Games go on the attack
Video Games The gaming industry is undergoing a major transformation. As we approach the next hardware cycle, the goal is to capture new market share.
Video games The gaming industry is in a state of upheaval. On the threshold of the next hardware cycle, new market shares need to be conquered, and anyone leafing through the relevant video game magazines will inevitably ask themselves the question: How many more wars can we wage? On page after page, trolls and elves bash each other's skulls in, machine guns mow down Nazi henchmen, and in various futuristic scenarios, mankind simply fights for survival. The video game industry itself seems to be cementing the prejudices that exist against it. When asked, representatives of the interactive entertainment industry sometimes react with a somewhat perplexed shrug of the shoulders and the remark: "That's what the market wants." The market. For some years now, global sales of video games and the associated hardware have outstripped Hollywood's box office takings. Last year, this amounted to 29.14 billion dollars (+8%), while US film studios had to make do with 23.24 billion dollars (-7.9%), according to the Motion Picture Association of America. The Swiss market shows the same trend: The cinema industry generated CHF 222 million in 2005 (-12.5% compared to 2004), while the entire video game market grew to CHF 271 million (+4%).
The reason for the current upgrade with martial content is a well-known and little-loved one: the video game industry is in a transitional phase. The current generation of consoles may not have had its day, but the next one is either already here (Xbox 360) or waiting in the wings: Nintendo Wii is expected in the fall, Sony's high-tech behemoth Playstation 3 on November 17.
In these difficult times, when sales are slipping and share prices are plummeting because video gamers are not investing money in "outdated" hardware and are therefore hardly making any purchases, it is important to occupy the terrain in a fresh way.
Hardcore gamers are being targeted, those players who play far more games per week than they watch TV. The first wave of titles is geared towards their tastes: "Have you seen 'Gears of War' yet?" a visitor to the Electronic Entertainment Expo E3 in Los Angeles, the biggest video game show in the world, promptly asked his colleague and immediately added: "If you don't have an Xbox 360 yet, then you'll buy one once you've played this hammer."
This first-person shooter is of the nastier variety, but offers superlative graphical sophistication on the very same day that the Playstation 3 is launched on the market.
Delicate price positioningHowever, once the shrapnel from the initial skirmishes for gamers' favor has faded, it is time to broaden the field of vision and ask: Which platform brings what to the table? While this question was comparatively easy to answer in the past, even during transition phases, various unknowns have emerged in 2006.
With a global market share of around 70 percent, Sony is still the undisputed market leader. Its Playstation 2 has sold over 100 million units, and independent game producers such as Electronic Arts, Ubisoft and Konami have a correspondingly strong connection (more on this next week in: The players in the video game industry). When Sony announced the prices of the successor model, the Playstation 3, at 749 francs (20 gigabyte hard disk) and 899 francs (60 GB HD) in May, a crack went through the woodwork.
After postponing the market launch of the hardware, the Japanese company made negative headlines with a new price cap. Certainly, with a Blue-ray player, high-definition capability and the brand new cell chip technology, there is a lot of high-tech in the box, but many are already singing the song: "Who is going to pay for this? Who has that kind of money?"
In its market analysis, the US research institute DFC Intelligence concludes that the high price of the PS3 will lead to a slowdown in industry growth and that Sony could fall behind Microsoft and Nintendo in terms of hardware units sold. DFC is not alone in this assessment. Gerhard Florin, General Manager International Publishing at Electronic Arts, also told Werbewoche: "Nintendo also used to have a market share of 80 percent." Today it is around 10 percent.
When two people argue ...While the top dog will probably soon stop roaring, Microsoft - to stay with the image - has successfully locked horns with the Xbox and has been confidently trumpeting the Xbox 360 for almost a year now. This head start in terms of time does not only mean units sold - according to Bill Gates himself, ten million units are to be sold this year. On the programming level, the second generation of games is already coming onto the market at the start of the competition, which will be even more visually impressive. In addition, a price correction from the US software giant is also to be expected; the Xbox 360 with 20 Giga-HD currently costs 579 francs.
It's a well-known fact that when two people fight, the third is happy. This one is called Nintendo and doesn't give a damn about the high-tech hype of the other two console providers. With their next-generation hardware, unconventionally called Wii, they are neither focusing on high-definition resolution nor on an upcoming carrier format such as Blue-ray or HD-DVD. It's too early for that, say the men behind Super Mario and co. Instead, the focus should be on the feel, and to this end they have developed a new type of control system that has very little in common with the previous ones.
