current videogame sales= Capitalism at its best, random thoughts (1 Viewer)

This competition among all 3 platforms is really benefitng us.

Playing Devil's Advocate...

It's really killing a lot of developers. The market is a killer right now, with independents going under left, right & centre. Publishers are ultra-conservative on new projects, with it being really hard to find a publisher for a "risky" project if you don't have a big name dev behind it. Game sales are flat that unless you're a breakthrough hit, it's very hard to make a profit on a big budget title. Hell, that $10 Mark of Kri is a great deal for the consumer, but how is SCEA supposed to make a profit out of it when it's sold what, a hundred thousand copies?

It's a really difficult time to be a developer looking for a contract.

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Someone has to go, with 3 platforms the market is too fragmented

I don't think so. We need to start getting rid of small developers and have them be brought into bigger developers. This way, the overall quality of third party games can improve while allowing some of the riskier projects to come out better and under a bigger name, potentially increasing sales.

Or they could make less crap games.

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We are in a boom period according to the financial stats

We were up until Christmas. The stock prices of Electronic Botique, Gamestop, and all video game developers have really headed south since December. I follow the financial side of the industry very closely (I'm a financial planner and have access to tons of information) and the sales have really slowed down.

One interesting recent development: Microsoft is really starting to take serious heat for the XBox. Investors were expecting much better growth and console sales have underperformed even Microsoft's low end estimates. Nintendo has made some major advances with Zelda. Sony's stock has dropped over 20% in the last two days; the decrease in the PS2's price hurt much more than expected. Anyway, my point to all of this is that of the 3 console companies right now, Nintendo might be in the best spot. Microsoft's core business is certainly not video games and their investors are getting nervous; Sony is involved in all sorts of other businesses (though they still dominate video games and aren't going anywhere), but their recent numbers point to trouble. Nintendo, on the other hand, keeps chugging along. Unfortunately, it's very hard to look at Nintendo's financials as they do not have any filings in America and I don't read Japanese too well.

Capitalism rules. My prediction: if Microsoft does not turn the XBox around by Summer 2004, it's gone. Stay tuned.

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This way, the overall quality of third party games can improve while allowing some of the riskier projects to come out ...

One, you haven't made a connection between larger developers having inherently higher quality standards. Two, the tendency of larger organizations is to play it safe -- not a climate for riskier projects.

I won't argue that a large developer with high quality standards and a risk-taking culture doesn't exist now, in the past or in the future. But it is certainly a steep hill to climb.

Rob: I didn't find any stories about any Xbox financial issues in the last couple days on Hoover. Since I'm lazy can you give me a link? Thanks.

-j

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Are you happy with the growth of Xbox?
Yes. We're a clear No. 2 in the market. We are coming on strong. It is probably going to take us another turn of the crank, from a product cycle perspective, before we make money. But most of the things we do as a company successfully today we worked at for years before they made money. Remember, we brought Windows 1 out in 1983 and we didn't have any real volume until 1991. It took us eight years to get volume. I don't know when we got profit, but it took us eight years to get volume.

Take Windows server. We started on it in 1988, but it was probably 1998 before we had real volume, and I don't know when we would have said we had profitability on that product. But most of the good businesses require long-term patience, commitment, tenacity...and you can't be impatient. I feel very good that we have great teams to take MSN and Xbox in exactly those same directions.

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One, you haven't made a connection between larger developers having inherently higher quality standards. Two, the tendency of larger organizations is to play it safe -- not a climate for riskier projects

If they're bigger, they have more money, which means the production values of games could go up. If there are less developers, then the big ones can come up with genuinely unique ideas (like Viewtiful Joe, ICO, and Conker's Bad Fur Day) or publish some unique games (like Mister Mosquito) without much of a risk of those games hurting their company that much because the competition won't do much better so long as they (the company being risky) has some other play-it-safe games.

And considering that only a handful of small developers even make a dent in the market, letalone get games published (of which, few are of the high quality people want for $50), I don't see how flooding the market with a ton of small developers really helps in terms of the quality of the games out there.

