The lights are on
After THQ reported today that it has sold more than one million copies of Homefront to consumers and shipped over 2.4 million units worldwide, EEDAR vice president of capital research Jesse Divnich issued a cautionary message to the investors who hastily ditched their THQ stocks two weeks ago.
For those of you who haven't been following the drama, here's a quick recap. On the same day THQ publicly admitted that it needed to move two million copies of Homefront to break even, traders reacted negatively when the game only mustered a 71 Metacritic rating after majority of the reviews went live (you can read ours here). As a result, THQ's stock dropped 20 percent in one day.
Now that THQ is reporting the game's strong early sales numbers, Divnich took the opportunity to scold shareholders and analysts for being too reliant on using a single metric to guide their investment decisions.
"It is easy to become too reliant on a single metric, which may erroneously drive forecasts and/or investment decisions," he said. "The reality is that numerous factors exist that can impact the overall sales performance for a title.
"Review scores are simply a weight, not an absolute. The impact of review scores on video game title sales are determined by the potential size of the market, direct and retail promotional spend, competition at launch, overall level of interest in the title before release and more. This helps to explain why titles such as Demon’s Souls can achieve 90+ reviews, but produce lower revenues, and why a game such as Medal of Honor from Electronic Arts can get an aggregated review score in the 70’s and surpass nearly 5 million units in sales worldwide."
Divnich also said that one of the flaws of the review score system in general is that it doesn't account for quality gaps between single-player and multiplayer modes in shooters.
"If anything Homefront is an example of a potential flaw in the video game review system and its ability to clearly represent in a single score the differences that can exist between online and offline gaming aspects within a single title," he said. "Fortunately, reviewers did an excellent job messaging within their reviews the disparate level of quality, something discerning consumers likely took into consideration and something investors clearly did not. Again, focused too narrowly on just 'the score.'"
In closing, Divnich said he expects Homefront to surpass three million units worldwide.
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TL;DR version= Meh singleplayer, different multiplayer, good timing.
who wants to bet the stock price'll explode when saints row three hits?
I can't blame he for calling out the investors when a game getts hyped liked homefront it will do well. Besides after playing homefront i recomend it everyone who asks me about it, the multiplayer is sweet and could teach a thing or two to battiflied (the battle commander being the main thing). I don't listen to reviews for games when i here only good things about them from friends.
Wow, I'm still working on picking this up, but there's several other stocks having the same thing done to them. The investors really need to smarten up...
Just another show of the current financial climate. If it's not perfect, people instantly believe it's not selling.
He's only partially right. There's a number of factors here that are at issue:
1. Review embargoes. If reviewers were allowed to publish reviews earlier instead of being forced to sit on them we wouldn't be deluged with an avalanche of reviews - good OR bad - on release date. I understand why publishers and/or developers want review embargoes - it guarantees preorders and sales. But it's terrible for consumers and for investors and isn't the kind of behavior we should be promoting.
2. THQ's CFO was making several forward-looking statements about the state of the industry and how many copies a game like Homefront would need to sell. These statements were geared towards investors, not average gamers. The reviews were held up to those statements. When you come out and say you need to sell X millions of copies and then the game is nearly universally panned, that makes investors nervous and generally drives selling off stock, regardless of industry.
3. Review system incompatibilities are problematic across the board. A 7/10 is widely considered average, but that same average is 2.5 on a 5 point scale. In 10 and 100 point scales, 0 to 60 has no meaning - anything below 60 is considered "really bad". This is why Metacritic, as an aggregate site, isn't very reliable.
All of these factors, combined, is why there was a knee-jerk reaction and the stock price dropped. They didn't JUST look at reviews and sell: They looked at an absolute avalanche of negative press coming out all at once, which are partly skewed due to rating incompatibilities, combined with the company's CFO's own statements and decided it was too risky to bet on the company.
This man is absolutely right about everything. Game reviewers should give two separate scores to games for their offline and online experiences.
....I disagree because the consumer is buying the offline and online package (unless you buy EA's games used). Regardless of how you feel, The publisher did spend money on all components of the game, and feels entitled to see you the entire. As such, it seems pointless to review a game seperately.
I've been saying the same thing for a while... Alot of people ONLY play online-multiplayer or ONLY play single. So, imo, there should be completely seperate reviews for online-multi and single.
The financial markets are volatile and seemingly insane because people are too scared these days. I completely agree with Jesse on this. You can't just look at one indicator and assume the worst. When the fuel gauge on my car is near empty I don't dump the car...there are several other gauges that tell me the car is fine. You can't just rely on one piece of data...