Random Thoughts

Over the years, the videogame industry has seen a lot of different console generations come and go, but I’d argue that none has been as interesting as what is happening now.

To preface this piece, I’d like to mention that I own all three next-generation consoles (the XBox 360, Playstation 3 and Wii), and that all three receive a fair amount of usage in my home. I also owned all three previous generation consoles (XBox, Playstation 2 and GameCube), and have a variety of other consoles around the house (NES, Super NES, Playstation, etc.).

I’ve always been an avid watcher and participant in the videogame industry. From the moment my parents first brought home an Atari 2600 console for Christmas in 1977, I was hooked.

Atari 2600 My brother and I played Combat, Asteroids and Space Invaders for hours on end on that console, with the glorious full colour graphics lighting up our imaginations.

During that generation, the Atari 2600 was the king of the hill. There was no other console on the market with the vast selection of games, and it had hit the mass market price point of $250 with prices falling from there.The Intellivision

A few years later, the Intellivision would come to market with graphics that were a little snazzier and the world’s most bizarre controller. We skipped that one, but did end up getting the Coleco ADAM computer system.

Donkey Kong The Coleco played ColecoVision games (including a fantastic port of Donkey Kong, with only three levels, sadly) as well as games which were loaded off a high speed datacassette. We enjoyed that machine easily as much as the earlier Atari 2600, and it served our needs for a few more years.

Then came the great videogame crash. The market crashed, and tons of crappy Atari and ColecoVision cartridges were available in bargain bins everywhere.

The market had crashed because the console systems of the time didn’t require a license to develop for them. Anyone could develop a game, and stick it on store shelves, and anyone did. Atari didn’t help matters with terrible first party titles like E.T., either.

It took a few years for the industry to recover from that debacle, and when it came back, it came back swinging. The new kid on the block was Nintendo, best known at the time for the arcade version of that great ColecoVision game Donkey Kong.

I was a rebel, though. I decided I didn’t want a Nintendo Entertainment System like everyoneAtari 7800 else, I wanted an Atari 7800. It had great graphics, a bizarre looking controller and it came with a near arcade perfect conversion of Pole Position. Plus, Joust on that console was second only to the arcade version.

The 7800 served me very well for several years, but I had the opportunity to play many NES games at friends’ houses, and even knew someone who owned a Sega Master System (poor bastard).

It was around this time that I went to college, and was on my own for the first time.

The Atari 7800 made the trek with me, but because Atari was focusing on their computer line, games were scarce for the machine. I decided it was time to move away from the consoles, but not away from gaming, and I purchased a Commodore Amiga 500.

Amiga 500 The Amiga was an absolutely stunning machine for it’s time, capable of playing back four track stereo sound and displaying 4,096 colours on screen in a time when PCs were happy with a beep and four colours (and Macs were only available in black and white).

The machine was good for my school work, word processing, programming, etc. It turned out to be a great purchase for school, as well, since I was learning about programming in a multi-tasking environment, and the Amiga had a fully implemented pre-emptive multitasking operating system which was very similiar in structure to the VAX/VMS unit I was working on in school.

Of course, the amazing multimedia capabilities of the Amiga were put to good use in games like Shadow of the Beast, Defender of the Crown and It Came From The Desert.

Still, the Nintendo Entertainment System was the dominant platform for games in the world, and it wasn’t long before I decided I needed to get back into that scene.

Sega Genesis I went to work at a video game store in a major shopping centre here in Calgary, and used my staff discount to purchase a Sega Genesis when it came out.

The Genesis was very similiar to the Amiga in a lot of respects but was, of course, a closed platform. I also picked up a Super Nintendo Entertainment System when it came out (after what felt like an eternity).

Working at the game store also provided me the opportunity to try a number of other platforms as they launched, including the TurboGrafx 16, Atari Lynx, Commodore CDTV (basically an Amiga 500 with a CD-ROM drive), Philips CD-I and Panasonic 3DO Multiplayer. I even had some quality time with that great debacle the Sega 32X. I will admit, though, that I have yet to play with a Virtual Boy.

