[crouton] Nathaniel Trost: Do You Want Atari For Christmas?

[Email subscription to blog articles]

Posted by Nathaniel Trost:
Do You Want Atari For Christmas?
http://crouton.powerblogs.com/archives/archive_2006_11_12-2006_11_18.shtml#1163441013


   My normally robust immune system has succumbed to one of those pesky
   âcommon coldâ things. This is decimating my productivity, but gives me
   an opportunity to muse on the current state of affairs in the gaming
   console market.
   Iâve 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 âlead platformâ. 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? Itâs 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 weâll see a near dead heat
   between the two. The PS3 is just too expensive and Iâm 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 Nintendoâs demographic will find success on the Wii.
   Nintendo will make boatloads of cash, but then they always do.
   Itâs 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. Whatâs 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 wasnât 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
   arenât 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 canât 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 Iâll be cutting back on frivolous expenditures for quite a
   while. Iâll blog a review of that purchase soon. I havenât regretted
   it one bit thus far. Hint: it involves Apple.