Final-Fan said: Just in case you don't notice it, Sqrl, I updated my post to address my overreaction and the rest of your post. I also would like to add that it will indeed be interesting to see how the Wii's effect on the market, combined with Microsoft's apparent policy of spending LIMITLESS amounts of money to abolish the very IDEA of a PS3 exclusive, ultimately turn out. Will we really see the death of exclusives? Will the PS3 just get hosed? Will (most unlikely of all) Microsoft finally get tired of throwing money around like it's radioactive hot potatoes?

I think it's unfair to target Microsoft here, and not Sony. Sony has clearly spent a lot of money in securing exclusives. 

http://kotaku.com/gaming/dyack-justified%3F/phil-harrison-talks-unreal-engine-fixes-for-the-ps3-280944.php

It's easy to make fun of Microsoft for offering cash directly, but "sending in a SWAT team of super engineers" for any extended period of time to aid a third party developer (And one should add, a third party developer that not-so-coincidentally just announced a timed exclusive for the PS3) would also cost a great deal of money.

The timed exclusivity deals for Haze hasn't been announced, but I would be shocked if money didn't exchange hands in some fashion, be it through marketing or publishing or what have you. Sony and Microsoft are both spending a lot of money here, and if Sony is spending less, it's because their pockets are a lot shallower. 

Nintendo said early on that they were not competing with Microsoft and Sony. They said that they were going to create an underhorsepowered innovation that would be compelling to gamers and non-gamers alike. Time has showb this statement to be at least half true. Regardless whether Nintendo acted like they were picking a fight with the other two, everyone's a little ticked at the little duo cube that could.

But wait...there's more.
I like where you are going with this Final-Fan. But can we take it a step further? Given the amazing amount of capital that both Sony and Microsoft have, couldn't they function on two fronts at once? Sony, of course, has already proven this with the PSP. Nintendo has with the DS. What if Nintendo was right? What if they have created a new market?

Could we in the future see Microsoft and Sony release Next Gen systems that would compete either with the Wii or with the Wii 2 in the next generation? Will Sony and Microsoft try to reach the hardcore market with a more advanced system while pulling a Nintendo and releasing a last gen product with motion controls to join the newly created waggle market?

In essence this would be a three tiered video game market (four if you count arcades). Handhelds-Motion Sensitive- Old School Hardcore.

super_etecoon said: Nintendo said early on that they were not competing with Microsoft and Sony. They said that they were going to create an underhorsepowered innovation that would be compelling to gamers and non-gamers alike. Time has showb this statement to be at least half true. Regardless whether Nintendo acted like they were picking a fight with the other two, everyone's a little ticked at the little duo cube that could. But wait...there's more. I like where you are going with this Final-Fan. But can we take it a step further? Given the amazing amount of capital that both Sony and Microsoft have, couldn't they function on two fronts at once? Sony, of course, has already proven this with the PSP. Nintendo has with the DS. What if Nintendo was right? What if they have created a new market? Could we in the future see Microsoft and Sony release Next Gen systems that would compete either with the Wii or with the Wii 2 in the next generation? Will Sony and Microsoft try to reach the hardcore market with a more advanced system while pulling a Nintendo and releasing a last gen product with motion controls to join the newly created waggle market? In essence this would be a three tiered video game market (four if you count arcades). Handhelds-Motion Sensitive- Old School Hardcore.

I think this is very unlikely -- in fact, I suspect the opposite will happen. The different markets have been converging gradually, with occassional changes and reversals like the Wii (Which has brought in a whole new market, and disrupted things).

I think within 15 years, we have less systems to choose from, not more. Someone is going to end up with a monopoly here. It's killing software companies and it isn't making much money for anyone but Nintendo right now. 

A good example is the convergence of portable and console gaming. These are spaces that are gradually coming together, with Nintendo already linking their portable systems to their console directly, and one can imagine a future where a home system can afford to be small enough and sturdy enough that it can be packed up and moved around. The Wii is actually startlingly close to this already. 

