
US: 230 Mil
Euro: 75 mil
Total: 305

Total sales: 305 + 106 + 339 + 220 = $971 mil

Units sold of Guitar hero 3 combined: 11.24 million

Someone please expand upon how many weeks it’s been on the chart and the costs incurred to product/license the tracks

Units sold of GTA4: 3.87 + 5.76 = 9.63 million units moved in 7 weeks with the single day record in sales across all mediums.

Thus you have a differential of 260 million [theoretical] USD.

Not bad for 7.

Death of next gen, hardly. Talk to me when GTA 4 has run the duration of San Andreas (and let’s not forget when the PC version is released in the fall).

Data collected and analyized from http://www.vgchartz.com, http://www.amazon.com and http://www.amazon.co.uk.

Johnathon

Author is an idiot. Cite facts and stop spreading F.U.D. GTA3 has been out for several years and, as a result, it was able to move 21 million units. Moreover, GTA 4 is the single largest grossing entertainment release…ever. They have made a return of nearly 5 to 1 (sold over $500,000,000 USD). Thus, you’re presumptions are false. Go back to your WII and leave the mature/adult games to the big boys.

In short, your assumptions are wrong, you’re being presumptuous and you’re not taking into account timeframes in your modeling.

moserw

Is it not a bit early to jump the gun here? I am sure there will always be an audience for big budget spectacles in Hollywood and ditto for the gaming industry too. 9 million is not a small number by any means and I am sure there will be more games, even coming from Rockstar that will do much better in time to come.

fletc3her

The game sold nine million copies in the first month at $60 each. That’s $540 million dollars. After taking out $100 million for development, the extensive ad campaign, distribution, and retail markup, there is likely still a lot of profit. And, just in the first month. The previous GTA took two years to reach the sales figures you quote.

I’ve never played a GTA game and this release certainly doesn’t make me want to run out and buy a PS3 or XBox to run it on, but it’s a huge success any way you slice it. This analysis reminds me of how we sometimes hear about how a major blockbuster is a failure because it failed to live up to some other movie’s gross. In the end if the product makes money it makes money. And if it makes money then there will be more. Far from being a detriment, I believe GTA IV is being discussed in boardrooms across the country as a reason to green light blockbuster games.

a nun a moose

Not true. I will definitely buy GTA4 and a 360 some day. It’s just that we are in bad financial times right now, so food and gas are ahead of fun and games. If things get better, I may also get a PS3 and Wii after that. Not everyone needs to have the latest toy as soon as it comes out. Look at all the people that got screwed buying the early 360s before the rrod issue was resolved! Look at all the early iPhone idiots kicking themselves now!

Best to wait.

Samir Satam

Though i dont generally comment, just like a Sean above me, i felt compelled to say something. I won’t re-hash with what other commenters has already said. I think you are oversimplying the gaming market. Yes the Wii is extermely popular, hard to find, and nintendo stock soaring. The most troubling ascept of the Wii is the lack of 3rd party titles. The most polished games (Zelda, Wii Fit, Mario, Smash Bros. etc.) are first party Nintendo games. The only thing really going for Nintendo, is the casual gaming market. But there has to be a steady supply of casual games for this market to buy. Right now, i think only Wii Sports and Wii Fit are the 2 titles targeted to this market. Many of my friends who arent gamers and have a Wii only have Wii Sports. Some are considering getting a Wii only because they find the concept of Wii Fit interesting. The lack of 3rd party games is extermely disconcerting.

It doesnt matter if people buy consoles because of games. The simple reason, is its expected that console sold will get saturated at one point. The hardware is already discounted. Profits come from licensing fees, and games sold. I am sure the Wii console is profitable, but how many Wii consoles am i really going to buy. Its all about the games…. Its always about the games. And i own quite a few Xbox titles (GTA4 included) only 1 PS3 title (MGS4) and 4 Wii titles (Wii sports, and Wii Fit included).

Of course i dont own MS or Sony stock, but Nintendo stock. But not because i love one console over another, but because MS is not just XBox, and Sony is not only PS3. But Nintendo is defined by Wii and DS. (And i am betting for DS than Wii).

