Tuesday, December 26, 2006

Why Battle of the Consoles was more than just business

Today is Boxing Day and you are spending the morning reading the paper instead of braving the crowds at an electronics superstore, so presumably a) you found everything you were hoping for under the tree, or b) your children did, or c) you found a way to opt out of this year's orgy of videogame consumerism. Congratulations to you.

Opting out of videogame consumerism is tough most years, but in 2006 it was nearly impossible. This was the year when the young Xbox 360 finally began showing up in stores in significant quantities, and it was the year when the PlayStation 3 and the Wii made their public debuts. Ever since the eruption of hype that was the Electronic Entertainment Expo (E3) trade show in Los Angeles in May, the Battle of the Consoles was the videogame story of the year.

Here's the funny thing. a business story about a horserace for market share – in the entertainment section. Sorry about that. In fact, we spent nearly the entire year talking about whether the PS3 would win, or whether the Xbox 360 would win, or whether the Wii put Nintendo back in first place. Why?

"It's a high-interest category. It's like having a favourite flavour of soft drink," says Ron Bertram, Nintendo of Canada's vice-president and general manager. "Gamers invest lots of hours playing. They have strong opinions."

"I was a gamer long before I worked in the industry," says Matt Levitan, marketing and PR manager for PlayStation Canada. "First I was an Atari guy and then I was a (Sega) Genesis guy. That's what makes our industry so unique: people are passionate. It's easy to get carried away."

Yes, it is easy to get carried away. But you are not allowed to find that sort of talk interesting unless you hold stock in one of the console makers, and even if you do, you are still not allowed unless you know the material and marketing costs behind each machine.

Seriously, you are not allowed. Three large electronics companies have game machines for sale. Chances are very slim that any of them is headed for bankruptcy. So what if we forget about the market-share horserace for a while, and instead talk about what happened in gaming itself in 2006?

Well, many new games arrived in stores. A few were inspired. Several were good. Many of them were boring and stupid. Unforgivably many were sequels. That much has been standard every year for more than a decade.

So, okay, maybe games themselves are no place to go looking for trends. Maybe the horserace really was the story of the year. But why should you care about who wins the fight for market share?

"Market share is important," says Jason Anderson, head of marketing for Xbox Canada, "because that kind of critical mass affords us the ability to offer great exclusive games."

An exclusive game is one that is available for one machine but not for the others. Halo is an exclusive, and so are all the Mario titles, so is Gran Turismo.

A really great exclusive is called a "system seller," because its appeal is powerful enough to make gamers buy a $300-plus machine they would have otherwise ignored, just for the privilege of a 12-hour play experience.

So, to paraphrase Anderson, market share is important because if you have it, you can persuade a hot game developer to make titles exclusively for your system, which will give you a library that persuades more people to buy your system. It is a virtuous circle, at least as far as a console maker is concerned. It also makes the horserace more important than you might think.

This holiday season, each of the three console makers insisted it was above the horserace. Microsoft told us the Xbox 360, with its global install base of nearly 10 million machines, already had an unstoppable lead. Sony said the PlayStation 3, with its built-in high-definition Blu-ray movie player, would be the centre of digital entertainment in the networked home and far more than just a game player. Nintendo said it was bowing out of high-tech competition and would instead concentrate on selling the Wii to the majority of the population that currently believes videogames are for weenies.

Most of that was insincere. All three horses are galloping as fast as they can.

Nintendo's Bertram: "Our strategy is to compete in the existing gamer market. But also to expand that market."

Sony's Levitan: "First and foremost, the PS3 has to be a games player. You never want to alienate the gamer."

Microsoft's Anderson: "For the consumer who only buys one (console), our goal is to be that one."

Behind the counter at Game Shack in the Atrium on Bay, Luigi Vaccaro has the perspective of someone who has seen many races like this one, and is still interested. He currently owns an Xbox 360 and a Wii.

"I'm into shooters and I like to play online (on the 360)," he says. "The Wii is almost like virtual reality. In Rayman, you have to throw a cow by swinging the remote around above your head." He says he hasn't yet found a reason to buy a PS3. Still: "I have to try everything. I'm one of those spenders who can't stop.

"Back then, it was Nintendo versus Sega. Today it's the same. I'll just be happy if neither Nintendo nor Sony goes bankrupt."

The key thing here, and what makes the horserace important, is that each console maker has a point of view: a brand image that informs everything it does. The Xbox 360 is good at high-definition pictures and it does play DVDs, but its real selling point is online play. The PS3 is a beast of a computer and will probably boast the best visuals of this generation, along with the smartest virtual enemies. The Wii is a party machine that works best with eight friends and a keg.

The console that winds up leading the pack will make its parent company rich, certainly, but it will also have the power to shape gaming at large. A win for the 360 will mean a win for online play and trash-talking into a headset at opponents half a continent away.

A win for the Wii will mean smaller development budgets and fewer titles that appeal to the hardcore and more titles about swinging cows over your head.

A win for the PS3 will be a win for the status quo: gaming as a largely solitary activity that pits players against ever more sophisticated artificial intelligence.

The horserace mattered because everybody talked about it, sure. But it really mattered because all that chatter was really a conversation about the future of the medium. The creative (and maybe even artistic) choices game developers will make over the next five years hang on it. Maybe it's okay if you couldn't help picking a side.

Toronto Star

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