A graphic representation of relative publisher sizes in the gaming industry, using The Witcher 2 creator CD Projekt as a unit of measurement.
There's a conventional wisdom in the gaming industry that splits companies into haves and have-nots. There are a handful of big, successful companies, and a broad underclass of upstart outfits on their way up and stumbling giants trying to put off their inevitable demise.
For gamers who don't need to follow the financial ins-and-outs of the industry, sorting companies into a handful of categories instead of digging to see if the reality of the situation matches their perceptions can be a helpful, time-saving exercise. The thing is, sometimes the companies we consider to be big players really aren't as big as we thought. And those rising stars (or companies with flagging fortunes) may not be quite as small in stature as they first appeared.
With that in mind, we looked to rank a selection of the most influential players in the industry by the metric that most clearly indicates size: revenue. We went through each company's financial earnings reports and took the net revenues each reported for its most recently completed fiscal year, then ranked them accordingly. While the information itself was interesting, it was easy to lose any sense of perspective when faced with a table of equally unfathomable numbers. To remedy that, we decided a visual representation of the company sizes was called for, so we used the smallest company on our list, The Witcher 2 developer CD Projekt, as our baseline unit of measurement. For example, CD Projekt posted $39.36 million in net revenues for its last fiscal year, so Take-Two's $825.8 million in revenues was equivalent to a little less than 21 CD Projekts, while one could fit the Polish studio into Sony's $79.1 billion in revenues more than 2,009 times over.
That brings up a significant caveat. Like a number of companies on this list, Sony's business extends far beyond gaming. And because not all of these companies report the revenues of their gaming business separate from all other interests, we couldn't accurately limit the exercise to just game sales. That obviously means giants like Sony, Microsoft, and Time-Warner will wind up dwarfing their more gaming-focused counterparts, but it carries impacts on the smaller scale outfits as well. For example, Konami operates a series of fitness centers in Japan, while Sega Sammy manufactures pachinko machines, and Namco Bandai boasts a significant toy business built on brands like Gundam, Power Rangers, and Tamagotchi.
Even taking that into account, there were some surprises in the data. For instance:
GameStop is bigger than Nintendo. The House of Mario had a particularly rough year revenue-wise, but did you realize the specialty retailer brought in more money than Nintendo by a cool $1 billion? GameStop also brought in more than Activision Blizzard and Electronic Arts combined, underscoring just how much weight the chain has to throw around when it comes to protecting its used game business.
THQ topped Take-Two. Most of the news surrounding THQ of late has been grim, but the publisher behind Saints Row and the WWE wrestling games brought in more money last year than the outfit behind Grand Theft Auto and BioShock. Of course, Take-Two didn't have major releases in either of those series last year, but L.A. Noire and NBA 2K12 are nothing to sneeze at.
Zynga's still fairly small. In 2010, a report from SharesPost put the social gaming company's total value at $5.51 billion, topping that of Electronic Arts. Despite the hype for Zynga's initial public offering, the free-to-play Facebook publisher isn't yet posting the sort of sales one might expect from such a buzz-worthy brand. However, it is growing at an impressive clip. Last year, the company posted $1.14 billion in revenues, nearly doubling the $597 million it brought in the year before.
EA and Activision Blizzard are outsized by Sega Sammy and Namco Bandai. While EA and Activision Blizzard tend to come up when gamers think of the world's biggest third-party publisher, the two Japanese publishers draw considerable income provided by pachinko, arcade operations, and toys.
"underscoring just how much weight the chain has to throw around when it comes to protecting its used game business."I just imagined gamestop whiping it's chain at all these wolves. nintendo snarilin and valve aint even up there lol
First thing I want to say is I got curious about Nintendo for no reason at all and decided to have a look at their financial statements. Their net income was just over $12 billion, I'm not sure where that $8 billion figure came from.
Second thing: While I appreciate the attempt at laying out a level playing field and to gauge the relative companies by comparing revenues, it is an unreliable method. Particularly in the games industry, I think single-year revenues are extremely unreliable by themselves as a way of determining the size and power of a company. There are so many factors to consider alongside revenues that this article verges on being irrellevant.