 

 

Bodhesatva said: Final-Fan said: Just in case you don't notice it, Sqrl, I updated my post to address my overreaction and the rest of your post. I also would like to add that it will indeed be interesting to see how the Wii's effect on the market, combined with Microsoft's apparent policy of spending LIMITLESS amounts of money to abolish the very IDEA of a PS3 exclusive, ultimately turn out. Will we really see the death of exclusives? Will the PS3 just get hosed? Will (most unlikely of all) Microsoft finally get tired of throwing money around like it's radioactive hot potatoes? I think it's unfair to target Microsoft here, and not Sony. Sony has clearly spent a lot of money in securing exclusives. http://kotaku.com/gaming/dyack-justified%3F/phil-harrison-talks-unreal-engine-fixes-for-the-ps3-280944.php It's easy to make fun of Microsoft for offering cash directly, but "sending in a SWAT team of super engineers" for any extended period of time to aid a third party developer (And one should add, a third party developer that not-so-coincidentally just announced a timed exclusive for the PS3) would also cost a great deal of money. The timed exclusivity deals for Haze hasn't been announced, but I would be shocked if money didn't exchange hands in some fashion, be it through marketing or publishing or what have you. Sony and Microsoft are both spending a lot of money here, and if Sony is spending less, it's because their pockets are a lot shallower.

Chalk this one up to faulty memory:  I turned "Microsoft spends insane amount for exclusive GTA IV content" into "Microsoft buys GTA IV nonexclusivity".  But I still get to call shenanigans -- c'mon, $50 MILLION!

Bodhesatva said: super_etecoon said: Nintendo said early on that they were not competing with Microsoft and Sony. They said that they were going to create an underhorsepowered innovation that would be compelling to gamers and non-gamers alike. Time has showb this statement to be at least half true. Regardless whether Nintendo acted like they were picking a fight with the other two, everyone's a little ticked at the little duo cube that could. But wait...there's more. I like where you are going with this Final-Fan. But can we take it a step further? Given the amazing amount of capital that both Sony and Microsoft have, couldn't they function on two fronts at once? Sony, of course, has already proven this with the PSP. Nintendo has with the DS. What if Nintendo was right? What if they have created a new market? Could we in the future see Microsoft and Sony release Next Gen systems that would compete either with the Wii or with the Wii 2 in the next generation? Will Sony and Microsoft try to reach the hardcore market with a more advanced system while pulling a Nintendo and releasing a last gen product with motion controls to join the newly created waggle market? In essence this would be a three tiered video game market (four if you count arcades). Handhelds-Motion Sensitive- Old School Hardcore. I think this is very unlikely -- in fact, I suspect the opposite will happen. The different markets have been converging gradually, with occassional changes and reversals like the Wii (Which has brought in a whole new market, and disrupted things). I think within 15 years, we have less systems to choose from, not more. Someone is going to end up with a monopoly here. It's killing software companies and it isn't making much money for anyone but Nintendo right now. A good example is the convergence of portable and console gaming. These are spaces that are gradually coming together, with Nintendo already linking their portable systems to their console directly, and one can imagine a future where a home system can afford to be small enough and sturdy enough that it can be packed up and moved around. The Wii is actually startlingly close to this already.

I think that that's only partially true, Bodhesatva. It might be true that we'll have fewer consoles in the future, but only if it's true -- as it seems to me to be -- that it's becoming more and more difficult for a new console to break into the industry as it gets ever larger. The Playstation had a slow start, but Sony had the money to see it through. The Xbox NEVER turned a profit, but Microsoft has a bottomless bank account. If one of the current console manufacturers goes under like Sega, will anyone replace them? It seems to be getting harder and harder, unless someone can make a soft entry into the market.

But I don't see consoles and portables ever merging completely. No matter how portable the Wii is, you simply can't whip it out at a bus stop and start playing. And if you thought the text in Dead Rising was hard to read on SDTV, try doing it on a 2-inch screen!

[edit: P.S. to super_etecoon: I don't count arcades because arcades are dead. It's very sad but very true. RIP.]

Bodhesatva...I don't believe a monopoly will occur. This generation could prove to be the most egalitarian of them all. Granted, Microsoft and Sony might not put nearly as much money or processing power into their next systems, but they will rebound.

We cannot forget that gaming as a whole is bigger than ever. Nintendo's Blue Ocean strategy suggests it will only get bigger. My girlfriend is playing games now. She saw Nintendogs. It was over. Granted, she is an extreme casual, but she now can identify herself as a gamer...casual or not.

The same can be true with the older market that Nintendo has had much success with lately. Sony and Microsoft (or whoever decides to enter the next race Apple? Google?) will restructure and redefine themselves within the market. If there is anything that can be said about console wars it is that they are neither won nor lost in a single generation.

And I don't believe that handhelds are merging with consoles. Ask a DS owner how much interconnectivity there is between his touch screen and his Wii and he might not even have a clue what you are talking about. To my dismay there has been very little crossover between the two systems (or any handheld and its console counterpart). Yet the handheld market is alive and well. Even the PSP's limited success against the DS is success overall. 20 million units can not be misconstrued as failure. In fact, it suggests that the handheld market is capable of holding multiple competitors just like the console market.

