Associated Press

Comparing Black Ops 2 sales to movie tickets is misleading, and the press should stop playing along

Comparing Black Ops 2 sales to movie tickets is misleading, and the press should stop playing along

You’re going to see stories about how much money Black Ops 2 took in during its first 15 days of availability, and Activision helpfully pointed out that its product was able to reach $1 billion in gross revenue two days faster than Avatar, which is currently the highest grossing film with $2.78 billion in worldwide ticket sales. The story Activision likely wants to sell is that Black Ops 2 is bigger, and more profitable, than the biggest blockbuster films.

In fact, video game press releases love to compare gross revenue against movies like Harry Potter, Star Wars, and other films that are considered to be culturally relevant. It’s great that a few games have reached such blockbuster status, but it’s important to realize what these numbers mean, and it may be time to stop repeating them every time a company sends out a press release.

Comparing video games to movies, when you look at revenue, is just about worthless. This is why.

What do we mean by “gross”

When a company says their product “grossed” $1 billion in 15 days, they’re saying that this is the amount of money they took in. We’re not looking at profits, which is a much more complex number that requires us to remove the development, marketing, and distribution costs from the revenue. It’s merely the amount of money consumers as a group paid for the product. My wife, who is an accountant, is going to roll her eyes when I say this, but for our purposes “gross” is a fairly simple term.

Black Ops 2 was sold in three editions, which in the United States ranged in price from $59.99 to $179.99. The price of movie tickets varies significantly as well, by features as well as geographically. A standard movie ticket in Ohio is going to cost much less than a 3D iMAX ticket in New York. Allow me to simplify and say the less expensive movie ticket is around $10, and the most expensive is around $30. But these are very rough estimates.

It takes two sales of the most expensive movie ticket to equal the least expensive version of Black Ops 2. This is why publishers love comparing films to games; there are so many ways to stack the numbers to make games look impressive. It would take 18 people purchasing the least expensive movie ticket to equal the revenue from one sale of the most expensive Black Ops 2 bundle. Gross revenue is a great way for video games to look good when compared to other forms of entertainment, because on average video games cost more.

They also offer more value than a film, so please don’t think I’m arguing that games are too expensive. I’m merely making a point that publishers love stacking games against less expensive forms of entertainment before presenting comparisons to the press as evidence that games are more popular. The truth is games are simply more expensive, so they have the advantage when it comes to gross revenue.

There are so many caveats, differences in pricing, and variables involved when you really drill down into the numbers to make the comparison worthless, but this is a wonderful metric for marketing purposes. The problem is that it doesn’t tell us anything of worth about either product. In fact, since movie tickets are sold at a much lower price than video games, especially collector’s editions, Activision is making the argument that more people went to see Avatar than played Black Ops 2, since they both grossed $1 billion within two days of each other.

But Black Ops 2 will still be more profitable, right?

That’s a great question, and I’m going to frustrate you by saying I don’t know, and it would take an enormous effort to find out. Games are sold at retail locations and through services such as Steam, and their biggest sales occur in the first two months or so of availability. After that things drop off very quickly, and it’s only been recently that you’ve been able to search for and purchase older games online. Games, historically, have had a very short tail when it comes to sales.

Movies, on the other hand, live damn near forever. They make money from ticket sales in the theaters, and then have another run on DVD and Blu-ray. Movies like Avatar and The Dark Knight Rises are basically released twice, once in theaters and once on media for the home, and each one can be very profitable if the movie is popular. Have you ever seen a movie that is still in theaters on an airplane? Money exchanged hands for that to happen. Movies make money when cable and network TV buy the rights to show them. Netflix streams movies. They’re released over and over again with “unrated” versions or boxed sets. Movies have long tails.

This sort of thing is beginning to happen with games as well, but it’s not nearly as widespread. Movies have a business model that allows companies to profit from the same product over and over, and the closest thing gaming has to that model are HD re-releases or box sets of certain series. Movies also usually have a higher marketing spend than games, but it takes a much smaller upfront cost to play a DVD than it does a current-generation video game, but piracy is an issue on both platforms, although Call of Duty has DLC to sell, but…. And… except…..

I could go on and on. The truth is that the business of movies and video games are so different than any comparison between the two is deeply flawed. Activision is also using the age-old trick of obfuscating actual sales data. They’re willing to say that it took a product that sells for many times the price of another less time to reach $1 billion in sales, but they won’t say how many copies they’ve sold, so making an apples to apples comparison is impossible. Avatar itself had an advantage in this area, as 3D tickets are more expensive, and the film enjoyed great success in 3D theaters.

We don’t know what we’re talking about

This lack of real data is what leads to articles like this, where the writer bends over backwards to try to find evidence to support their headline. Activision not releasing data is used to suggest sales are down? Vague analyst quotes are also on full display. A better headline would be “We have no idea if this game is selling as well as previous releases, but we have to say something because everyone is talking about this thing.” Most articles about the success or failures of specific games are written in a near-vacuum in terms of information. We rarely have enough facts to say anything with certainty.

Other outlets are pointing out that it took Black Ops 2 one less day to gross $1 billion than Modern Warfare 3, while neglecting to point out that the most expensive version of Modern Warfare 3 was only $99.99, compared to the $179.99 version of Black Ops 2.

The real story is that more expensive products bring in more money when sold to a dedicated fan base that’s not price sensitive. But again, that doesn’t make a good headline. None of this tells us if the game is more or less successful in terms of unit sales or even profits than previous games. Forbes may say “it’s worth noting” that the game’s grosses compare favorably to Avatar, but the writer fails to give a single good reason we should note that fact.

Using movie revenue as a yardstick for game sales is pure marketing, and the information it gives us is all but useless. The only value is that it looks good to investors and makes for an easy headline. It would be great if Activision released specific sales information, while breaking down how many of each edition sold, but that’s never going to happen; I contacted the company and they refused to disclose any information that isn’t in the press release. The trick is always to find a way to make the game look impressive, without sharing any actual data about sales or performance.

Black Ops 2 is a good game, and it’s selling extremely well. I don’t blame PR or marketing for framing the sales information in a way that’s beneficial to the brand. The problem is how eagerly the press uncritically repeats these talking points, as if they say anything about the health or decay of the Call of Duty series.