There’s a couple of articles from earlier this week that make related points about the current situation in the game industry. The first is a report in financial site The Street about the possible fallout if Nintendo strikes gold when they release the Wii sometime this fall, as seems increasingly likely since their big splash at E3. Apparently, if Nintendo does well, it will be bad, or at least not good, for most 3rd party developers, who, up until E3, had written off Nintendo and were putting all their eggs in the Microsoft and Sony baskets. From the report:
“No one’s going to make money on the software except Ubisoft,” whose Red Steel title Nintendo showcased at E3, says one hedge fund manager, who is short shares of THQ (THQI – commentary – Cramer’s Take) and Take-Two Interactive (TTWO – commentary – Cramer’s Take). “Everyone got caught flat-footed.”
Next up is an article from DFC Intelligence, a game industry market analyst. The main gist of the article is that Sony has slipped up badly, giving Microsoft and Nintendo a shot at the top slot:
DFC Intelligence has always said that as the dominant market leader, SCE was largely in control of its own fate. Microsoft and Nintendo had to hope Sony fumbled or significantly changed its strategy so that they could get an opportunity to capture some of that PS2 audience. Now it is clear Sony is handing its competitors a golden opportunity.
The article goes on to show lots of graphs, and to provide various “Best Case Scenario” estimates for various consoles in various regions, but I won’t be dwelling on that, because the reason for mentioning these two articles was just to segue into the main point I want to make, which is that for the first time in about a decade, it is dangerous to be a 3rd party game developer.
For the past decade, with a few exceptions, Sony’s platforms have been the target of choice for 3rd party developers. It’s easy to see why. In order for somebody to play your game, they need to own the system, so developers are of course going to favor the system that gives them the largest potential customer base.
In the last console-generation transition, there was nothing to fear: The PS2 was pretty much guaranteed to be a big hit. Sure, some developers would make a few games for other systems too, to grab a bit of extra revenue, but more often than not they had come out on the PS2 first. Only in a few rare cases (Tecmo and Capcom’s projects on the Xbox and ‘Cube) were the resources and fortunes of a major project placed in a minority console. If you wanted a safe bet (and who doesn’t) Sony was the place to go.
Just a few months ago, the PS3 was surely looking to ride in on the PS2’s coattails, as the PS2 had done before it, and I’m sure that’s what most developers were banking on, but things aren’t so clear-cut now. It appears to me that each of the three systems has strengths that could propel them to the top:
The PS3 looks down, but it might not be out. Surely, despite the damage done by price tag, and the E3 fumble, being heir to the Playstation line is still worth a lot. On the off-chance that BluRay does take off, it will be an underpriced BluRay player rather than an overpriced console, much as the PS2 made it into a lot of homes in its first year just for being an affordable DVD player (this looks much less likely though – most people just don’t have the chips to lay down for HDTV and BluRay). It will be the most powerful console, even if it’s not by much, which counts for something. This is especially the case in Japan, where the Xbox 360 is essentially dead in the water, so for developers who wish to make technologically impressive game, the PS3 will be the only choice.
The Xbox 360’s big draw is that it’s already out, and has somewhere around 6 million already sold. When the Wii and PS3 come out, the 360 will already be getting its second generation of games. It’s reportedly only marginally less powerful than the PS3, and $200 cheaper. As with the original Xbox, the use of DirectX should make it easy for PC game developers to port their games, or to release simultaneously on both platforms for a little extra cash. And then there’s Xbox Live, which rocks and will undoubtedly continue to grow as broadband does, and gives developers the chance to make small games that nobody would buy off a shelf, and sell them for $5 a pop.
And of course there’s the Wii, already mentioned in the article above. It has the forward momentum now, coming off of E3, and it has the nifty factor. Anybody who likes both video games and gadgets is in love with this thing. If Nintendo is true to form, it will only be $200. True, Nintendo decided to take a timeout from Moore’s Law this time around, but those who haven’t shelled out thousands on a widescreen and surround sound might find it attractive that they won’t be missing out on anything when they buy the same system and same games as everybody else.
From where I stand, all three of these consoles has a chance to be a top dog. None of these advantages seem clearly decisive. Worse, I can’t see any strategy that developers might take to maximize their chances of success. A lot of developers opted to release multiplatform titles last generation, to get maximum exposure, but it’s not clear that will even be a workable strategy this time around.
The Wii will probably be the cheapest to develop for, and its games will cost the least. These are good reasons to develop for it. On the other hand, games made for the Wii probably won’t make good ports to the other consoles, due to the vastly different control schemes they have. And making a technologically impressive game for the 360 or the PS3 will probably prevent it’s being totally portable to the Wii, due to the very large power differences.
So, one might say, the best bet is to make multiplatform games for both the 360 and the PS3, leaving out the Wii. However, as the first article I linked to shows, developers stand to lose quite a bit of potential revenue for having done just that. Is it really smart to leave out the Wii at this point?
Finally, it occurs to me that while competition is almost always a good thing for the consumer, in this case there could be some unwanted side effects due to the way the gaming industry is structured, such that the people developing the systems are mostly different from the people making the games. Some games are really involved, and can take a lot of dedication, money, and time to develop. Are developers/publishers going to want to put that many eggs in one basket, when that basket has a roughly 2/3 chance of falling, or if none of the baskets reach a majority of the user base (Yes, I realize the basket analogy just broke down)? Consider that for some publishers, there’s not a lot of room of error, because the industry is already in a bit of a slump.
So where would you spend your company’s money if you were the unfortunate schmoe making decisions for a developer or publisher right now? Would you be starting any major big-money projects, or hanging in there to take a bit of a wait-and-see approach? Or would you perhaps just make games for the DS for a while (akin to making games for hotcakes, if hotcakes had games)? And how will this situation end up affecting those of us who just want to waste some time playing games?
[tags]xbox360,nintendo wii,sony ps3,3rd party developers,game developers[/tags]