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Winning the war by losing the arms race
September 2006 (first published in Develop)
Before E3 2006 I had the sensation of watching an arms
race fought by two heavy-weights while the real prize was quietly stolen by a featherweight. Sony and Microsoft were duking it out over the traditional territory of the geek gamer – processing power, violent games,
graphics resolution. The media was in thrall, watching the big two boast about how many horses they have under their bonnets, ridiculing Nintendo's Wii for its silly name and for being powered by a lawnmower engine.
Sony gazes lovingly at its Cell processor – with
multiple cores, high definition (HD) output and Blu-ray DVD playback. But multiple cores are difficult to code for, HD output drives up content production costs dramatically, and the heavily-subsidised Blu-ray
player drives up the PS3's retail price beyond the reach of most.
So-called 'true' HD – 1920x1080 progressively scanned
pixels – may be supported by the PlayStation 3, but developer feedback suggests that PS3 struggles to cope with the CPU/GPU load needed for fully-featured 1080p support. This gap between specifications and reality
means that few developers appear to be working on games that support this high level of detail. Sony's need to be bleeding edge – take its support for a new HDMI standard not yet found in any televisions – is
beginning to look like a liability.
Microsoft isn't far behind Sony in the arms race. With
multiple cores and HD output, it too will fight through the treacle of the DVD format war. With two console manufacturers banking on HD, what are its prospects? HD should mean beautiful games and it impresses the
early adopter, but it's a barrier to entry for most people. Unlike the previous generation, mass market adoption of these consoles will be held back by necessitating consumers to upgrade their televisions. Screen
Digest recently forecast that the penetration of HD-ready TVs will reach 30% in European households by 2010. Not exactly mass market…
Nintendo sidesteps this problem altogether. No HD, no
future formats or standards, no online subscriptions, just a plug-and-play box with an engrossing UI and some promising accessible games. Many of its intended audience couldn't care less about horse-power and don't
know what HD is. Nintendo's ultimate goal is to carve out a whole new audience and its ability to attract casual gamers, older people and females to its consoles is proven.
Nintendo's traditional malaise of indifference towards 3rd party studios has been replaced by an active recruitment campaign. Publishers are jumping onto the Wii bandwagon, in part because they have watched the effect of sales of simple, innovative games for DS on their (or their competitors') bottom lines. Nintendo's own Brain Age has sold a remarkable 4m units since launch, displaying completely different sales trends. Many publishers have realised (as they pour investment into lengthy, resource-intensive, next-gen games) that the Wii facilitates quicker, lighter, cheaper games production.
Since E3, it's arguable that Nintendo has set the
industry's agenda. It has certainly dominated the charts, with the DS sprinting ahead of its rivals. More portable consoles were sold in Japan in Q1 (and the US in June) than home consoles, and Nintendo's DS easily
leads in Japan, both in hardware and software. The PSP appears stuck in the pits with too many 'seen-it-before' games. Some publishers, like EA, have publicly questioned their investment in the more expensive,
higher-spec PSP. With 21 million units sold since launch, DS has helped to cushion our fall to the bottom of the industry cycle.
Some analysts predict a catastrophic third place for
Sony in the long run. That seems unlikely. By conceding first mover advantage to Microsoft, Sony was bound to lose market share but it will eventually re-establish its lead. However its days being far out in front
of competitors are past.
What's truly exciting is that real competition between
three contenders will force innovation on a risk-averse industry, which opens up new markets and new IP opportunities, particularly for independents.
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