Entries Tagged 'The platform holders' ↓

Firstly the iPod and iPhone. Apple can see a lot of money here and are working to create a major gaming platform. Earlier iPods lacked the horsepower but the iPhone and iPod Touch correct that fault. Because of the iTunes distribution system this platform could be ramped up very quickly indeed to an already well established user base. This could well be the biggest growth area in gaming this year.

Nokia meanwhile continue to mess up their nGage platform. In 2003 Nokia had the potential to create the most popular gaming platform on earth and instead they made just about every mistake that was available to them. It was embarrassing. They are trying yet another tactic this year. It could work for them, but the evidence of history is not on their side. A pity because we are headed towards a universal pocket device and Nintendo Nokia could have owned the market. Yet they squandered first mover advantage.

The PC has matured into an interesting gaming platform. For boxed games at retail it has been in a downwards slide for some years. But for MMOs, casual gaming and for Steam it has grown massively. Also the effective banning of online gambling in the USA has forced companies to put their resources into online for money skill games. This will grow a lot during 2008. The companies with a gambling background will make a lot of money from this, showing up the lack of vision of traditional game publishers.

MMOs have grown under the effect of World of Warcraft which brought strong social networking to the genre. Other MMOs have learned this lesson and we will see the results of this during the year. Also non subscription business models will increase. Habbo Hotel is a powerful role model. As for genre we must be reaching the time when something other than swords and sorcery will work. It is overdue.

Steam is hugely important to the whole future of gaming. It must make Valve worth billions of dollars. The addition of social networking at the end of last year was a genius masterstroke. For serious hardcore gaming Steam is rapidly becoming the only show in town. It is a great example of what a team of very clever people can achieve.

Another group of gaming platforms that will show very strong growth this year are the social networking sites. MySpace and Facebook are now both open to third party developers. Their huge user base guarantees that games have a great potential. It is a pity that so many developers can see no further than data mining. Combining online for money skill games with social networking userbases could be a license to print a vast amount of money.

Mobile phone gaming will continue to be a niche due to the fragmentation of platforms and carriers. However the potential is massive. They are ubiquitous. The current complex business model could well die out as much stronger business models run by the platform manufacturers come along. Apple and Nokia are the obvious ones, but look out for Sony, Microsoft and Nintendo entering this space.

There are loads of other gaming platforms from in flight seat back entertainment to SCUBA diving computers. They all sit in their respective niches and make business for those that service them.

Happy new year. And back to work! As is traditional at this time of year I will try and give some pointers to what I think may happen over the next twelve months. Firstly let’s look at the current situation. According to VG Chartz there are now 8.71 million Sony PS3s sold to end users, whilst the Microsoft Xbox 360 has sold nearly twice as many at 16.02 million, but has been overtaken by the Nintendo Wii with 19.45 million. All three of these are dwarfed by ownership of the Nintendo DS which has 64.92million happy owners, far more than the three previous machines combined. The PSP continues to sell with 29.79 million but most of these are used as media players, not as gaming machines.

Sony PS3 sales were given a big kick by the price reduction, despite the lack of AAA exclusives on the machine. This year sees massive system sellers such as Metal Gear Solid 4 and LittleBigPlanet which at long last will give the PS3 credibility and make it a worthwhile purchase. The delayed Playstation Home has the potential to be huge. Unlike Xbox Live this is geared up very much to be an online social networking community and we all know how big they can become. Sony should recover their position a lot during 2008, they need to with the amount of money this is costing them.

Microsoft have already pulled off what may well be the biggest marketing coup of 2008. Grand Theft Auto IV on the 360 is going to have a lot of exclusive downloadable content that the PS3 won’t have. Considering that this will certainly be the biggest game of the year this exclusive content will swing a lot of buying decisions over to 360. Other than this Microsoft have more games coming out for the 360 than Sony has for the PS3 and a lot of room to use the price mechanism to maintain their market position.

The Nintendo Wii could very well be a bubble that is already bursting. Or it could build on the existing solid base to become an entertainment phenomenon. Wii Fit will keep the impetus going through Q1&2 whilst Animal Crossing will be massive in Q4. These alone will probably be insufficient so Nintendo need some AAA third party titles. Nintendo like to upgrade their hardware so we could see an enhanced Wii with, for instance, a hard drive. Also a more powerful HD console must be on the way.

The DS for Nintendo threatens to become a ubiquitous device like the Walkman was for Sony. This year should see another upgrade with bigger screens. Nintendo are perfectly placed to make a telephone version (with a partner like, say, NEC?) which could deal a huge blow to both Nokia and Apple.

What is certain is that this generation is still in it’s infancy. There are still over 130 million owners of last generation consoles who have yet to upgrade (mainly PS2 owners waiting to see if the PS3 will be worth buying). If you add in the constant growth of the market and the popularising effect of the Wii then there could easily be a market for a further 200 million home consoles in this generation. Four and a half times more than have been sold to date.

