Call of Duty: No, it's not "review proof"
Other analysts chime in to counter Cowen and Company's assertion about the impact of reviews on game sales
Yesterday, Cowen and Company analyst Doug Creutz commented on the sales of Activision's Call of Duty: Ghosts, which has already sold-in $1 billion despite seeing less than stellar reviews from the media (an average rating in the mid-70s). Creutz asserted that because the Call of Duty brand has become so strong, fans are likely to pick up the newest editions yearly, regardless of reviews.
Analysts GamesIndustry International chatted with, however, beg to differ. "I know Doug, like him a lot, but he's wrong," said Wedbush Securities' Michael Pachter. "Reviews matter at the margin, and certainly can help or hurt sales by 10 percent. In Call of Duty's case, 10 percent is 2 million units. I'm not sure that a 76 average Metacritic score is enough to hurt sales by that much, but it doesn't help."
Indeed, there's a reason that Activision reported sell-in numbers and not sell-through to consumers. On the earnings call, executives mentioned that they expect top franchises like Call of Duty and Skylanders to follow a different sales curve, in part due to the console transition and in part due to the fact that Black Friday comes later. Regardless, for people who haven't yet purchased Ghosts, you have to wonder what impact the lower review scores will have on their decision to buy or not.
"Review Scores have always ranked in the top three among metrics that correlate the most positively to game sales"
"Strong franchises like Call of Duty: Ghosts tend to benefit from a halo effect (no pun intended), but no game is 'review proof.' A franchise's increasingly stronger past performance does not guarantee that sales records will continue to be broken. Reviews are important and affect sales performance -- titles with higher review scores typically sell more units. Positive pre-release coverage enhances pre-sale transactions as well as sales at and around launch. Research backs up all of these assumptions. Gamers and publishers are very aware of review scores and metacritic scores are used as indications of quality and potential popularity," noted independent analyst Billy Pidgeon.
He continued, "It's also very useful to consider consumer rankings when estimating expected sales performance. If scores have been in decline for two or three versions of a hit franchise, a drop in sales could be in effect or due. If scores are down across a genre, that genre could be cooling. With first-person shooters like CoD, Battlefield and Halo, multiplayer session frequency and popularity is a strong net effect and atypical declines in player population could precipitate title or genre sales declines. Pending PS4 and Xbox One launches are another big factor to consider here -- there could be some cooling in sales of high performance franchises. During this console transition, overall software sales should be strong, but I expect fewer record breaking sales by title in the near-term."
As Pidgeon notes, research shows that reviews certainly seem to have an impact, and EEDAR is one of the firms tracking that impact. Analyst Jesse Divnich told us, "Review Scores have always ranked in the top three among metrics that correlate the most positively to game sales. However, their influence fluctuates when additional variables are added."
"One trend we've observed is that the correlation between Review Scores and Unit Sales declines by 24 percent from games launched early in a launch cycle (the first third) compared to games launched late in a launch cycle (the last third). While a positive, and very relevant, relationship still exists, it is still a considerable but explainable decline."
He further explained, "During the early years of a console cycle, consumers are far more likely to try new intellectual properties or purchase games of existing brands they've never played before. But with this willingness to try something new, consumers will still mitigate the risk of uncertainty through research. Whether that is asking advice within one's social circle or reading articles online/print, there is some level of high correlation back to the quality of the game which is best captured with the aggregated review score."
To Creutz's point, Divnich did acknowledge that brand loyalty carries a lot of weight as well. "After one or even two strong releases, a brand loyalty bond is created which is stronger than the influence of outside factors such as review scores," he added. "Consumers are willing to overlook one bad review score of their favorite movie brand if they've had multiple positive experiences with previous iterations. One set of bad review scores is unlikely to break that loyalty bond. We are, after all, creatures of habit. One mediocre set of reviews is unlikely to impact sales from loyalists. It would definitely impact newcomers into the market, but at year eight into a cycle, those rarely exist."
Ultimately, "no brand is review score proof," Divnich remarked, "but some are more resistant than others."