So, if you’ve made it this far, you may ask what the hell does this have to do with the current generation console war? The answer to that is everything and nothing.

We can look back at past “console wars”, and perhaps predict a victory in this generation.

If we look back to the Atari 2600 versus Intellivision versus Colevision era, the 2600 clearly came out on top even though it was very much technologically inferior.

The reasons for this are many, including the price, the Atari brand name, but most importantly, the selection of games.

Even though the 2600 ports of games like Pac-Man and Joust were ridiculously bad in most cases, they were at least available. On the Intellivison or ColecoVision, you usually got no-name clones or second rate arcade conversions (i.e. LadyBug on ColecoVision instead of Pac-Man).

In the next generation of consoles, Nintendo picked up on a lot of the mistakes that Atari made in that first generation. They took some huge risks that paid off in big ways.

First off, Nintendo required that every publisher of games register with them and they signedNintendo Entertainment System off on the “quality” of each game. This helped to reduce the amount of garbage games on the console (not to say that the NES didn’t have its fair share of junk).

Nintendo also stepped back into the market when the big toy companies like Coleco and Mattel had all but abandoned it. Coleco and Mattel saw an expensive business model that they felt wasn’t worth the investment. Nintendo saw an underserved market.

The master stroke were Nintendo’s license agreements, which effectively precluded developers from marketing the same game on a competing console. This is the reason the technologically superior (ever so slightly) Sega Master System and Atari 7800 were unable to penetrate the marketplace in any significant numbers. They didn’t have the games, and they weren’t going to get the games because Nintendo wasn’t going to let them.

In the 16-bit generation, Sega took advantage of the failure of the Sega Master System and released the Sega Genesis significantly earlier than Nintendo released it’s next-generation console.

Sega managed to capture significant market share because they had a console that was vastly superior to the NES and had managed to lock up their own fair share of exclusive games (many of them first party arcade ports).

Nintendo, in the 16 bit generation, was hesitant to release a new console because the NES was still selling well. They didn’t want to bite the hand that was feeding them.

Once Nintendo did release the Super NES, they managed to regain significant market share thanks to exclusive titles like Super Mario World and Donkey Kong Country. Still, they had given up a significant lead in the marketplace, and the 16 bit generation was a draw.

Also, Nintendo, during the Super NES time frame inadvertantly created a new competitor, Sony. The PlayStation was originally going to be a CD-ROM peripheral for the SuperNES. When Nintendo backed out of the deal, Sony decided to go for it on their own.

Before Sony stepped in, though, a host of other companies came and went.

CD-i Philips introduced the CD-I interactive player, which was a very high priced CD-ROM drive based console that didn’t play very good games. Philips reportedly spent a billion dollars developing the thing, and it was an utter and complete failure in pretty much every way.

3DO, meanwhile, was a new startup created by Trip Hawkins, who had previously been the head of Electronic Arts. 3DO’s business model was unique in that they would design the hardware and license it to manufacturers for them to build.

The concept was essentially to “standardize” the videogame industry much the way the VHS cassette had done for video. There was a fatal flaw in that plan, though; console manufacturers typically take a loss on the hardware and make the money back on licensing fees for the games. Hardware licensees like Panasonic, Sanyo and GoldStar couldn’t sell the hardware at a loss,The Panasonic 3DO Multiplayer because they didn’t get a slice of the royalties from game sales. Thus, the 3DO was very expensive, and never penetrated the mass market. For it’s time, though, it was a surprisingly strong console and introduced some new concepts like daisy-chaining controllers and the ability to play back movies on the console with an optional MPEG decoder card (this was around the time VideoCDs first showed up).

Sega, meanwhile, had not been sitting on their laurels. They had released the afforementioned 32X, as well as the Sega CD add-ons for the Genesis, and they rushed the Sega Saturn to Sega 32Xmarket to beat Sony’s PlayStation to the punch.

The problem was that Sega had burned many of the bridges they had built with consumers by this point, and they were swimming in debt to boot.

People who had purchased the Sega CD or 32X felt ripped off because the Saturn was coming so soon, and the Saturn was expensive and didn’t have any games at launchSega Saturn (aside from Daytona).