Wagner James Au

“He’s not saying that the game isn’t making tons of money. The point is that people aren’t buying PS3s and XBOX 360s in order to get this game.”

Thanks, Tim, that’s exactly my point. Also, that GTA IV’s sales are the most optimistic outcome for a next gen game– decent profit on a big budget game (though considerably lower than they’d make were it a PS2 game.) There’s very, very few franchises that can do this. That’s why I say next gen games won’t *drive* the market. Since they’ve become so expensive to produce and the market for them has become so small and they don’t reliably boost the install base, fewer and fewer will be made.

Chris

“the industry’s future will be shaped by games like Rock Band.”
Ah yes. the ultimate casual game. No, wait that can’t be right can it? surely casual means the entry bar is set low? So how can a game that costs more than the system it is played on (at least here in the UK) be hailed as the future of the industry? I’m not sure the market can sustain multiple games that cost > £150 + the cost of the console + a drip feed of expensive DLC.

Tim

It seems that a lot of you are missing the point. He’s not saying that the game isn’t making tons of money. The point is that people aren’t buying PS3s and XBOX 360s in order to get this game. For 2 years now people have been saying that this game will cause sales to go up and surpass the Wii. However with sales of the game already dropping that’s not going to happen. Also at whoever said something about the economy, that’s BS. If it’s due to the economy then why the hell is Wii selling so well?

Alejandro

I would not add much James, but it is clear that your article is not correct at all. It has been made clear by other comments that:

– Take two made a lot of money with GTA IV. And they will make more.

– The game sold well for their installed base, ( and by the way sold more than GTA III or GTA Vice City which are the games it should be compared to).

– It’s too early in the cycle to call Xbox 360 and PS3 a failure
( since you like VGcharts I included PS2 vs PS3 sales “launch aligned”)

http://vgchartz.com/hwlaunch.php?cons1=Wii&reg1=All&cons2=PS3&reg2=All&cons3=PS2&reg3=All&weeks=156

The Wii is selling better than other adding to the total, that means an expanding market for Videogames not the opposite.

If i change PS3 and XBox 360 for PS2 and Xbox, and GTAIV for GTA III and publish your article in 2001 I would have a more sound story and better numbers to back it up , and still would be very wrong 3 years later.

Andrew B

I vaguely remember numerous sites reporting that Rockstar made around 500 million in sales the first week alone. In addition to being the fastest selling game beating Halo 3 in first weeks alone. In fact today it was reported that another game with over a 100 million dollar budget (Metal Gear Solid 4) outsold every other game combined in the top 10 of Japan 12 to 1 . So I believe the future looks quite bright for the large budget games.

Sources
http://www.nytimes.com/2008/05/07/technology/07game.html?fta=y (500 million figure)

http://arstechnica.com/journals/thumbs.ars/2008/05/14/grand-theft-auto-iv-series-a-guinness-world-record-giant (fastest selling)

http://www.videogamer.com/news/19-06-2008-8586.html (MGS 4 12:1 ratio)

Blake Snow

“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.”

I imagine that keeps Sony and MS up at night right now. To be clear, GTAIV has been utter win for it’s publisher, Rockstar, but not yet (if ever) for PS3 and 360 sales like GTAIII was to PS2.

Ron

I’m very confused here. Why would a game that you just claimed would sell 12-14 million copies at $60 a pop be the beginning of the end? At $100m in development costs, lets be generous and say $100m in marketing costs, and throwing a bone to the retailers, wouldn’t that be a pretty conservative net of $500m to Take-Two?

This also doesn’t include the downloadable content which will surely go for $20 a pop to an already established install base.

San Andreas was certainly a great seller, but with a an extremely established install base across multiple consoles.

Bob Johnston

I have been playing GTA 4 now for a few week. I have been an obsessive computer game fan for 20 year. GTA 4 sucks. The gameplay and “openness” of the city is not a patch on previous version. They have lost their way. I am sick of reading 10/10 reviews for it. Its crap.

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