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BBC Ponders Another Games Industry Crash
weirdguy writes with a link to a BBC article that poses the same question asked by journalists every couple of years: is the games industry headed for another crash? "Yes, gamers are snapping up the new generation of games consoles — Microsoft's Xbox 360, Nintendo's Wii, and Sony's Playstation 3 [PS3], but at huge cost to the industry. Hardware makers are losing hundreds of dollars on every console sold, and games publishers face an "increasingly difficult environment, as rising development costs and small user bases [mean] that return on investment in next generation games development is unlikely to be achieved before 2008," according to media analysts Screen Digest. More importantly, though, the video games publishers are facing a revolution of their business model."
Hardware makers are losing hundreds of dollars on every console sold
Since the Wii allegedly only costs about $158 to make and is sold for $200, I don't find a compelling reason to take the rest of the article seriously.
The XBox 360 is apparently slightly better than break even now as well.
I've had a Wii for a while now, and while I enjoyed it, my personal opinion, alone, hasn't convinced me, one way or another, what the draw of the console will be. Last night, this question was proven to me, once and for all.
I brought it to a BBQ that another friend of mine was hosting. Half of the people there were gamers, and half of the people there were decidedly NOT gamers (Chinese students, a few hippies, some others). At first, all my gamer friends screamed for some "SMASH!" and that went on for about 45minutes in the other room while everyone else went outside and sat around jawing.
Then I pried the GameCube controllers away from the gamers, and stuck in Wii Sports. The other half of the party suddenly rushed inside and grabbed controllers. They'd obviously never played or seen the games before, since they had no idea what to do, but within 5 minutes, everyone had made their own Miis, and were smacking tennis balls around to their hearts content. We alternated Wii Sports and WarioWare for the next few hours. By the end, many of the non-gamers were coming up to me, asking me how much the Wii cost, and where they could get them. I was pretty shocked, myself. I'd heard stories like this before, but hadn't really witnessed it in person, and was pretty amaized at the degree of involvement everyone had. Also, it was a party... none of us were sitting around, alone, brooding over a scummy screen. We were joking with eachother, making cracks all the time--we were interacting with each other even more than if we'd been doing most other normal party activities. In the end, the host came up to me and thanked me profusely, saying that everyone there had had a blast, and bringing the Wii was exactly the thing we needed.
Just the other night, NBC news ran a piece on how retirement communities were getting into games... although the only games they showed were Wii games, there was no mention of PS3 or 360 titles. It's clear, the Wii is a phonominon, like no other we've seen in videogame history. We are entering a period of unknowns, in gaming... this is the LAST time to be making doomsday prophecies for the game industry.
This guy from the BBC needs to get out more, see what exactly is going on in the world. He sounds as closeted as a 15-year-old gamer in his mother's basement.
Multiplayer Gaming (defined): Sitting around, discussing single-player games with my friends, at the bar.
Urban legend. The first console to ever be sold at a loss was the Sega Saturn (it lost around $100 IIRC). The Playstation was profitable from day 1. The Dreamcast followed the Saturn model in an attempt to recapture market share...even though it was successful it lost a ton of money and drove Sega out of the hardware business. The PS2 was profitable from day 1. The Xbox followed the Sega model (only difference is that Microsoft could afford to write off the loss). The 360 lost money at first (not sure how it's doing now). The PS3 is losing more money per console than any manufacturer has ever done before. The Wii is profitable on hardware. Before the Saturn, the concept of "selling hardware at a loss and making it up on the games" was absolutely unheard of. This rumor got started because when Sony announced the launch price of the PS1 in the US, it was quite a bit cheaper than in Japan at the time (but the launch was still months away and costs dropped in the meantime - they were thinking ahead). Atari accused Sony of "dumping", claiming that the PS1 was going to be sold below cost when it actually wasn't...due to costs dropping significantly before the launch. Sega dropped the price of the Saturn to $299 when the PS1 launched, thus they were the first to start losing money.