In view of this unstable starting position, turbulent battles for market share are to be expected, from which Sony may well emerge as the loser. Nobody wants to shout this away, the video games industry and not least Sony itself are too dependent on the success of the Playstation 3.
If it does not become the desired hit, things will also look bad for the Blue-ray format and therefore for the future of the Japanese consumer electronics company in general - or as Chris Reeves, head of Sony Computer Entertainment Europe, said optimistically in an interview with Werbewoche: "The PS3 plays a decisive role. There is pressure of expectation, but we will succeed."
Marc Bodmer
The reason for the current upgrade with martial content is a well-known and little-loved one: the video game industry is in a transitional phase. The current generation of consoles may not have had its day, but the next one is either already here (Xbox 360) or waiting in the wings: Nintendo Wii is expected in the fall, Sony's high-tech behemoth Playstation 3 on November 17.
In these difficult times, when sales are slipping and share prices are plummeting because video gamers are not investing money in "outdated" hardware and are therefore hardly making any purchases, it is important to occupy the terrain in a fresh way.
Hardcore gamers are being targeted, those players who play far more games per week than they watch TV. The first wave of titles is geared towards their tastes: "Have you seen 'Gears of War' yet?" a visitor to the Electronic Entertainment Expo E3 in Los Angeles, the biggest video game show in the world, promptly asked his colleague and immediately added: "If you don't have an Xbox 360 yet, then you'll buy one once you've played this hammer."
This first-person shooter is of the nastier variety, but offers superlative graphical sophistication on the very same day that the Playstation 3 is launched on the market.
Delicate price positioningHowever, once the shrapnel from the initial skirmishes for gamers' favor has faded, it is time to broaden the field of vision and ask: Which platform brings what to the table? While this question was comparatively easy to answer in the past, even during transition phases, various unknowns have emerged in 2006.
With a global market share of around 70 percent, Sony is still the undisputed market leader. Its Playstation 2 has sold over 100 million units, and independent game producers such as Electronic Arts, Ubisoft and Konami have a correspondingly strong connection (more on this next week in: The players in the video game industry). When Sony announced the prices of the successor model, the Playstation 3, at 749 francs (20 gigabyte hard disk) and 899 francs (60 GB HD) in May, a crack went through the woodwork.
After postponing the market launch of the hardware, the Japanese company made negative headlines with a new price cap. Certainly, with a Blue-ray player, high-definition capability and the brand new cell chip technology, there is a lot of high-tech in the box, but many are already singing the song: "Who is going to pay for this? Who has that kind of money?"
In its market analysis, the US research institute DFC Intelligence concludes that the high price of the PS3 will lead to a slowdown in industry growth and that Sony could fall behind Microsoft and Nintendo in terms of hardware units sold. DFC is not alone in this assessment. Gerhard Florin, General Manager International Publishing at Electronic Arts, also told Werbewoche: "Nintendo also used to have a market share of 80 percent." Today it is around 10 percent.
When two people argue ...While the top dog will probably soon stop roaring, Microsoft - to stay with the image - has successfully locked horns with the Xbox and has been confidently trumpeting the Xbox 360 for almost a year now. This head start in terms of time does not only mean units sold - according to Bill Gates himself, ten million units are to be sold this year. On the programming level, the second generation of games is already coming onto the market at the start of the competition, which will be even more visually impressive. In addition, a price correction from the US software giant is also to be expected; the Xbox 360 with 20 Giga-HD currently costs 579 francs.
It's a well-known fact that when two people fight, the third is happy. This one is called Nintendo and doesn't give a damn about the high-tech hype of the other two console providers. With their next-generation hardware, unconventionally called Wii, they are neither focusing on high-definition resolution nor on an upcoming carrier format such as Blue-ray or HD-DVD. It's too early for that, say the men behind Super Mario and co. Instead, the focus should be on the feel, and to this end they have developed a new type of control system that has very little in common with the previous ones.
In view of this unstable starting position, turbulent battles for market share are to be expected, from which Sony may well emerge as the loser. Nobody wants to shout this away, the video games industry and not least Sony itself are too dependent on the success of the Playstation 3.
If it does not become the desired hit, things will also look bad for the Blue-ray format and therefore for the future of the Japanese consumer electronics company in general - or as Chris Reeves, head of Sony Computer Entertainment Europe, said optimistically in an interview with Werbewoche: "The PS3 plays a decisive role. There is pressure of expectation, but we will succeed."
Marc Bodmer