I'm not saying this to say that my original claim is without its flaws; I'm only saying that your arguments against it don't seem to hold water. I think we both could be wrong. Ha!

super_etecoon said: Bodhesatva...I don't believe a monopoly will occur. This generation could prove to be the most egalitarian of them all. Granted, Microsoft and Sony might not put nearly as much money or processing power into their next systems, but they will rebound. We cannot forget that gaming as a whole is bigger than ever. Nintendo's Blue Ocean strategy suggests it will only get bigger. My girlfriend is playing games now. She saw Nintendogs. It was over. Granted, she is an extreme casual, but she now can identify herself as a gamer...casual or not. The same can be true with the older market that Nintendo has had much success with lately. Sony and Microsoft (or whoever decides to enter the next race Apple? Google?) will restructure and redefine themselves within the market. If there is anything that can be said about console wars it is that they are neither won nor lost in a single generation. And I don't believe that handhelds are merging with consoles. Ask a DS owner how much interconnectivity there is between his touch screen and his Wii and he might not even have a clue what you are talking about. To my dismay there has been very little crossover between the two systems (or any handheld and its console counterpart). Yet the handheld market is alive and well. Even the PSP's limited success against the DS is success overall. 20 million units can not be misconstrued as failure. In fact, it suggests that the handheld market is capable of holding multiple competitors just like the console market. I'm not saying this to say that my original claim is without its flaws; I'm only saying that your arguments against it don't seem to hold water. I think we both could be wrong. Ha!

The big problem (or flaw, as you say) is that the video game market is really two markets rolled into one, much like the PC market: hardware and software. And guess what happened to the PC market?

The big issue is that specific software needs to be made for specific hardware. A software company needs to choose between making a game for the DS, or the PSP, or the Wii, or invest a great deal more money and develop a PS3, 360 and PC game, with a good deal of money spent on conversion. It makes more economic sense for all the software developers if all of these platforms became a single one.

Development companies are losing a lot of money right now, super. The next gen movement has been very hard on companies, even including EA, who has seen their profits shrink year over year for four years running, since they began investing in "next gen" properties. Observe EA's annual earnings:

FY04: $511 million R&D costs, $577 million total profitFY05: $633m R&D, $504m profitFY06: $758m R&D, $236m profitFY07: $1041m R&D, $76m profit This is the most profitable 3rd party company in the world we're talking about here (okay, they've briefly been passed by Activision, but EA will almost surely eclipse them again within a few weeks, with the release of NCAA 08 and Madden 08). Something is wrong. This is not tenable. Within a generation, if things remain as they are, this will no longer be profitable for any third party trying to juggle their games across all these varied platforms. It's too expensive to develop games and assets, and too much risk is taken with so many possible reasons for failure (the game isn't well received, the system itself isn't well received, and so forth). Additionally, the two companies that are currently "losing" the hardware war -- Sony and Microsoft -- are both billions of dollars in the hole for this generation, and are unlikely to make all of it back. They may both be in the red for the entirety of this generation.  Clearly, this market isn't able to sustain this many consoles in a profitable manner.  Whoever wins will make a ton of money -- just as MS has with its OS monopoly on PCs -- so its understandable why everyone is fighting so viciously over this territory, but that someone is going to be singular (or, perhaps a two console race, including the portables), and as the finances show, the also-rans are going to lose a great deal of money, both on the hardware and software side. 
The current environment simply is not tenable, economically speaking.

 

super_etecoon said: Bodhesatva...I don't believe a monopoly will occur. This generation could prove to be the most egalitarian of them all. Granted, Microsoft and Sony might not put nearly as much money or processing power into their next systems, but they will rebound. We cannot forget that gaming as a whole is bigger than ever. Nintendo's Blue Ocean strategy suggests it will only get bigger. My girlfriend is playing games now. She saw Nintendogs. It was over. Granted, she is an extreme casual, but she now can identify herself as a gamer...casual or not. The same can be true with the older market that Nintendo has had much success with lately. Sony and Microsoft (or whoever decides to enter the next race Apple? Google?) will restructure and redefine themselves within the market. If there is anything that can be said about console wars it is that they are neither won nor lost in a single generation. And I don't believe that handhelds are merging with consoles. Ask a DS owner how much interconnectivity there is between his touch screen and his Wii and he might not even have a clue what you are talking about. To my dismay there has been very little crossover between the two systems (or any handheld and its console counterpart). Yet the handheld market is alive and well. Even the PSP's limited success against the DS is success overall. 20 million units can not be misconstrued as failure. In fact, it suggests that the handheld market is capable of holding multiple competitors just like the console market. I'm not saying this to say that my original claim is without its flaws; I'm only saying that your arguments against it don't seem to hold water. I think we both could be wrong. Ha!

