An Unfortunate Race to the Moon

Dec 4, 2011

What do Dark Souls, Heavy Rain, Alan Wake, Skyward Sword, Bastion, and Uncharted have in common? They’re a few of this generations great games. We’re in an incredible point in the history of gaming. We’re more spoiled than ever before and we have each other to thank. As a market we’ve asked for games to go beyond graphical fidelity and push the limits of imagination. The momentum is gaining as consumers have fallen into comfort with the current generation’s technology. The Wii, PS3, and 360 are wonderful platforms that are affordable to many and a wonderful way to experience what the best minds in gaming have to offer. Software sales are high despite four years of recession and recovery. So why are the Big 3 racing to bring out new consoles?

No company ever wants to be last. In most cases, even if your technology is less superior, being first to market pays dividends. What’s more, the gaming market is rare in that an impressive percentage of participants are early adopters; between 10-20% in the first 3 years. The Big 3 know this and are fighting hard to push their new consoles for 2012. That may lead to more money for shareholders, but as a gamer it makes me scratch my head. And as a businessman, I can’t quite wrap my mind around it. If you look at the 360, it was riddled with issues for 4 years until the slim was released. Now their system has a reduced failure rate, and the system overall costs less to manufacture. That increases opportunity for the system to enter more homes, and Microsoft can reap the profits on higher margin items, such as Live and online transactions for games, DLC, and movies. Its not quite the AOL model, but it would work. Instead, to be first, they’ll release a new system, surely sell 1 million units before 2013, and push developers into new development models. We can expect the new system to be similar, but no guarantee there (see PS3 vs PS2). While they will find success, their NOI (net operating income) will be substantially lower and will sacrifice overall profit for market positioning. For us consumers, we’ll have the unenviable task of packing up “old” consoles, “old” games, and “old” peripherals, and selling or storing them just to keep up. What The Big 3 do not understand is they’re dragging us with them.

The latest and greatest is what we want. So keep us believing what we have is the latest. Don’t drag each other to an era we don’t need to be apart of. Let’s spend more time here, in this generation, perfecting our craft and growing the market. Need is the mother of all invention – and nobody needs a new console generation.