GRAND THEFT AUTO V Is Not Scaring Hollywood

     September 22, 2013

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Dozens of articles and blog posts have covered Grand Theft Auto V‘s $800 million in day one, worldwide retail sales. Virtually all of them have tried to make the point that this somehow proves that video games are now beating the crap out of Hollywood.

Hogwash. First order hogwash, at that.

First, let’s not quibble with the fact that GTA V has proven to be a financial success. Selling $800 million of anything in 24 hours is impressive. That the game will likely surpass $1 billion in a matter of days should prove definitively that video games are a major commercial force.  Hit the jump for more on why the video game industry isn’t bringing down Hollywood any time soon.

grand-theft-auto-5-box-artOnly, we already proved that over and over again with other high-profit game releases. Last year, when video games generated just under $58 billion in global revenue, we proved that. That didn’t even include mobile gaming.

That a video game made $800 million retail in a day is newsworthy, but it’s hardly earth shattering. It’s not telling us anything about video games as an industry (or art form) that we didn’t already know.

It most certainly is not telling us anything about the film industry.

Yet many members of the fourth estate just couldn’t help themselves. Perhaps they just needed something to compare it to, because they couldn’t quite wrap their heads around basic addition and division.

Slate.com, continuing its trend of lazy post-lets, published this doozy: “The game is expected to blow past the $1 billion threshold, making its sales figures the envy of other like-minded industries, namely Hollywood.”

Those 23 words represented 21% of the entire article. Take a moment to reflect on that.

Deadline Hollywood, which should know better, posted a piece not much longer than Slate’s and just as work-shy. It included the following: “The GTA V [sales] already sets it in front of Man of Steel, which with a worldwide haul of $663 million, is the [third] biggest movie of 2013 so far.”

Meanwhile, the Los Angeles Times wrote about Call of Duty: Black Ops II. That game was the previous holder of the single-day sales record, recording $500 million in its first 24 hours. “That game went on to reach $1 billion in sales in 15 days,” recounted the piece. “Faster, many observed, than the box office record-holder Avatar.”

Why are all of these bits of reporting so forehead-slap-inducing? Let’s start with the basic math.

grand-theft-auto-v-collectors-editionThe suggested retail price for GTA V is $60. You can find it for as cheap as $55, but you can also find a collector’s edition going for $150. Who knows what the average retail price paid was? Let’s generously go with the low end of $55.

At that price point, $800 million in sales adds up to about 14.5 million copies.

Now let’s look at Man of Steel, which Deadline Hollywood brought up. Let’s not even bother with its worldwide grosses. In just the United States alone, it has made $291 million, a mere 36% of GTA V’s single day sales

But the average ticket price in the United States is $8.38 according to the National Association of Theater Owners. So that measly $291 million totals out to just under 35 million tickets. Even with repeat buyers, that’s double GTA V’s audience, and that’s just the U.S.

If that same average ticket price was applied to worldwide box office, Man of Steel would have sold 79 million tickets. The Avengers, which bested the box office in 2012 grossed $1.5 billion around the world and $624 million here at home. That’s almost 77 million tickets in just America. Around the world, it was probably closer to 180 million.

grand-theft-auto-5-skydivingThe Los Angeles Times deserves some credit for at least mentioning that once GTA V surpasses $1 billion, however many hours from now, it will have sold “roughly 18 million copies of the game.”

It’s not as if one metric is inherently better than the other. But when somebody posts online, “GTA V made $800 million in a day! When was the last time you saw a movie do that?” you can guess they wouldn’t be gloating quite so much about the total number of people who ponied up to buy said game.

But did 14.5 million people see the biggest Hollywood blockbuster in just a day?

No, but that just makes a more damning case for video games, at least in comparison to movies.

Everybody lines up to buy GTA V on day one. They take it home and play it for days after that, but all the money is spent right then and there. Take a look at the drop off in sales between day one and day two for any major video game release ever.

Movies don’t work like that. You consume the movie more or less at the same time you buy your ticket, and the laws of physics and time cap just how many people can see a movie in a single day. There are only so many theaters, and only so many seats inside of them. There are only so many hours in a day – 24 of them, in fact – to fit those two-hour blockbusters.

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Add in the staggered release dates for movies around the world, and it’s virtually impossible for them to make that much money in one day.

grand-theft-auto-5-michaelMovies, however, have a more significant advantage over video games: the opportunity to keep milking audiences for revenue.

Once I’ve bought a video game, I own it. It’s on my shelf at home. I’m not likely to buy it again. There’s a reason developers have come up with increasingly creative ways to pry open your wallet with DLC and in-game transactions.

Movies, on the other hand, are re-watched over and over. Once they finish making their millions at the box office, they start making even more millions in home video release, on DVD, Blu-ray, or iTunes. After that, they can earn even more through broadcasting rights on television or in streaming deals with Netflix or Amazon.

The overhead for Hollywood’s secondary release windows is relatively small. They’re just repackaging the same movie. Compare that to video game DLC, especially for narrative titles. They’ve basically got to produce a whole new game, just in miniature. No wonder they usually just make a sequel.

Certainly, merchandise revenue is an option for video games, but it’s been a staple of Hollywood’s business for a few decades now. On the other hand, when was the last time you went to a theme park designed around a video game franchise?

grand-theft-auto-5-trevorOf course every Hollywood producer would love to spend $265 million making and marketing their movie – the reported budget for GTA V – to earn back $1 billion plus. So would every other person on the planet, regardless of what they were peddling. But GTA V’s success hasn’t got much to do with Hollywood’s fiscal outlook.

You don’t even need complicated analyses. Just do basic math and ask simple questions about the two industry’s business models. It’s simple, really.

So why did so many people not bother to do that?

The Los Angeles Times piece quoted Doug Creutz, a media analyst, saying “It felt like you were in a Quentin Tarantino film.” That single quote is more telling than all the media hype about video games leaving Hollywood enviously drooling on the side of the road.

Of course they would describe the video game by comparing it to a movie. They didn’t just compare the financial profits to movies. They compared the actual game experience itself.

The video game industry has come to define itself in relation to its cinematic cousins. Developers have lobbied to gain critical acceptance and mainstream recognition. Gamers have argued vociferously that their medium of choice is truly the superior one. Never mind the inanity of debating which art form is superior. These gamers have pointed out, and rightly so, that the cost-per-hour of entertainment in your average top-tier video game is way cheaper than the cost of a movie.

grand-theft-auto-5-franklin-jet-skiSlowly, these people have successfully shaken off the image of gaming as the purview of socially inept shut-ins.

I’m one of these people. Sorry, ghost of Roger Ebert, but games have shown themselves to be as artistically powerful as any other creative medium.

Yet while video games, and their fans, have gained increasing commercial relevance and cultural cache, they’ve never quite shaken the chip off their shoulder. You know the one. The indignant huffing and puffing that video games deserved all of this sooner, and maybe they deserve even more.

That is what’s underneath all of this shoddy reporting and ignorant commentary.

Why can’t gamers just be happy with incredible visuals, massive interactive worlds, and increasingly rich storytelling? They have to somehow beat the cool kids in Hollywood too?

So to every lazy reporter and gamer fanatic out there stoking this nonsense competition between movies and video games: This isn’t Revenge of the Nerds. Grow up already.

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