Video Games Are the New Blockbusters

Video games now have $200 million budgets and sell billions

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Disney (DIS) spent $300 million on Pirates of the Caribbean: At World’s End, the costliest movie ever produced. For that investment, the studio collected nearly $150 million at the box office on opening weekend, en route to a $963 million worldwide gross.

Sounds impressive, but believe it or not, video games often do better.

The budget for Grand Theft Auto V hit $265 million, but when it was released in September, the game quickly justified Take Two Interactive’s (TTWO) investment with an $800 million launch day. After just three days on shelves, sales passed the $1 billion mark, faster than any video game — or movie — in history.

Video games are the new blockbusters.

The Glitz and Glamour of Gaming

Movies might have a red carpet premiere, but video games are getting into the release hype business too. Long, snaking lineups outside of stores have become common at retailers like GameStop (GME) and Best Buy (BBY), which open after regular hours specifically to release highly anticipated games. Activision’s (ATVICall of Duty: Ghosts launch on Nov. 5 was one such blockbuster. Some 15,000 stores worldwide stocked more than $1 billion in copies of the game, opening their doors at midnight to meet demand.

Hollywood actors are increasingly in on the action, lending their voices to video games. Liam Neeson, Emma Stone, Christopher Walken, Martin Sheen — those A-listers are among names you can find on a game console. Mark Hamill may have risen to fame as Luke Skywalker in the original Star Wars movies, but his voice acting — particularly his 19-year role as The Joker in various shows and games ending with 2011′s Batman: Arkham City game — has been the core of his career ever since.

Consumers are willing to fork over $60 for a video game because they can get tens and even hundreds of hours of entertainment out of it. The single-player mission of a typical game might last 10 to 20 hours, and often much longer when you include side quests. Add in multiplayer capability — especially via online services like Microsoft’s (MSFT) Xbox Live — and that one $60 game can provides months of play, plus the opportunity to socialize virtually.

You can’t say the same about your $10 movie ticket or $20 DVD.

The next generation of video game consoles will take realism, immersion and interactivity to new levels. Next-gen consoles have roughly eight times the processing power of the current Xbox 360 and PS3. That means smarter artificial intelligence, more lifelike animation and the ability to render detail like lighting effects in an ultra-realistic fashion. Advanced cloud integration and online capabilities mean the potential for huge worlds to explore, populated by other players and advanced AI characters.

Meanwhile, Microsoft’s new Kinect motion sensor includes infrared capability, and its camera is powerful enough to track a user’s heartbeat.


Article printed from InvestorPlace Media, http://investorplace.com/2013/11/big-investment-big-gross-video-games-new-blockbusters/.

©2014 InvestorPlace Media, LLC

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