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Game Industry Faces Adoption Challenges
The BBC reports that, while gaming continues to grow in popularity, the industry still faces numerous challenges in attracting new customers. From the article: "Although gaming is a huge industry, the report warned that turning a profit will become increasingly difficult. For players such as Microsoft, Sony and Nintendo the fact that the market is reaching saturation point coupled with the increasing costs of producing both games and consoles means profit margins may not be a big as they would like. "
Who gets the Linux gaming market first.
Nintendo may or may not have success with the Revolution. At least it opens the possibility of something brand new that hasn't been seen in home console gaming before. While the X-box and PS3 too have a chance for innovation the Revolution just appears the most likely for it at this time. However it's hard to say what is over the horizon. Maybe a new console, something completely new and different. Only time will tell.
"Armed forces abroad are of little value unless there is prudent counsel at home" - Cicero
Isn't that sort of the whole point of the Nintendo Revolution? To attract newer, different gamers. People that aren't necessarily hardcore gamers, or of the established market?
Comment removed based on user account deletion
For long term business survival, these links tell all.
y /history.html
http://www.nintendo.com/corp/history.jsp
http://www.sony.net/SonyInfo/CorporateInfo/Histor
http://en.wikipedia.org/wiki/Microsoft
(I'm sure some one could point out a better link for MS history.) MS just hasn't been around a long time. For a computer company, they have and are large enough to survive anything except global war. Nintendo & Sony have both survived a WW. (Actually Nintendo made it through both WWI & WWII.)
First of all, you have the fact that despite the money the industry makes (income, mind you, not necessarily profit), games have a much higher average price of goods for a consumer than the other entertainment industries. Sure, there are still the bargain bin games, and a quite vibrant used market, but those cannibalize the companies' ability to exist. Essentially you have something like an average CD or DVD costing in the $15 range, while games CONSISTENTLY push the retail price up, with new next gen titles going to the $60+ range. What does that mean? Total market / higher price = smaller audience.
The fact that the game industry is essentially the largest niche market EVER seems to be lost on everyone in the industry. So, considering the price of the goods combined with a much smaller audience than movies or music, you get market volatility. A smaller trend can radically affect things.
Second, games are reaching the end of the technology curve. Games have been existing for years on the "ooo, lookie" factor. However, it's getting to the point where many of the non-professionals have a problem seeing the leap from PS2 to PS3. Sure, there will be detail, but the wow factor that was there from, say, SNES to N64 just isn't there.
Third, the rising development costs are bringing two things to light: first, developers can't cut it and are going under/being absorbed at an alarming rate (in the US at least). What that means is that there are fewer and fewer outlets for creativity and less motivation to "take risks" (as if it's somehow not risky to keep doing the same thing forever, but whatever). Second, those costs are making it more and more necessary to amortize development over multiple platforms. By doing that, companies CAN'T spend the money to fully utilize the systems, and you get generic ports that don't look as good as they could on the new hardware. That tends to exacerbate the loss of the "ooo, lookie" factor as well. How many reviews have we seen of XBox 360 games where people say they're WORSE than the previous games? Too many already. The HD/non-HD issue really threatens to mar the system if developers aren't careful.
Combine all of these things, and we wind up with a stagnant market that is heading towards a cliff. I don't think the simple alarmist reasons of the Costikyan's of the world are the whole story, but they're one part of something that's coming. I think of it as Hollywood around 1965. It's not looking good, and things are going to HAVE to change. Microsoft's recent revision that they won't hit their sales figures are the first tremor.
If there has been one constant in gaming, it is that analysts (especially Forrester analysts) constantly get it wrong. They don't always get it wrong the way people expect them to get it wrong, but they never get it right.
Let's pick this apart, shall we?
Although gaming is a huge industry, the report warned that turning a profit will become increasingly difficult... For players such as Microsoft, Sony and Nintendo the fact that the market is reaching saturation point coupled with the increasing costs of producing both games and consoles means profit margins may not be a big as they would like.
The report then goes on to claim that the market is reaching saturation point because almost half of everyone in the western world plays games. Honestly, for anyone making any product, that's a pretty good problem to have.
