Do You Want Atari For Christmas?
My normally robust immune system has succumbed to one of those pesky ‘common cold’ things. This is decimating my productivity, but gives me an opportunity to muse on the current state of affairs in the gaming console market.
I’ve spent far too many years of my life earning a living doing game development. Because of this, I track the industry quite closely. Console generations usually run 5-6 years, and we are now at the very end of the old generation and the beginning of the new.
In the last generation, Sony continued to dominate with the PlayStation 2. Microsoft lost a few billion dollars buying themselves into second place with the Xbox, and Nintendo ran a trailing third, but racked up quite respectable profits with the GameCube.
The last time around, Sony launched first, with the PS2. The Xbox and the GameCube trailed its release. In terms of horsepower, for the most part the PS2 was the least powerful system, followed by the GameCube, then the Xbox. However, since the PS2 was by far the most popular platform, the majority of games, multi-platform releases, were developed with the PS2 being the ‘lead platform’. This usually meant minimal improvements on the GameCube and Xbox versions, which largely negated their technical advantages.
For this new generation, each of the Big Three has readied new consoles. Microsoft was the first out of the gate this time around, releasing the Xbox 360 for last Christmas. This gave them a year head start on the PlayStation 3 and the Nintendo Wii, which come out this week.
Sony and Microsoft are slugging it out for supremacy. Both the Xbox 360 and PS3 were designed as significant technical leaps over the last generation, and geared for being displayed on HDTV displays. As a result, both machines are currently expensive, the 360 being $300/$400, and the PS3 being $500/$600 (in both cases depending on model, and yes, in both cases you want the more expensive one). Even at those price points, both Sony and Microsoft are losing substantial amounts of money on each unit sold. In the case of the PS3, that figure at launch may be in excess of $200.
Nintendo, in contrast, is releasing the Nintendo Wii, which from a technological standpoint is only a mild evolution in power and capability from its previous console, the GameCube. In fact, the Wii is pretty much just a faster GameCube with extra RAM, with one important addition: its unique controller. Because of its modest technical heritage, the Wii is also the least expensive of the three consoles at $250. Also, at that price point, it is pretty much a given that Nintendo is actually making a profit on each Wii sold from unit one.
It is pretty obvious that Nintendo decided to bow out of the technical arms race and concede the battle for having the coolest system in the minds of 14-25 year old males. They also were unwilling to sell hardware at a loss.
There are a couple questions to ask when trying to pit the various consoles against each other: Who will have the most market share? Who will make the most money? Which system is most powerful? Which will have the best games? It’s easy to fixate on the first year or two of the console cycle, but really, these questions have to be extrapolated out over five or six years.
Sony will probably prevail in the end in terms of worldwide market share. Japan will probably be largely to thank, the Xbox 360 is unlikely to make any serious inroads there. In the US and Europe, however, its much more probable that we’ll see a near dead heat between the two. The PS3 is just too expensive and I’m not sure Sony is going to be able to cost reduce it fast enough.
From a technical standpoint, there will probably be minimal technical differentiation between 360 and PS3 games. Both systems have some strengths and weaknesses. The PS3 probably does have a bit more ultimate potential, but will be hamstrung by the difficulty in taking advantage of the vector processors (especially considering most releases destined for North America and Europe will need to be multiplatform) and the development environment, libraries and operating system for the PS3 are light-years behind Microsoft.
The Wii will be in third place, however I suspect it will sell more units than the GameCube did. While Nintendo can always be counted on for a solid software line-up, it will be interesting to see how third-party support will be on the Wii. Due to the shelf-space and sales domination that Nintendo titles tend to have on their platform, Nintendo consoles can be a dicey market space for third-parties. However, companies will be able to leverage their GameCube technical investments from the last generation, and the budgets for Wii titles will be much, much more modest than 360 and PS3 titles. I think, in the end, that means that publishers that have licensed properties that do well with Nintendo’s demographic will find success on the Wii. Nintendo will make boatloads of cash, but then they always do.
It’s interesting that all three new consoles have backwards compatibility support with their predecessors. In the case of the 360, it is imperfect, the original Xbox title support is handled through a software emulator, which means that not all of the Xbox library is supported, and some games run less than ideally. The Wii, being essentially a GameCube derived design runs GameCube games with no difficulty. What’s interesting is the road Sony had to take with the PS3 to fulfill their promise of backwards compatibility. There was a lot of scuttlebutt that Sony had been attempting a software emulation route ala the 360. If they were, it wasn’t yet remotely ready for prime-time because the PS3 essentially has the PS2 core chip components on its motherboard. This is definitely another cost-reduction headache for Sony, even if they can capitalize on the fact that they already produce the EE/GS chip in great quantities for the slimline PS2. I would still wager that the chip costs Sony almost as much as Nintendo is paying for the main CPU chip for the Wii.
In a related cost note, it will also be interesting to see how Blu-Ray fares in the marketplace. Being able to cost-reduce the player is going to be another major hurdle for Sony to reach a point where they aren’t losing money hand over fist on the PS3 hardware.
As for me, which of the systems will I have come this Christmas? The answer: none of them! Funny as it may sound, I just can’t justify the expense at this point, especially since I have ready access to them. I had toyed with the idea of buying a Wii at launch, but then the stars fell into place to make another (much more expensive) purchase, which means I’ll be cutting back on frivolous expenditures for quite a while. I’ll blog a review of that purchase soon. I haven’t regretted it one bit thus far. Hint: it involves Apple.
