Friday, April 12, 2013

Comcast's Syfy Network And Trion Worlds Potentially Changing Video Game Industry With Defiance

On Monday, Syfy Network will premiere its new show "Defiance". The unique part about this new show from Comcast (CMCSA) owned Syfy is its accompanying video game. This isn't a video game based on a tv show, or a tv show based on a video game. The two are connected and will give players and viewers the most unique experience.

The video game from Trion Worlds is the first to connect to a television show at the same time. Players will have new missions after every episode airs and will have an impact on the show's storyline based on gameplay. By connecting to the television show, Trion can release downloadable content (DLCs) and gain additional revenue.

The show is set in the future in the town of Defiance, similar to St. Louis. "Defiance" is complete with aliens, post war survival, and human struggles. The show will provide a lift to the network that has struggled to showcase original content since "Battlestar Galactica". The channel now counts on reality shows to gain viewers.

There are 13 episodes scheduled to air between Monday and July 8th. A huge budget of over $40 million was spent on the first season. The show was paid for by Comcast and Trion Worlds. Syfy is hoping for a renewal if ratings are strong. Trion has already begun working on a follow up game based on a second season.

The potential for Comcast and its Syfy network is huge. Back in 2009, Syfy charged $0.21 per subscriber to large cable companies. With a declining fan base and viewers, the network has even turned to WWE (WWE) to showcase "Smackdown" on its network. "WWE Smackdown" is shown on Fridays and most recently had 2.52 million viewers.

"Defiance" has also already seen several international pickups, providing additional revenue for Comcast. The show will also air in Brazil, Canada, France, United Kingdom, Ireland, Germany, Spain, Portugal, and Australia.

The Defiance video game was released this month and has seen strong sales for a new brand. According to, the game has sold 170,000 copies on XBOX360, 70,000 copies on Playstation 3, and 50,000 copies for the PC. Sales remain strong and the game is currently on Amazon's top 100 selling video game list. The game will likely see strong sales this week as the show airs.

The impact on the video game industry could be huge. Two companies recently released games based on AMC's (AMCX) "The Walking Dead". "The Walking Dead", which is the most popular show on television, saw releases from Telltale Games and Activision (ATVI). The Telltale version, which follows an episodic storyline has sold 400,000 copies on the XBOX360 and 250,000 copies on the Playstation 3. The Activision version titled "Survival Instinct" has sold 210,000 copies on the XBOX360 and 140,000 on the Playstation 3.

Imagine that if "Defiance" is successful, television shows following video games will start popping up. Old franchises like Mortal Kombat, Street Fighter, and Resident Evil could all see a boost in game sales with a new version surrounding a television show. A successful "Defiance" could also lead to a buyout of Trion Worlds by a larger company. The video game company is partially owned by Comcast, Time Warner (TWX), and the Ontario Teachers' Pension Plan.
As "Defiance" airs on Syfy Monday, it won't be just science fiction fans watching, but an entire video game industry. This new move by Trion Worlds and Syfy could be just the boost the declining video game market needs.

The potential winners to watch in this video game/television partnership are:
  • Comcast-company owns the Syfy channel and will be able to charge other cable networks more in subscriber costs thanks to higher viewer numbers.
  • Time Waner-owns Mortal Kombat, Batman Arkham brand which could also translate well from a television series and game concept.
  • Activision Blizzard-has large library of games and cold make a play into this avenue. Could also utilize strong bases with its MMORPG games and turn them into televisions shows.
The biggest winners in this new format could be the video game consoles. Consider investing in Sony (SNE) or Microsoft (MSFT). Both have new consoles hitting the market soon, but could see a lift in current games with a television following. A new audience of video game players could emerge from shows like "Defiance". Shows like "American Idol" and "Dancing with the Stars" don't just do well for the talent. It is the human interaction where people have an attachment.

*Disclosure-Chris is long Activision Blizzard (ATVI)