A better method would have been to compare the companies by working capital. I understand that the smaller companies probably don't publish their balance sheets, however I believe in doing things right or not at all.
@u1tradt Yeah, that definitely sounds much more accurate. I suppose that in any given year, several factors could dramatically reduces income, but could still be worth it for the company later on, like building a larger HQ building etc, which would cost a lot initially but would increase sales later on.
@Maximus_Fett Thanks for the kind words. However do bear in mind that the article is using revenues while your example would affect net profits and not net income.
But you get the point, which is that there are far too many factors to consider alongside revenues when determining the size and power of a company, particularly in the video games industry.
What's the issue with title. To me "biggest players in the industry" tells how much each company has at their disposal in total. Sure Microsoft gaming division is just a small part of MS but that total sum from all divisions brings them a lot of power, fame and reserves for all the divisions including gaming. Much more even ground and chance to quickly redistribute funds than for CD Projekt. Can't comment on whether numbers are right or comparable though.
Pretty fun to think however that Gamestop revenues almost the same as Activision and EA combined, practically meaning that Gamestop could almost make their revenue just by reselling every used Activision and EA game. No wonder those 2 would get mad.
@PrpleTrtleBuBum Actually, there's another article here where the writer explains Gamestop's used game revenues account for around a quarter of its total revenue. So, no, Gamestop can't outperform EA and Activision by selling used games alone.
Another thing to consider is that a large percentage of their costs are going to be the amount they have to pay publishers for each new game sold (which is the lion's share of it). Think on that for a moment in relation to their net income.
Neat article! EA gives me the impression of holding many more IPs than A-B and Battlefield 3 is a big chunk of that. Something similar may be said of Ubi and THQ. Is the financial gap between the top-selling IPs and everything else really that large? Wow.
Well this is just publicly traded companies,nobody actually knows how much money Valve and ZeniMax have.The results would be quite different.
@bogorad i don't know what gives you the impression the results would be "quite different". it's not like those 2 would turn the charts on its head. all that data still stands, except now with ZeniMax and Valve in there.
and realistically how much do you think they have?
if the data shows anything, its that gamers have pretty out of touch views of which game companies are really the high rollers, mostly colored by fandom and myopic views of the industry.
note GS's very accurate point about how your average gamer would probably swear Activision and EA were the dominant juggernauts of the industry.
those 3 groups are pretty good data sets because GS grouped companies with similar behaviors.
the first group are devs/pubs who pretty much develop purely in-house projects and if they publish, mostly publish in-house projects.
the second group are companies which are still mainly game related but have significant other businesses. a console (Nintendo), toys (Namco, Sega), etc.
and the 3rd group are all the companies where video games are only a fraction of their total business.
based on those patterns, where exactly did you think ZeniMax or Valve would be, thus making it "quite different"?
because realistically, based on those patterns it's likely they're right there in the second group.
perhaps on the high end,
but that "out of touch" viewpoint is coming into play if you think either is throwing around the kind of money Microsoft or Sony are, with their huge multi-product corporations.
Yes they may fall in the second category.
And my observations of Valve and ZeniMax,are from doing research.And how much ZeniMax has been Acquiring over the years.
For instance look who sits on ZeniMax board of directors.
My guess is that ZeniMax has around 6-10 Billion.
Valve probably has around 3-7 billion due to steam ,steam sales are not traceable.
Plus there was that rumor that rumor in 2009 that ZeniMax was going to buy Valve.
Gabe Newell Net worth is estemated to be 1.5 Billion.
Please respond. :P
@mriom Game Freak's profits are shared with Nintendo, so they don't really have that much market share to compete with all these other companies, even if Pokemon rakes in ludicrous amounts of money.
@Strangethings They might not know exactly how big Valve is. Valve, being a private company, does not have to publicize sales, profits, or net worth. This could make it impossible for GS to add them to the comparison, but it would be interesting to see where they stand.
I don't like to be a hater, but GameStop blows. I am surprised that such a poorly operated company (from my personal consumer experience) makes so much money. I guess when you hire emloyees who were fired for incompetency from McDonald's has a part in the reason.