I’ve spent far too many years of my life earning a living doing game development. Because of this, I track the industry quite closely. Console generations usually run 5-6 years, and we are now at the very end of the old generation and the beginning of the new.
In the last generation, Sony continued to dominate with the PlayStation 2. Microsoft lost a few billion dollars buying themselves into second place with the Xbox, and Nintendo ran a trailing third, but racked up quite respectable profits with the GameCube.
The last time around, Sony launched first, with the PS2. The Xbox and the GameCube trailed its release. In terms of horsepower, for the most part the PS2 was the least powerful system, followed by the GameCube, then the Xbox. However, since the PS2 was by far the most popular platform, the majority of games, multi-platform releases, were developed with the PS2 being the ‘lead platform’. This usually meant minimal improvements on the GameCube and Xbox versions, which largely negated their technical advantages.
For this new generation, each of the Big Three has readied new consoles. Microsoft was the first out of the gate this time around, releasing the Xbox 360 for last Christmas. This gave them a year head start on the PlayStation 3 and the Nintendo Wii, which come out this week.
Sony and Microsoft are slugging it out for supremacy. Both the Xbox 360 and PS3 were designed as significant technical leaps over the last generation, and geared for being displayed on HDTV displays. As a result, both machines are currently expensive, the 360 being $300/$400, and the PS3 being $500/$600 (in both cases depending on model, and yes, in both cases you want the more expensive one). Even at those price points, both Sony and Microsoft are losing substantial amounts of money on each unit sold. In the case of the PS3, that figure at launch may be in excess of $200.
Nintendo, in contrast, is releasing the Nintendo Wii, which from a technological standpoint is only a mild evolution in power and capability from its previous console, the GameCube. In fact, the Wii is pretty much just a faster GameCube with extra RAM, with one important addition: its unique controller. Because of its modest technical heritage, the Wii is also the least expensive of the three consoles at $250. Also, at that price point, it is pretty much a given that Nintendo is actually making a profit on each Wii sold from unit one.
It is pretty obvious that Nintendo decided to bow out of the technical arms race and concede the battle for having the coolest system in the minds of 14-25 year old males. They also were unwilling to sell hardware at a loss.
There are a couple questions to ask when trying to pit the various consoles against each other: Who will have the most market share? Who will make the most money? Which system is most powerful? Which will have the best games? It’s easy to fixate on the first year or two of the console cycle, but really, these questions have to be extrapolated out over five or six years.
Sony will probably prevail in the end in terms of worldwide market share. Japan will probably be largely to thank, the Xbox 360 is unlikely to make any serious inroads there. In the US and Europe, however, its much more probable that we’ll see a near dead heat between the two. The PS3 is just too expensive and I’m not sure Sony is going to be able to cost reduce it fast enough.
From a technical standpoint, there will probably be minimal technical differentiation between 360 and PS3 games. Both systems have some strengths and weaknesses. The PS3 probably does have a bit more ultimate potential, but will be hamstrung by the difficulty in taking advantage of the vector processors (especially considering most releases destined for North America and Europe will need to be multiplatform) and the development environment, libraries and operating system for the PS3 are light-years behind Microsoft.
The Wii will be in third place, however I suspect it will sell more units than the GameCube did. While Nintendo can always be counted on for a solid software line-up, it will be interesting to see how third-party support will be on the Wii. Due to the shelf-space and sales domination that Nintendo titles tend to have on their platform, Nintendo consoles can be a dicey market space for third-parties. However, companies will be able to leverage their GameCube technical investments from the last generation, and the budgets for Wii titles will be much, much more modest than 360 and PS3 titles. I think, in the end, that means that publishers that have licensed properties that do well with Nintendo’s demographic will find success on the Wii. Nintendo will make boatloads of cash, but then they always do.
It’s interesting that all three new consoles have backwards compatibility support with their predecessors. In the case of the 360, it is imperfect, the original Xbox title support is handled through a software emulator, which means that not all of the Xbox library is supported, and some games run less than ideally. The Wii, being essentially a GameCube derived design runs GameCube games with no difficulty. What’s interesting is the road Sony had to take with the PS3 to fulfill their promise of backwards compatibility. There was a lot of scuttlebutt that Sony had been attempting a software emulation route ala the 360. If they were, it wasn’t yet remotely ready for prime-time because the PS3 essentially has the PS2 core chip components on its motherboard. This is definitely another cost-reduction headache for Sony, even if they can capitalize on the fact that they already produce the EE/GS chip in great quantities for the slimline PS2. I would still wager that the chip costs Sony almost as much as Nintendo is paying for the main CPU chip for the Wii.
In a related cost note, it will also be interesting to see how Blu-Ray fares in the marketplace. Being able to cost-reduce the player is going to be another major hurdle for Sony to reach a point where they aren’t losing money hand over fist on the PS3 hardware.
As for me, which of the systems will I have come this Christmas? The answer: none of them! Funny as it may sound, I just can’t justify the expense at this point, especially since I have ready access to them. I had toyed with the idea of buying a Wii at launch, but then the stars fell into place to make another (much more expensive) purchase, which means I’ll be cutting back on frivolous expenditures for quite a while. I’ll blog a review of that purchase soon. I haven’t regretted it one bit thus far. Hint: it involves Apple.
Posted by Nathaniel Trost on
Monday November 13, 2006 at 10:03am
What's been really interesting is that while many coworkers have purchased the Xbox 360, there wasn't a huge rush to buy it at launch owing to the price. On the flip side, 89 people signed up to buy a Wii from work even though it's not discounted, merely guaranteed to be available to them by early December.