A big factor this generation will be multiple machine ownership. To a far higher level than in previous generations. This is because there are so many must have games that are platform exclusives. This means that the real war between Microsoft and Sony will increasingly be fought between Xbox Live and Playstation Home. So expect both companies to put a lot of effort into these online platforms.

A big tactic this generation has been to stratify each console into a product range and to bundle games with consoles to give higher perceived value (something that was overdone in the days of the Commodore Amiga and Atari ST). Expect this to be continued this year with top end versions of the 360 and PS3 featuring large hard drives and enticing bundles of AAA games.

That is a very quick overview. It is impossibly to say who will do best out of the three. This generation of consoles is spectacularly good at making analyst’s predictions look stupid. One major change that has emerged is that Microsoft are now a player at the top table in the console industry. Just watching how they use this new found position will be fascinating.

These are dark days for Sony and Playstation. Previous undisputed winner of the console wars through two generations they are now trailing third in the current generation with developers and publishers reallocating their resources to try and make better profits out of  Microsoft and Nintendo games. Unable to compete on games Sony have been forced to take a billion dollars of loss in one year in order to subsidise lower retail prices for the PS3.

So here is a suggestion to improve Sony’s fortunes.

One problem lies with Sony’s corporate structure which gives Sony Computer Entertainment (SCE) a lot of autonomy. This results in them losing advantages of synergy that would come if they were better organisationally integrated. So it might be a good idea to split SCE into two. A hardware arm and a software arm.

The hardware arm of Playstation should be under the same overall top management as digital cameras and mobile phones. They have the same strategic generation wars and they have the same technology density. And increasingly they will be the same device. If these three areas of Sony were under unified control we would be far more likely to see an iPhone and DS killer. Together they have the resources to make a device that everyone on the planet would lust after. Just as they did with the original Walkman.

The software arm of Playstation should be under the same overall top management as television and film. Then they would unite all their corporate knowledge of managing and exploiting IP. The synergies and the resultant commercial potential are massive. Sony Pictures Entertainment is a $6.6 billion turnover organisation which includes Columbia Pictures, TriStar Pictures and 20% of MGM (which in turn includes United Artists). With this plan they would be able to maximise income out of every property from cinema, television and gaming. Something they are nowhere near doing at the moment.

Sir Howard Stringer is a lot more experienced than I am and is in possession of a lot more facts. So he would probably laugh at this. But still it seems that Sony does not make the best of it’s resources and that this reorganisation would go some way towards addressing this.

Codemasters released Colin McRae rally on the original playstation in 1998. It was a major hit, breathing new life into the genre. And benefiting Sony enormously with many millions of pounds in license fees and a great impetus to the value of the playstation brand. So how did Sony reward us for this? They went into direct competition! Releasing their World Rally Championship game. They could have chosen any other genre to invest in, but they chose instead to tread on the toes of a major customer.

So here are a few things that are wrong with the current platform holder publishing model:

• You can spend millions of pounds/dollars developing a game and they can refuse to publish it. You have no redress. I have seen this with a Codemasters title.
• They stylistically restrict games. I remember when one platform holder told us that they would no longer publish 2D games.
• They limit the content of games, holding back the whole industry. You are not allowed to do in games things that are commonplace in books and films. This is seriously bad.
• When they develop games themselves they don’t have to pay a license fee, giving them a huge and unfair competitive advantage.
• They have access to manufacturer’s technical information and tools, once again giving them an advantage.
• We should be in the transition to online distribution, which affords game publishers and developers huge advantages. PC gaming already is with services like Steam. Console gaming is sticking to the outdated plastic and cardboard model. Holding back the whole industry in yet another way.

All the above harm the game industry, preventing it realising it’s potential. However at the same time the platform holders benefit the industry with the billions they spend developing and launching new consoles, which require the current publishing model if they are to be paid for. So there is a balance of good against the evil that they do.

You can use the comments to say where you think the balance lies, or to add to the debate in any way you want.

You have read on here before that Sony try to conquer the world by creating media standards. It is a fixation for them. The idea is that like razors and razorblades they make far more profit on the media than on the player. Most famously they lost the video war to VHS when their own Betamax was a better standard.

But Betamax is only one of a litany of failures. Does anyone remember Mini-Disk from 1991? Sony Dynamic Digital Sound from 1993? The HiFD from 1998? MusicClip from 1999? Then there are the failed standards that they are still trying to foist on us like Memory Stick, Connect, eBook and the UMD drive on the PSP. Their last successful standard was the 3.5 inch diskette in 1983. Against this history you must wonder about the future of Blu-Ray.

And now another one of Sony’s standards has bitten the dust. When Sony re-engineered the PS3 to make it cheaper to manufacture (the 40Gb model) they took a lot out. Most famously backwards compatibility to PS2. It also lost it’s memory card reader and two USB ports. But quietly and almost un-noticed it lost the ability to play Super Audio CDs (SACD), Sony’s failed attempt at super HiFi audio disks. Not that anyone is going to notice.