@ranbla No kidding. I was looking for a couple of games the other day and they were cheaper new at Target than used at Gamestop.
@ranbla My cousin worked there for a time, and he hated it. They make you shove sales pitches down the customers throat, and he said a little part of him died every time someone traded in a game.
@Ghost_702 he got it from bloomberg market data. google it, skip the ad, and you call see all that he saw in a whole lot more detail.
I don't think it's an apples to apples comparison to put GameStop's revenue figure up there. They are a totally different type of business to the rest, they are a retailer with high revenue and low margin, meaning they have a lot of sales, but take a low cut on those sales. This means that their revenue number gets inflated relative to the size and importance of the business. I think overall I would have preferred to see market cap figures, instead of revenue figures.
@TheFreeloader No, the majority of their business is used games and systems. That's very high profit margin. It's like printing money.
@Kryptonbornson Well, one might think that, but overall GameStop's net profit margin is just 3.5%. By comparison Activision Blizzard had a net profit margin of 23% profit margin in fiscal year 2011.
@Kryptonbornson Alright, I looked a bit into it, and looks like used game sales is indeed quite a big profit driver for GameStop. The figures I found say that while used game sales represent about a quarter of the revenue for GameStop, it makes up about half of the gross profits of the business. While this doesn't change that overall GameStop, like most retailers, is a low net margin business, it does kinda highlight why they would work so hard for preserving the used games market. (My source: http://www.gamerswithjobs.com/node/111869)
@TheFreeloader Maybe for new items. I know retailers get a large chunk of new game sales, probably a smaller margin on systems, but do the true math for used sales.
I'm not the biggest fan of capitalism, but to know that an honest company (if such a thing exists) like Sony tops the money-grabbing likes of Microsoft (I'm manily annoyed by their registry and ownership issues) gives me a small sliver of solace.
@Maximus_FettWhy don't you move to China? You would love all that anti-capitalism gives you like censorship, extreme government control, forced servitude, lack of motivation to succeed, and as for ownership issues... you will never own anything so I guess there is no issue.
So, what registry and ownership issues are you referring to? Sony doesn't sell you their software, they only sell you the right to use it. Microsoft and all other companies are the same. They all have 1 goal - profit. Period. They might go about it in different ways, but their only goal is to get your money.
@rolla020980 If you've ever been onto the registry on a windows computer, you'd know what I was speaking about. It messes your software up because Microsoft are so paranoid about anyone doing anything with their software.
As to your first point, with the structural integrity of Swiss cheese, China is a crap example. Basically, China is ruled by a load of nut jobs, that is the reason it is so screwed up, not the fact it is communist (although that itself is arguable if you look at the speed they are expanding).
Capitalism is unsustainable and is never meant to be a prolonged ideological goal, because what you get after many years of capitalism is a massive, devastating crunch time caused by the country being run and owned by greedy companies you don't care about poor people. Karl Marx himself said that capitalism is a road to a destination, not the destination itself, which essentially means that a small level of closely monitored capitalism is beneficial to society, but if you let it get out of hand pretty heavy **** goes down.
I say this in the nicest possible way because I generally want you to see my point, but you really need to read up on capitalism and other ideological alternatives in wiki or something. Everyone should.
@Maximus_Fett Not to mention they give free only play XD while M$ doesn't :/
Interesting, a few of these companies deserve a rude awakening because they don't respect their consumers only their money.
please stop doing "stats" based articles. you're embarrassing yourself. this is nothing more then meaningless raw data with pictures of big numbers and varying sizes of pennies.
also, why disrespect cdprojekt by labeling them as a penny? why not use their logo?
It's much better that Brendan only repeats published raw data. This article is a thought-starter instead of conclusive opinion. Anyone who wants in-depth analysis because he feels this article is too superficial should be encouraged to do so.
@Unfallen_Satan the raw data is apples to oranges and really says nothing about what the title of the piece claims itself to be. the raw data is solely the income, with no respect to spending or other expenditures. its meaningless.
what conversation? "neat look at those big numbers. some of those big numbers are bigger than those other big numbers." this looks likes something that was thrown together in a hour. if you're gonna headline a piece, it should have something meaningful to say.
