The video game industry's Electronic Entertainment Expo (E3) is happening in Los Angeles right now, and this year the convention's organizers are bringing sexy back to the show, looking to make the event a big deal—a return to its glitzy origins. This video game bonanza comes in stark contrast to the recently concluded network television upfronts, where subdued was the theme.
Why shouldn't gamers strut their stuff? Despite a bum economy, the video games business finished the fiscal year ending in March generating $28.7 billion, up 13% and more than the $27 billion made by the movie industry. It's not all salad days, though. Sales of games fell 17% in March and 23% in April, and April also saw a 40% drop in sales of video game consoles compared with the previous month.
But the industry seems to be taking these bumps in the road in stride. Much of that drop in game sales is blamed on the fact that "Grand Theft Auto IV" and "Super Smash Brothers," two blockbuster titles, were both released at this time last year, skewing the results. The industry's biggest titles will be coming out in the second half of this year, so there appears to be an air of something sorely lacking in the TV industry—hope.
The news is pretty grim on the network television front. According to a recent analysis of TNS data by the Television Bureau of Advertising, total broadcast TV ad revenue dropped 6.3% in the fourth quarter of 2008 vs. the previous year and was down 0.4% for all of last year compared with 2007. To rub salt in that wound, 2008 had two ad-generating events in the Olympics and a competitive Presidential campaign. Zenith Optimedia predicts that TV ad spending will drop 5.5% this year.
With news like that, it's no wonder that the networks scaled back on their upfront celebrations, paring down the lavish parties that were once a hallmark of the annual advertising frenzy. Media buyers were predicting that the networks would pull in between $8.2 billion and $8.5 billion from the upfronts this year, down from $9 billion generated last year. The good news is that's less than the 20% drop some analysts were predicting for the broadcast networks. Jeff Zucker, CEO of NBC, put on a happy face during the recent D7 conference and said the TV ad market has "bottomed out, and there is some light at the end of the tunnel."
TV's Dizzying Changes
It's not entirely fair to compare the disparate states of the video game and television industries. Video games are not going through a massive revolution right now. Sure, there have been innovations in games that make them more active (like Wii titles), interactive (like "Rock Band"), and immersive (like "World of Warcraft"), but the fundamental way you experience them is still basically the same: There's a controller in your hand and a screen.
The way we consume television, on the other hand, is in the midst of massive changes. Whereas television programming was once dictated by networks, DVRs and the Web have made viewers more demanding of on-demand content. There are more options than ever for accessing video (TV, broadband, mobile phones ); TVs are becoming social with the inclusion of Facebook and Twitter; and heck, we may not even need remote controls any more.
Perhaps the video games business can have hope because it knows that by the end of the year it will probably look a lot like it does right now. With the constant changes it's undergoing, TV just can't say the same thing.