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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. "
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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
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