@Unfallen_Satan aww.. that's not how internet fightings suppose to work =P. but ok.
I don't want our discussion to further take up space on the page, so I will continue with private message.
@Unfallen_Satan though i regret it some, i stand by initial remarks as harsh as they maybe. i have many criticisms for this piece, but didn't want to go item by item.... who edits the senior editor? this isn't the first time that an article didn't ascribe to what it's title set out to answer, and amounted to little more than some numbers and pictures and a justification for blowing the day browsing the internet at work.
i am by no means an expert of math, but have some basic understands of what it can do, some of which pertaining to decision making, "what's the best... let the numbers decide!" its articles like this that complete misrepresent the power of math, and what things we can can learn when we apply it to stuff, not just random on top of random. i mean something like this would hardly getting a passing grade in high school.
as for the conversation bit, i read it / interpreted it wrong. sorry.
the article itself says that sega sammy makes pachinko machines, so it having made more money that one year means nothing. apples to oranges with respect to "who's the [gaming] industry's biggest players". cdprojekt is a developer, most of those are publishers, and what the hell is disney and gamestop doing in there, lol? this does little to show who's got the most influence, which i don't think you can get to by merely looking at revenues alone.
i think it should have been more complete. i liked the question but was disappointed by the answer.
You can make arguments for other types of data as better indicators of "biggest players." I don't know what is more appropriate, not being a businessman myself. But if anyone writes a different analysis using a better metric, I believe GS will be at least amenable to include a link to that analysis in this or a future article.
I am not sure where the conversation comes in since this is not a forum and not many here have the expertise necessary to discuss the finance of game publishing in a cogent manner. This article is just a summary of several company's previous fiscal year revenue based on public financial reports. Brendan felt it's a good indicator of the size of the players; that may or may not be true. Most comments are restricted to the article at face value; many already recognize its limitations.
Just for the questions and criticisms it has generated, it was better to publish this article than not. There is a risk that some readers will ascribe meaning to the article where none exists, such as "because Sega Sammy had five times the revenue of Capcom last, it must matter a lot more." I think just by reading some of the comments, the risk of jumping to conclusions is minimized. On the other hand, Sega Sammy indeed had five times more revenue than Capcom in the last fiscal year. That's certainly indicative of something.
Could this article be better, more worthy of its title? Sure. Is that necessary? I don't think it's mandatory. I certainly don't feel it warrants your initial criticisms, at least not the way you wrote them.
@Dubbya44 because the penny makes a better metaphor and is easier to use as a representative of value than the whole label.
im surprised rockstargames wasnt on this list. i guess take 2 is kinda filling in there place... and i hope WB fails miserably. thats what they get for canning this is vegas. great potenial down the drain...
of course these are unfair, even if u take microsofts "gaming" numbers, they make green on any title sold in marketplace, console sales, controllers and other peripherals, xbox live gold memberships.. and so on, the only "real" comparison would be to look at titles published via microsoft studios excluding hardware and everything else. same gose for sony wb and disney.
but these companys are built diferantly, ms makes SHIT loads on "giving away" MSw7 basic to developing contreys "but they give it away how do they make monies?" threw tax reductions and people paying for w7 courses for this "free" os :D
the graph shows 1 thing, how much money is floating about in the games industry nowadays, but dose NOT show "who the big players are" MS isnt going to take 20 billion from its windows sales and put it into the next xbox, its just not how buisnes works.
the one thing ALL these guys have in commen? someone (if not everyone) in the company is looking at the bank account and saying "what can we do to make those numbers bigger" and thats where companys like EA and Activision stomp out creativity and destroy small studios by makeing them release absalute turds of games to make money. look at most movie tie in there close to unplayable, but they make money because kids buy them to play as there fav heros! very few studios now have the luxery of sayign "hey is this game fun to play? are we doing the right thing here?" in the game industry theres no time for that! DEADLINES DEADLINES!
wall of text crits you for over 9k