Bodhesatva said:
That was basically the point I was making -- all the possibilities I listed are either unpalatable to the 360/PS3 consumer (1,2,3,5) or have already been implemented and aren't enough on their own (4). But something on that list has to happen, because economic reality demands it. To go to an extreme to highlight the point: I would love to have a brand new quad core computer for 200 dollars, but such a pricing structure would quickly put Dell, Gateway, and other hardware manufacturers out of business. There is no magic fairy dust that suddenly makes high end electronics cheap to develop (please keep in mind everyone that I'm talking about the pricing structure over the life of the system, not just right now. Production costs will drop, but so too will MSRPs). I have to either be prepared to pay more, or be willing to buy a cheaper, less powerful computer. And that's basically the situation that PS3/360 users are in: pay more, or buy cheaper, less powerful systems, because the current pricing structure isn't tenable.
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Interesting point you're making Bod, but I think you're missing the point a bit. If Sony's and Microsofts profits aren't high enough that's caused by their strategy. In a world where Nintendo can make a profit on the Gamecube hardware sales, without even talking about the games, there's no need for Sony to have declining profits on a 120 million selling gameconsole, unless they intent to or have a failing business model.
For Microsoft we know that it's their strategy to not bother about profits too much, in the sense that it's A goal and not THE goal. Their main strategy behind the Xbox and the 360 is to enter the livingrooms, mainly to push their software and coding properties.
Back to the declining profits. This year there were software developers that made enormous profits and eneormous losses and in between. This has nothing to do with low revenues, although games have gotten cheaper through time. I have the box of Donkey Kong Country for SNES here and it cost 180 Dutch guliders, which is about 80 euro. In current value that's probably well over a 100 euro or 150 dollar. The main reason is that most companies don't understand the market in which they operate. I never seen a business in which so many stupid development and business decisions are made as in the game industry. Part of that has to do with it being on the border of being an artform and making money, part has to do with increasing technology and part with it being a fairly young industry.
A good example of a stupid business decisions or bad management: People blame everyone but themselves for failing. A good example is the Wii. Every company should have had at least one game ready for it in case it became a succes, only Ubisoft had, in other businesses every missed opportunity means someone will be held accountable, not in this case. Here the excuses were plenty. A year after the Wii started its rise to become the fastest selling console ever the 3rd party developers still haven't jumped on the bandwagon en masse. Which is strange considering the rise in stock value Capcom experienced once it announced Monster Hunter 3 for Wii. Instead they keep telling things like: "We can't compete with Nintendo", "The public only wants mini-games", "It's success will be short lived" etc. That might be good for fanboys and nice forum discussions, and maybe they're right, but from a business perspective you should at least make a serious effort. Instead they look at each other and say: "well dev A doesn't do anything so we won't"'. Last year would have been an excellent opportunity to make money with that little competition.
Another good example of doubtfull asset management are the Mega-Projects that are currently going for PS3. These are absolutely ridiculous. It is rumoured that MGS4 costs 70 million, which, in case of a $20,- dollar revenue per sold game will need 3.5 million games sold to break even. Final Fantasy 13 will maybe even cost more than MGS4. Developers are more busy with creating the best game ever than to make profits, which is good from a gamers perspective, but not really from a business side.
So to conlclude, I think the problem lies within the industry and not with the lack of potential revenue.
