Games vs. movies: who wins?

As revenues generated by the global gaming and film industries continue to climb amid a constant churn of box-office-winning titles, BusinessTech investigates which medium holds the keys to the entertainment kingdom.

According to a new report by NPD group, spending on video games and video game content in the US hit $2.88 billion in Q2 2012, versus the total spend of $4.5 billion recorded for the same period in 2011.

Despite the continued posting of losses in the US market, according to a Reuters report, the gaming industry is projected to hit $70 billion, globally, up from $65 billion in 2011.

Adding the sale of mobile games on smartphones and tablets, which show continued growth, the total value of the global video game industry is projected to be $78.5 billion for 2012.

Citing DFC Intelligence figures, Reuters reported in June that revenue from global retail software sales (physical game sales) is likely to drop to $28 billion, down from $29.5 billion in 2011.

Online revenue, however – including digital delivery, subscriptions and Facebook games – are expected to rise to $24 billion, up from $18 billion in 2011.

Locally, according to figures published my market research firm, Gfk, the South African games industry showed booming growth, contributing R1.7 billion (just under $210 million) in 2011.

As many as 3.86 million games were sold in South Africa in 2011. In comparison, 3.48 million games were sold it 2010, and 3.64 million in 2008.

Games vs Movies

When looking at the global movie industry, the Global Movie Production and Distribution report compiled by market research firm, IBISWorld, finds that movies still outweighs its gaming rival by some margin.

In 2012, the global movie production and distribution industry is projected to generate revenue of $126.8 billion, showing annualised growth of 0.8% for the past five years.

This figure takes into account not only US-based Hollywood – but also the booming film industries in India (“Bollywood”) and Nigeria (“Nollywood”) as well as Russia and emerging countries, including Latin America, Asia and China.

When looking at a market like the US, where gaming and film are matured and cemented entertainment media, the video games industry flexes its revenue-accruing muscles.

In the US, gaming generated $17.02 billion (±R130 billion) in 2011, according to the NPD Group, while movie sales in the US generated $9.42 billion (±R72 billion) according to The-Numbers.com.

Looking at South Africa, physical game sales have overtaken local box-office ticket sales, according to GfK.

In 2011, almost 3.9 million physical games were sold, locally, generating over R900 million in revenue, surpassing movie ticket sales, pegged at R788 million.

Top grossing entertainment

According to data from analyst group M2 Research, the average budget to develop a current-generation multi-platform video game ranges between $18- and $28-million.

This figure can balloon depending on the profile of the game, with high-profile games such as Grand Theft Auto IV costing as much as $100 million to develop.

When looking at movies, budgets for films usually start around the same figure, averaging around $120- to $150-million, with big-budget films reaching as high as $300 million (and low-budget movies going as low as $30 million).

It’s worth noting that this figure does not include marketing and distribution, which can extend into the tens of millions of dollars as well.

* Approximate, as of 2011 ** Subscription-based model *** Bundled with Wii console
Figures taken from imdb and DigitalBattle.com

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