Nintendo, meanwhile, was still enjoying success with the Super NES and was in no rush to release the Nintendo 64. This left Sony to dominate the 32-bit generation with the original PlayStation.

The PlayStation launched to great fanfare, and with the first ever home edition of Namco’s Ridge Racer available. The price point was reasonable at $299, and the machine was veryPlayStation powerful for the time.

Sony didn’t have very much in the way of first-party software for the PlayStation, but they made up for it by maintaining great relationships with the third-party developers.

Eventually Nintendo did release the Nintendo 64 (along with another great Mario title), but it never achieved the type of success of their previous consoles. A big part of Nintendo’s failure in Nintendo 64the market with this generation (at least compared to Sony) was their decision to have the N64 run off of cartridges rather than CD-ROM.

The official Nintendo line on the cartridge decision was due to “load times”, but the reality was that Nintendo was scared of piracy if they released on a CD-ROM based format.

Ironically, the same issue that made the N64 software difficult to pirate also made it difficult for publishers to justify the cost of publishing on the platform.

In order to produce an N64 game, publishers had to produce expensive cartridges. CDs, on the other hand, were dirt cheap to produce and could be manufactured quickly as demand required. Also, CDs had the advantage of being able to store significantly more information, allowing for much richer experiences for the consumer.

Sega Dreamcast Sega, with the Saturn struggling in the marketplace, decided to release the DreamCast to replace it. Their strategy was simple; develop a good machine, and get it to market before Sony.

For all intents and purposes, Sega’s DreamCast launch went well. The machine was well-received by early adopters and it had a decent selection of games.

Sega had two major problems. The first was that they were carrying huge amounts of debt related to the failed Saturn, 32X and Sega CD platforms. The second was that Sony, in aPlaystation 2 brilliant marketing move, announced the Playstation 2 the exact same day that the DreamCast launched.

The PS2 announcement was very notable because the PS2’s hardware performance was significantly greater than the DreamCast. To drive the point home, Sony showed demos of the PS2 running PS1 Final Fantasy cut scenes in real-time.

Nintendo GameCube Nintendo, shortly afterward, announced the GameCube. Its hardware performance was on par with the PS2, but the machine was late to market so had difficulty gaining any traction with consumers. It also didn’t have a Mario game at launch (instead settling for Luigi’s Mansion).

The PS2 launch went phenomenally well for Sony, and they became the first console manufacturer to dominate two generations of consoles in a row.

Shortly after the PS2 launch, though, Microsoft stepped into the marketplace with the original XBox.

XBoxMicrosoft’s goal with the XBox was to get their foot in the door in the videogame industry, and the XBox succeeded quite well with that.

Microsoft followed a very similiar model to Sony’s original PlayStation launch, and also suffered from the same issues around a lack of first party titles. In an effort to ensure they had a AAA title available at launch, Microsoft bought Bungie and along with it, Halo. That one move ensured that the XBox would enjoy some success.

The problem Microsoft had with the XBox was that it was built with off the shelf parts. Because of this, the manufacturing cost of the console was outside Microsoft’s control. The processor was made by Intel, the graphics chipset by NVidia, and the other components from various different manufacturers. This effectively meant that Microsoft would not be able to turn a profit on the hardware for the life of the XBox.

This brings us to the current generation.

IXBox 360n a move designed to help them gain market share, as well as move to a hardware model that would eventually allow profitability, Microsoft released the XBox 360 in late 2005, well ahead of the offerings from Sony and Nintendo.

The launch wasn’t all sunshine and lollipops, though. 360s were in short supply throughout the holiday season, and hardware failure rates were high (10% by Microsoft’s estimate, which is ridiculously high from a hardware failure standpoint).

The 360 wasn’t cheap, either, and it was released in two separate SKUs which angered some developers, due to the lower cost SKU not included a hard drive for game storage.

Sony, meanwhile, stumbled for the first time. The November 2006 PS3 launch has beenPlayStation 3 hampered by difficulties, first with delays due to parts not being available for the Blu-Ray drive in the machine, and then with criticisms for the high price point of the console.