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Microsoft and its shareholders' historical expectations for fat margins no doubt had them playing along with the rollout of the low-margin Xbox console. Surely, the lucrative software licensing royalties and the promising broadband-enabled delivery of software updates would make it a rich-margin Microsoftesque addition. It hasn't happened. At this point, it's not likely to happen. While Nintendo has often appeared as the most likely console maker to bow out of the home system hardware race, maybe Microsoft should beat it to the punch and fold. The game isn't fun anymore.

I guess my point is the video games are not a high enough margin arena for Microsoft. I haven't seen many numbers on Live, but I'm curious to see what the numbers look like v. projections as well as how many current subscribers renew once the future pricing structure is announced (I hope at E3, but have heard no news). I would also like to know how much Microsoft plans on Live driving XBox profits. I'll keep looking, but have come up empty so far and Bill hasn't returned my calls yet.

Anyway, this is all just food for thought. As long as the console doesn't fold before KOTOR, I'm a happy camper.

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but if it leads to flooding the market with sub-par games (and this is a problem from big developers, too), then I think it should be stopped. The only real way to stop crap games from getting made is to not buy them, but the average consumer doesn't care enough to make that happen.

Then it won't be stopped. The way you put it, consumers are purchashing sub-par games. If they do, then they'll keep coming out. I'm not so sure what the "average consumer doesn't care enough to make that happen" means. Do you think people purposely go out and buy crappy games just to keep smaller companies in business? People buy what they want to play; if it's crappy games, then they'll keep the shelves full.

As for the 3 consoles, I think they can all survive, but they must differentiate themselves. PS2 is the clear leader with a ton of games to offer, the GameCube has a core following that will buy everything (like me) and a few absolutely stellar games in addition to the younger market.

The XBox is pretty grey. They tried to be a machine dedicated only for serious gamers that provides the best hardware available. They did this, but the games have not followed. They are also the clear online leader and Live could be a very effective at carving out a profitable niche, but this hasn't happened just yet. I own all 3 consoles and it seems to me that for the average gamer, the XBox offers nothing over the PS2, except for Live. I think MS thought that they could dominate the market just on their hardware, but they haven't followed with enough XBox-exclusive titles.

I hope all 3 survive, but right now, I think the XBox is doomed.

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I give you EA, nuff said

I don't buy this at all. A lot of people get mad at EA over not streamlining ports better, but I think their games are generally solid. I was recently looking for a good basketball game for my XBOX and ended up buying NCAA 2K3 over NBA Live 2003. NCAA 2K3 is total garbage. I returned it and got NBA Live 2003 and have enjoyed it thoroughly... so much more polished than NCAA 2K3. I also recently bought PGA Tour 2003 (my best friend and I suddenly went on a sports game kick) and thinks it's pretty good as well. Really, I've not bought any EA games that I thought were truly bad. I'm not saying they don't have some stinkers, only that I have yet to buy one.

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I hope all 3 survive, but right now, I think the XBox is doomed.

I think this is jumping the gun a little. Two quick points here:

You're assuming that MS was in this to make money off the Xbox, I don't think that was ever the plan. They want to own the box next to your TV (and the service) that delivers you music, games, movies, email, etc to your home. Since that market doesn't even really exist yet, no one can put a price target on what that is worth. MS thinks it is worth a lot, maybe enough to write off the Xbox and Xbox 2 to get there. If they can own and develop this market space, that future MS would be to the present one like the present one to the late 80s. It is potentially a very, very, very lucrative area. MS wants it at almost any cost.

Second little point is remember we are only half way through the current console cycle. The N64 beat the tar out of the Playstation for 2 years in sales, by the end of the cycle the PSX was the clear victor. What I'm saying here is it is never over until it is over, not one of the 3 console makers has blinked yet.

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The N64 beat the tar out of the Playstation for 2 years in sales

Only in the US, I believe.

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Do you think people purposely go out and buy crappy games just to keep smaller companies in business?

Lets just say that I know a few people who actually get mad at me for insulting Superman 64. Whether that's ignorance on their part or just so happening to like a game that everyone else thinks is one of the worst games ever, it's people like them that will keep buying the crap games that get made.

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