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Paying for exclusivity - why it’s here to stay

According to recent reports, the first game from Respawn Entertainment, called TitanFall, will be an Xbox One exclusive. Other rumours suggest that Mirror's Edge 2 and Fallout 4 could also be single format games--or at the least Xbox and PC only. Not just for a week, a month, or a year... but permanently. It’s a clear sign that Microsoft is going all-in to dominate PS4 in the next-generation. Why? Because true third-party exclusives like these cost big, big money.

During the current generation true third-party exclusives have dwindled from ‘unusual’ to ‘rare as rocking horse droppings’. When you’re spending millions of dollars on a game, you need to recoup your costs. The best way to do this is to sell millions of copies at $50 / £40 a pop. That’ll do nicely, thanks. And the best way to sell millions is to put your game onto as many devices as possible, maximising your audience. Sure, you can make cash by releasing DLC and using in-game advertising, but nothing beats millions of cold, hard, physical sales. This is basic economics, so it should come as no surprise that true, single format exclusives, are incredibly unusual. Why limit yourself to Xbox 360 when there are 80 million PS3 owners out there too?

At E3 2007, when Microsoft announced via the medium of tattooed Scouser, that GTA IV's Episodes From Liberty City would both be exclusive to Xbox 360 for over a year eyebrows were raised. Microsoft had paid Rockstar $50 million (that’s $25 million per episode) to keep Lost and Damned and Ballad Of Gay Tony away from PlayStation owners. At the time this felt like cheating. How dare Microsoft throw money around like that? Not very sporting of them. Now, six years later, the practice of paying for exclusivity--no matter how petty--has become the norm. In fact, it’s fast becoming a requirement. Games industry economics have made it so.

Securing peripheral content like DLC, services such as LoveFilm, and pre-release extras is a practice that has really taken off during this generation. Pretty much everything is up for sale, as console manufacturers and even retailers try to get one up on each other without paying silly money. Want exclusive escort missions? The PS3 version of Assassin's Creed Brotherhood has you covered. Want exclusive avatar items? Better get Final Fantasy XIII on Xbox, then. Want 17% bouncier balls? Better buy FIFA 14 on PS3. Actually, that last one’s a lie. For now.

However, fully exclusive games remain very expensive, which is what makes the TitanFall news so significant. Lucrative first-party arrangements mean that titles like Gears of War--created by independent third-party developer Epic--still exist, but with fewer large studios remaining independent, these deals are getting rarer.

It would be naive to assume that Microsoft’s GTA arrangement was the first ever ‘paid exclusive’, but it was the deal that changed things. Microsoft was open about it. The company needed a system seller for Xbox 360, and they bought it. Given the news about TitanFall, and the rumours about Mirror’s Edge 2 / Fallout 4, it looks like they’re doing it again. In fact, they’re taking it to the next level for the next generation. Back in 2007 the bean-counters at Microsoft decided that $50 million in both exclusive sales and damage to the opposition was worth it. Let’s not forget, the GTA Episodes deal wasn’t just about money: it was about reputation and competition.

The Xbox owner has never been shy about using financial clout to better its position in the games market. The signs were there when it bought Rare in 2002, essentially removing Nintendo’s most talented studio from under them. No one would argue that Rare produced $375 million worth of games during the Xbox generation, but it probably kept that amount away from the competition. It’s only now, working on the Kinect Sports series, that Rare has started to pay back its asking price.

By throwing money around, Microsoft has gone from gaming unknown to market leader in just over a decade. Why? Microsoft has not only paid for great exclusives, but has also done deals to weaken its competition or level the playing field. Final Fantasy? That’s on Xbox now. Metal Gear Solid? Yeah, that’s going Xbox too. Curiously, Metal Gear Solid 4 remains one of the few, high-profile third-party exclusives of the current generation, largely thanks to the storage capacity of Blu-ray (something quickly negated by higher capacity Xbox hard drives to avoid this becoming a trend). The general tendency, though, is a decline in true exclusives.