Likewise, consoles are the same price as always adjusted for inflation. The Genesis launched at 390, the Nes at 350, the Playstation at 370. Same Same.
Games are getting more expensive to produce, but only because people want better and better games, and capacity is making that possible. But it isn't required. The best game on the Xbox 360 is a downloadable vector-graphics game called Geometry Wars, and it is probably the most successful game of the 360 launch, despite being small enough to be made in a month with a team of three. Likewise, there is a lot of room for consolidation on teams... the proliferation of sub-quality clones was (and remains) a problem for many years, but consolidating those teams down to fewer bigger projects should produce better games overall, while letting smaller houses focus on the smaller, more experimental games.
Anyone who thinks there isn't any room for profit in gaming needs to expand their revenue streams a bit. Any team can keep their costs in line while still providing an amazing experience to the player and being rewarded with sales.
The report also warned that mobile phones and portable media players could supersede portable games consoles such as the Nintendo DS and Sony PSP.
Analysts who believe the PSP and the DS will be replaced by mobile phones any time soon have obviously never used both the PSP and their mobile phone to play games. It is possible to play games on your phone, and it is even possible that someone will release a successful phone / game hybrid. But besides a shared battery there isn't a lot of point to a single, dedicated device. Heck, Phone PDA combos and phone MP3 combos have been in the works for years, and they're still terrible in a way that would be unacceptable in the console realm. Consoles require lots of dedicated single-use processing devices that don't make any sense for phones, and phones have all sorts of broadcast equipment that don't help out consoles at all. They're both small candy-bar shaped electronic devices, but there the similarities end.
"While gamers will increasingly use their new consoles for non-gaming activities, this functionality will not be enough to convince non-gamers that buying a console is the answer to their digital convergence dreams," he said.
Let me straighten this out for analysts: consoles play games and there is nothing wrong with that. Consoles sometimes play DVD's also, and that's cool too (though their interfaces are pretty bad). But in the same way that DVD players play DVDs, and televisions display television, consoles play videogames. That's what they do. They don't need to be digital Swiss Army Knives to justify their existence. In fact, pretty much every digital Swiss Army Knife console to come along has been terrible. They don't need to be PVR's. They just need to play the games that people desire to play, and that is it. Anything else is cream, and historically nothing else has been helpful. The
The ______ Agenda
There's one thing needed for widespread mainstream acceptance: standardization. Well, maybe two; you might need a low price point as well.
Standardization is difficult when you've got a five-year cycle and three competing major platforms with no interoperability. A low price point is impossible when the hardware and software are both created entirely for technophiles who demand more features and better performance. If you can get games and game hardware cheaply, on a standardized format that is not monopolized by a single manufacturer, then you'll get mainstream acceptance.
There's a problem with this - most game hardware is sold at a loss. It's possible, however, to make a profit selling Gamecubes at a hundred dollars. If you take an equivalent platform, throw in some permanent storage, some DVD functionality, and intuitive Internet features including an online store for games, sell it at a profit, and market it toward non-traditional gamers and non-gamers with software that appeals to them, you can start to penetrate the market.
Sounds a lot like the Nintendo Revolution, doesn't it?
Once you build up your momentum and media awareness, license access to the online service to any manufacturer that wants it, but keep some exclusive features for yourself. You don't want to drive yourself out of business, after all. The online service would serve as a gateway drug, providing accessible games to get people interested in gaming. They might turn to your hardware after that - you've got the exclusive features, after all - or might turn to another hardware manufacturer. Market share won't matter as much any more, after all, since nobody will have to sell at a loss. Higher-end software can still go for a very high price - certainly not sixty bucks, but not five, either - and, like current game software, it will provide a deep and engaging experience for anyone who's not impressed by the more casual software on the market.
It's the restructuring and standardization that the game industry really needs in order to move outside of its (large) niche market and into the mainstream. It's a bit more complicated than home movies, but it's hardly impossible. Quite the opposite; I'd say it's inevitable.
...but is it art?
Gee, according to wikipedia and a previous article here on Slashdot, World of Warcraft broke 5 million suscribers months ago. This guy at Forrester got paid to write this?
I am in awe. That has to be one of the best comments I have ever seen, let alone on slashdot. I take my hat off to you.
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