So what do you think of the Sony business model of trying to create media standards?

Around a year ago the analysts were confidently predicting that the Wii would come a distant third in this generation. If you can count it as this generation as it really is GameCube V1.5 . So it is refreshing to see that the Nintendo ethos of entertaining people has proved so many people wrong. Including Nintendo themselves, which has led to them making two mistakes.

Their first mistake was to not make enough Wiis. At retail they are like hen’s teeth everywhere worldwide. And there are still many territories where it has not been released. I don’t know but I would guess that production is now between one and two million units a month and ramping up fast. They could easily sell three million. There are reports of Japanese sales dipping in August and September, but that is almost certainly supply constrained as they shipped stock into north America and Europe.

Their second mistake was to have insufficient numbers of the right kind of game title. The Wii is selling to just about everyone in the population, not just the core gamer of old. This is the reason for it’s amazing success. But it is confusing the games industry who continue to churn out gamer’s games for it. Wii Sport is the perfect Wii game and should be a lesson for everyone. Wii Fit will be massive and will prove that Nintendo know their own platform best. Meanwhile Metroid Prime 3, a superb gamer’s game, continues to underwhelm in the market.

So we are getting mixed messages. Nintendo cannot keep up with demand. Whilst reports say that 67% of Japanese Wii owners haven’t used them recently. So people are starting to talk about a bubble. But this is because they don’t understand. The mass market, who have bought the Wii, are not going to use it every day. Unlike core gamers they have got a life. So they are only going to fit Wii time into their busy lives when something comes along to pique their interest. Economists might call it something like marginal propensity to play.

There is an important lesson here for our industry. We cannot treat the Wii in the same way as we have ever treated any other gaming platform in the past. It is no good taking the existing catalogue and Wiifying it. It is no good even thinking about core gamers and gamer’s games. For the Wii you need to forget about everything that has gone before.

But has this important lesson been taken on board? By and large probably not. There is an immense number of titles under development for the Wii. Probably more than for the PS3 and 360 put together. It is a veritable publisher’s goldrush. And there are going to be a lot of disappointed people when the sales figures come through. However there will be gems that catch the public imagination, games that are entertainment for everyone. And these will make indecent amounts of money. And they will mostly be first party Nintendo games, simply because they understand the nature of their beast.

Nintendo is now making far more profit out of video gaming than any company has ever done before. Unlike their competitors they make a profit on every box that leaves their factory. They are now the third most valuable company in Japan behind Toyota and Mitsubishi UFJ. They are worth over 10 trillion yen ($85 billion) which is twice what the whole of Sony is worth, yet Nintendo have just one eighth of the sales revenue.

There is no danger of a short term Wii bubble but there may still be the potential of a medium term one. As Microsoft and Sony get their acts together. But Nintendo will be safe for some time. There is the sheer mass of new titles and the relative simplicity of the machine gives Nintendo a huge amount of room to price cut. Best of all it is Nintendo, so they will continue to innovate to entertain. The Balance Board, for instance, is a new gesture interface that opens a whole raft of new gaming possibilities.

So will the Wii go on forever? Of course not. Increasingly it’s GameCube V1.5 roots will betray it. As the capabilities of the 360 and the PS3 are realised they will eventually leave the Wii behind. Nintendo know this. So there must be a new, more powerful machine on the way. But this time Nintendo can run a two model policy, like Sony do. The Wii can be cheap and very cheerful as an entry level and third world product and the new machine can be positioned much higher. As technology has moved on it will be above the 360 and PS3 in every way.

So do you think Nintendo are set for a long run at number one or do you think it will all come crashing down?

“PS3 is a waste of everyone’s time”, so says Gabe Newell (co-founder of Valve) in an interview for the Edge blog. He goes on to say “I don’t think they’re going to make money off their box. I don’t think it’s a good solution”. Which ties in nicely with an earlier article on here: Will Sony ever make the Playstation 4?

This is not the first time Gabe has taken his gloves off over the PS3. In January this year he told Game Informer: ”The PS3 is a total disaster on so many levels. I think it’s really clear that Sony lost track of what customers wanted”.  And here is this blog’s explanation as to what is going on.

The analysts say that PS3 will do well this generation, many in the industry don’t think so. And they are voting with their feet, switching development resources onto the 360 and even more on to the Wii. Commercial decisions made because the industry has to get the best commercial returns from it’s human assets. Capcom switching Monster Hunter from the PS3 to the Wii is just one example of what is going on.

It is looking more and more like PS3 is the GameCube (or even Dreamcast) all over again. I have used this graph before and it doesn’t look good:

So do you agree with Gabe or do you think the analysts are right and that the PS3 will win out?