Sony was slow to react and lost the most ground. Whereas the PlayStation owner may have been in a position to respond with similar blockbuster exclusives back in 2007, it may not have the financial clout to go toe-to-toe with Microsoft now thanks to a significant shares and sales decline across the company, and the deficit left by developing and marketing the unpopular PS Vita. We’ve seen PS3 get timed exclusives for DLC and some smaller downloadable games, but nothing on the scale of Microsoft’s GTA IV’s episodes, Call of Duty DLC, or even Skyrim Dawnguard. Will this prove costly in the next-generation? It just might...

Meanwhile Nintendo chose to compete for a slightly different audience when it released the Wii, largely negating the need to compete for exclusive content. The Japanese giant has always relied heavily on first-party games, but Wii’s focus on motion control and unique system architecture meant that games were either tailored for Wii (eg. Call of Duty Modern Warfare) or never released (eg. Battlefield 3).

However, with the more ‘traditional game’ focus of Wii U, even Ninty is being forced to look around for exclusive content--we’ve seen the first signs of that with Bayonetta 2, ZombiU and the recent deal with Sega to keep the Sonic series exclusive for the next three games. However, Nintendo president Satoru Iwata recently commented: “I don't think it would be an appropriate course of action to get into a battle with a company like Microsoft over the cost or the expense of trying to go head to head in a situation to try to obtain exclusive rights,” so don’t expect any significant exclusives on Wii U beyond added functionality and first-party games. How will that impact sales of the console? It’s unlikely to be positive.

With the next-generation it seems exclusivity will be the key battle-ground between Sony and Microsoft. First looks at both PS4 and Xbox One show consoles that are largely comparable in power, functionality and architecture. Multi-format games will be largely indistinguishable, so the question both companies are asking is: what will make people buy our machine? The obvious answer is ‘stuff that other people don’t have’. Exclusives. Exclusives that will cost console makers plenty more money in the coming years. In fact, we could see a scenario where the next-gen will be ‘won’ by the console manufacturer not with the best original games, but with the biggest wallet.

30 comments

  • lancelot110 - June 15, 2013 7:28 a.m.

    I stated this in a reply but I'll say it again in a standard comment. If this about Fallout 4 is true and it's doesn't come to PS4 and that's you're system preference, and then you decide that's the turning point for you buying a ONE ($500), then I'd recommend buying a $500 PC instead. If you really really want to play Fallout, PC is by far the best platform for it because of the Nexus sites. Just google Skyrim Nexus and look at the top mods for a glimpse into what makes Bethesda developed games still fun and interesting long after the DLC dries up. Also I just want to say that I'm not trying to advertise for PC or some shit and that PC isn't for everybody, but for Fallout or Skyrim it is far and wide the way to play, and it also has super awesome other stuff too.
  • sandplasma - June 9, 2013 12:37 p.m.

    You know you guys can just build a PC right? I mean, most of these exclusives will come to PC as well as one of the new consoles. Who doesn't want higher resolutions with 8x aa and 16x af? Besides, everyone knows the best controls for any FPS is mouse and keyboard. A very good console FPS player will still lose against a mediocre pc fps player. nuf said.
  • sandplasma - June 9, 2013 12:34 p.m.

    MS can pay me $$ for the exclusivity of deez nuts.
  • Fox_Mulder - June 8, 2013 11 a.m.

    I wouldn't mind Fallout 4 being One exclusive, seeing as how Fallout 3 turned out on PS3.
  • westonb - June 6, 2013 2:10 p.m.

    plenty others to play this will be off my radar.
  • Mr.YumYums - June 6, 2013 1:43 p.m.

    In an irrelevant point: I've noticed PC elitist are not as opinionated as they used to be or choose not to voice their opinions as much as they used to do in this site in previous years. Have they gone somewhere else, or is there still a small group in here? I wish these discussions would go beyond consoles, and dwell a little in the PC realm as well.
  • sandplasma - June 9, 2013 12:35 p.m.

    PC Gamer has less console monkeys but weez still heah bro
  • ShadowOps117 - June 6, 2013 11:56 a.m.

    MICROSOFT CAN'T DOMINATE BECAUSE THEY DON'T SELL A GAME CONSOLE
  • brickman409 - June 6, 2013 8:26 p.m.

    is that supposed to be a joke on how the Xbox one is heavily focused on multimedia? If so I think that's kinda stupid, Sony has made PlayStation a multimedia device since the beginning by being the first to put a CD player function in the PS1 then DVD on the PS2, and then Blu-Ray, Netflix, etc. on the PS3. Adding more media doesn't make it any less of a console.
  • CitizenWolfie - June 6, 2013 8:40 a.m.

