Labels retreat from new IP

The world’s biggest publishers have been forced into reducing investment in new IP – as recession-hit consumers and a crowded market strong-arm them into relying on established brands.

THQ and EA have both blamed ‘unfocused’ product slates for contributing to their disappointing Q3 results – and pledged to concentrate more on well-known franchises in FY10.

Sega has also told MCV that it plans to cut back on creating fresh property, as the economic slowdown punishes return on investment in new IP.

We concur with both EA and THQ that new IP is an absolute challenge to make work in the current marketplace,” Sega Europe president Mike Hayes told MCV.

Sega will be joining these companies and others in reducing our new IP ambitions over the next two to three years. Brand extensions and further improved quality on sequels is the priority.”

Excluding its Partners business, EA expects to publish 125 SKUs in FY10, compared with 145 in FY09.

CEO John Riccitiello said that the firm will increase the hurdle rate for new titles”, admitting that generally games with a ‘two’ on them sell better and with a lower R&D budget [than new IP]”. He said of Q3: We depended on new IP in a year consumers were even more cautious with their dollars.”

However, the firm won’t be backing away from new IP completely – with core titles such as Dante’s Inferno, BattleForge and Saboteur on the horizon, as well as a handful of new EA Sports Active games.

THQ CEO Brian Farrell offered a similar message. He said: We are putting fewer core gamer titles into full production, concentrating our investments in our biggest franchise opportunities.”

DFC Intelligence analyst David Cole told MCV: Without an established fanbase it is extremely hard to justify a massive development budget for a new IP.”