The big problem (or flaw, as you say) is that the video game market is really two markets rolled into one, much like the PC market: hardware and software. And guess what happened to the PC market? Microsoft got the most lucrative monopoly in the world.

The big issue is that specific software needs to be made for specific hardware. A software company needs to choose between making a game for the DS, or the PSP, or the Wii, or invest a great deal more money and develop a PS3, 360 and PC game, with a good deal of money spent on conversion. It makes more economic sense for all the software developers if all of these platforms became a single one.

Development companies are losing a lot of money right now, super. The next gen movement has been very hard on companies, even including EA, who has seen their profits shrink year over year for four years running, since they began investing in "next gen" properties. Observe EA's annual earnings:
FY04: $511 million R&D costs, $577 million total profit
FY05: $633m R&D, $504m profit
FY06: $758m R&D, $236m profit
FY07: $1041m R&D, $76m profit

This is the most profitable 3rd party company in the world we're talking about here (okay, they've briefly been passed by Activision, but EA will almost surely eclipse them again within a few weeks, with the release of NCAA 08 and Madden 08). Something is wrong. This is not tenable. Within a generation, if things remain as they are, this will no longer be profitable for any third party trying to juggle their games across all these varied platforms. It's too expensive to develop games and assets, and too much risk is taken with so many possible reasons for failure (the game isn't well received, the system itself isn't well received, and so forth). Additionally, the two companies that are currently "losing" the hardware war -- Sony and Microsoft -- are both billions of dollars in the hole for this generation, and are unlikely to make all of it back. They may both be in the red for the entirety of this generation.

Clearly, this market isn't able to sustain this many consoles in a profitable manner. Whoever wins will make a ton of money -- just as MS has with its OS monopoly on PCs -- so its understandable why everyone is fighting so viciously over this territory, but that someone is going to be singular (or, perhaps a two console race, including the portables), and as the finances show, the also-rans are going to lose a great deal of money, both on the hardware and software side.

The current environment simply is not tenable, economically speaking. If this generation ends up being "egalitarian," as you say, it's because Sony and Microsoft lost billions of dollars in an effort to make it egalitarian, not because it would have been so in a "natural" economic environment, where everyone was, you know, trying to make a profit. Instead, Microsoft and Sony (and to a lesser extent Nintendo, as I think their main goal has simply been to survive against these larger companies) are willing to lose this much money -- again, billions -- because they believe they might get a nigh-unbreakable monopoly down the road in an extremely lucrative field.

Final-Fan said: P.S.  Credit is due to KruzeS, with whom I had a good-natured argument due to my original post in the dead thread.  The back-and-forth helped me solidify my position, and I might never have started this thread if he hadn't responded in the first place.Â

Thanks, Final.

One idea I briefly discussed with you in private, and that I'd like to introduce now, is how I think this might affect sales, market share and even games this generation.

I have a fealing that, unless this very noticeable trend changes, sales will be split regionally between the PS3 and the 360. With both consoles getting more or less the same games, and both being so expensive, there really isn't much of a point to owning both of them (except maybe for the most dedicated of core gamers). Given this, the healthy head start the 360 has in America, and its non-existance in Japan, this may mean we get to see both consoles "winning" 2nd place in different regions. Not only that, but combined, they may even be the healthy competitor to the radically different Wii, that the Genesis was to the SNES.

Of course, both consoles will still differentiate themselves through their exclusive games, and has Bodhesatva as pointed, there's an ongoing bloody battle over those. However the trend right now seems to be very much geared towards timed exclusives, or over exclusive content and improved versions/ports. Exclusive games for these consoles seem reduced to little more than 1st and 2nd party games (and these companies are no Nintendo), and the few 3rd party games the companies are willing to flat out buy (regardless of what they say). Because 3rd parties are loosing money on these systems. So, beyond that, and if that reagional trend does settle in, I can only see a few Japanese oriented exclusives coming to the PS3, and FPSs coming to the 360 and the PC exclusively.

But, what do y'all think?

Bodhe....what will the size of the market be when only one console is made? Does this cause more sales or fewer? Can the market be sustainable with only one platform? And are we not considering the PC as a platform in and of itself?