    I'm not too bothered about Respawn's thing as it looks likely that it'll be yet another sci-fi FPS. But if Fallout 4 was console exclusive, then THAT is the thing that'll make me splash out for an Xbox One. I'm probably not alone in this; I think a lot of people would be swayed to buy a console predominantly due to a big exclusive game in a series they love. I wasn't going to bother with a Wii U in all honesty until Wind Waker HD and a brand new Zelda were announced, and now I'm glad I bought one. It's still going to be a PS4 launch buy for me, and I wasn't sure about XB1. But Fallout 4 as a permanent exclusive would definitely make me change my mind. Unless I built a gaming PC of course.
  • lancelot110 - June 15, 2013 7:18 a.m.

    Buy a $500 PC over a ONE if that's you're reason for buying it. Bethesda developed games have the biggest difference in quality between console and PC in the industry. Not necessarily because they try for a better experience on PC, but because of the Nexus sites for modding. Seriously if you're thinking about dropping that money on a ONE solely for that game then get a PC instead, I'd recommend getting it anyways. If you don't think mods would make that big a difference to the game I ask that you go check out Skyrim Nexus or Fallout 3 Nexus, it'll blow your mind.
  • CitizenWolfie - June 16, 2013 2:42 a.m.

    I'm thinking about building a gaming PC in the next 12 months so I probably would go down the PC route if Fallout 4 ended up being exclusive to Microsoft. I can't see it happening though - Bethesda surely know that more availability leads to more sales.
  • taokaka - June 6, 2013 8:30 a.m.

    Microsoft doesn't need to pay for timed exclusivity to mirror's edge 2 or fallout 4, they already have the best exclusives for the Xbone already, TV and sports.
  • Mr.YumYums - June 6, 2013 1:23 p.m.

    Lol'd
  • mothbanquet - June 8, 2013 1:48 a.m.

    Of course! I hope Halo goes to WiiU so long as the exclusive Lubed Granny Snooker League coverage stays where it belongs!
  • windjunky - June 6, 2013 8:03 a.m.

    I don't think I could resist it.. I'd probably end up buying that Microsoft shite.. I'm so weak.
  • BladedFalcon - June 6, 2013 7:42 a.m.

    I'm not exactly sure of what's the point of this article? I mean, what? that companies will pay money to get ahead the competition? hasn't this been the case since the birth of civilization and economy? :P Not to mention... If nothing else, this article reinforces the fact that third party exclusivity is becoming less and less relevant. I mean, all mentioned here, including the GTA exclusive content... Actually didn't end up mattering because both Lost and Damned and Ballad of gay Tony made their way into the PS3 not that long after anyway. At worst, those kinds of deals only means that the other party has to wait an extra months to get the content. But no one nowadays is willing to dish out the amount of money necessary to secure a permanent exclusive, not even microsoft. Again, how many non-first party exclusives did MS end up retaining this generation? I can't say it with 100% certainty, but I'm confident that the number is 0.
  • BladedFalcon - June 6, 2013 7:58 a.m.

    Nope, gotta correct myself. There ARE a few third party games that remained exclusive to the 360, like Splinter Cell: Conviction, Dead Rising, Lost Planet, and the first condemned. Although those last three are probably mostly because they got released very close to the 360's launch, and the publisher didn't want to bother porting it two years later XD
  • Sinsational - June 6, 2013 8:03 a.m.

    Not to mention The Lost Odyssey and Blue Dragon (the only two RPGs besides Mass Effect that made me want a 360). But I have to agree with your initial statement. I don't get the point either. To be honest, it sounds like a Microsoft fanboy laying down the logic of why "PS4 will have better exclusives, but Microsoft will win in the end... WITH THEIR WALLETS!!" than trying to really report any kind of news.
  • shadeslayer77 - June 12, 2013 10:37 p.m.

    Lost Planet was actually ported to PS3 about a year later, so you can strike that one off the list.

Showing 1-20 of 30 comments

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