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The Halo Effect

November 10, 2004

A Seattle P-I story reports that first-day sales for the new Halo 2 Xbox video game will reach $100 million, according to Peter Moore, a corporate VP in Microsoft’s home-and-entertainment division, which developed the title. Moore also said that one retailer reported selling more than 200,000 copies at $50 a pop.
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The shooter turns his sights on Hollywood…
With this release and the October 26 release of Grand Theft Auto: San Andreas, the video game industry has been flexing some serious muscle lately. Big game companies don’t like to reveal their development costs, but as a rule of thumb, blockbuster titles can cost up to $20 million to create. It may sound like a lot, but compared to the absurd economics of Hollywood – the entertainment industry that is most often cited as a video game competitor – these development costs are modest. Game companies are increasing marketing budgets significantly, but we think this only helps their competitive position. Selling 200K units in one day beats the hell out of trying to fill a movie theater.
If you want to look for potential winners, consider companies like Disney that can leverage both movie and video game properties – the MBAs call it “synergy.” But we also favor pure-plays like Electronic Arts, the gold standard of the video game industry.
Read: Halo 2 Debut May Hit $100 Million – [Seattle P-I]

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