Sony’s launch days were marred by muggings and shootings, and a huge number of the early PS3s purchased appeared to be bought for the sole purpose of reselling on eBay.

Nintendo, in a move that may pay off in the short term but could cost dearly in the long run, released the Wii mere days after the PS3 launch. They took a completely different approach, and effectively released a souped-up GameCube with an entirely new controller interface.

Wii The advantages to this approach are a low cost for Nintendo on the manufacturing side, and significantly lower costs for game developers as well. The disadvantage is that the Wii is woefully underpowered when compared to the XBox 360 and the PS3, so it will undoubtedly look very limited once second and third generation titles start to hit for the two more powerful consoles.

So this brings us to the core question for this blog entry. Who will win the new console war?

At this point, it appears Microsoft has the lead. They have a great selection of titles for the 360 and their online experience is second-to-none. The hardware is powerful, and is now readily available.

The down-side for Microsoft is that they still haven’t cracked the Japanese market, and you can’t achieve total global domination if you’re missing Japan. Their game library also isn’t very deep. They have great games in specific genres (i.e. shooters), but they have other genres that are sorely lacking (Viva Pinata didn’t connect with consumers in the family segment, and they still haven’t provided a great platforming experience). Titles like Halo 3 and Gears of War are great for bringing on fans of their respective genres, but they don’t really expand the marketplace.

Nintendo has the advantage of a low price-point, and they’re obviously appealing to a different market segment. They’re growing the base of players, people are buying Wiis who have never purchased a console before. Nintendo also has some of the strongest first-party brands in the market (Mario, Pokemon, Smash Bros, Donkey Kong).

Sony, meanwhile, has an incredibly powerful piece of hardware that is very difficult to develop for. It’s also expensive, and doesn’t have very many games.

Having said that, Sony doesn’t need the PS3 to be as successful as the PS1 and PS2 for it to be considered a success. They just have to get it to a point where it’s profitable, and the PlayStation cash cow can keep mooing along. They also now have a huge stash of first party games that appeal to a wide variety of gamers (i.e. God of War, Ratchet & Clank, SOCOM), and they’re very good at timing their releases to keep the PlayStation brand in the spotlight.

If Sony achieved 30% of the penetration of the PS2, they would end up selling more than 30 million consoles. This would also equal 30 million additional Blu-Ray players in consumers homes, and would open up the Playstation Network to millions of consumers. Bet on Sony using their online service to offer HD movies for download alongside music and game content. They’re the one company big enough to pull off the elusive “multimedia machine”.

As far as declaring a “winner” for this generation, it’s too early to say for sure. I’d say Microsoft has the North American and European win for a true “next-gen” experience at this point. Sony will likely be the dominant “next-gen” provider in Japan, and will be a close second in the other markets.

Nintendo will still sell more Wiis than 360s or PS3s, though. At least in the first few years. Nintendo is also really good at repackaging their hardware and selling it again (i.e. the DS Lite, GameBoy Advance SP) and I wouldn’t put it past them to release a next-generation Wii with enhanced graphics a few years down the road.

All-in-all, I think that the differing experiences on all three consoles will expand the market enough that all three will easily survive and likely thrive. I also suspect that a lot of people will end up with at least two consoles in this generation. Bet on one of those being a Wii.

For me, I say buy all three. They offer different experiences, and if you’re truly into games, having all three means never having to go without that killer game that’s an exclusive. Of course, it’s expensive as well, but nobody ever claimed gaming was cheap.

2 Responses to “Who Will Win The New Console War?”

  1. Lisa

    Wow. I actually could care less about this subject matter…in fact, we’ve discussed it many, many times already. But you wrote it in such a way that I read it completely to the end. And I actually thought more about it than, “you have too much time on your hands”. Very nicely written.

  2. Charlie

    Ok, I\’m not in complete agreement with this, but I see your point. Thanks for sharing.

Proudly powered by WordPress. Theme developed with WordPress Theme Generator.
Copyright and Copy; Random Thoughts. All rights reserved.