Gaming Consoles are for Playing Games; All the Rest is Flash

Well, well, well. "Window to the living room.""If we build it they will come." These phrases and others like them are the stock in trade of my friends over at Microsoft and Sony. Build a big, powerful, muscle-bound machine with a billion features and people will be willing to pay a premium price for all this added functionality beyond gaming. No, I said. People who buy gaming consoles want to play games. I've been writing about this for 10 months. Sure, online games are great. But HD-DVD, Blu-ray, etc., etc., etc., for $500, $600 bucks? I said "You're limiting your market and strictly catering to the hard-core gamer. No, Microsoft and Sony said. You don't get it. This is a long-term strategy. Our customers will get it.The problem is, according to a recent NPD survey, that they're not getting it. Not at all. This from today's ARS Technica:

The Xbox 360 and PlayStation 3 consoles are marvels of technology. The PlayStation 3 features a Blu-ray player, the ability to stream video and music from your PC, and it's a very impressive upscaling DVD player. The 360 has a robust selection of movies and television shows you can purchase and rent through the Xbox Live service, and with VGA or HDMI connections it will also upscale your DVDs. For some gamers, these functions go a long way towards justifying the high price of these systems, but a new study from the NPD Group suggests that not only are people not using these functions, they're not even aware of them.

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It's apparent from the study's results that one thing interests the majority of consumers: games. The dueling next-generation HD disc formats, the ability to download content, and even high-definition graphics don't seem to matter to the majority of the game-buying public; if these figures are reflective of the wider market, all those features are being roundly ignored by most gamers.

When you take another look at the three next-generation systems through this filter, it becomes obvious why the Wii is in such a dominant position. It's the least expensive system, and all the added features that make the extra cost of the 360 and PS3 good values to the plugged-in aren't swaying the mainstream buying public. With constantly shifting hardware configurations, falling prices, and the HD DVD/Blu-ray fight still going strong, Microsoft and Sony may be sending the message that they're too complicated for the average gamer, while Nintendo's game-first attitude and strikingly lower price point may be exactly what the majority of console buyers want.

Doh! Not exactly what the pooh-bahs at Sony and Microsoft want to hear. Gamers want to play, what, games? Not to be an I-told-you-so guy, but here is what I wrote four months ago on this exact topic, building on my earlier thinking from last fall:

Fast forward to today. Both Microsoft and Sony are offering super-premium versions of their products, more firmly cementing their bets in the multimedia space. Hard-core gamers seem willing to pay for the high-end graphics and extra functionality, but what about the casual gamer? They seem to be much more in tune with the features, functionality, usability - and price - of the Wii. Nintendo has clearly struck a chord with the everyman, someone who just wants to step to the plate, bowl a game, smash that serve or share with their friends. Nintendo is about accessibility, ease of use, value and fun. Theirs is not a holy war against a competitor, but a quest for understanding and acceptance from their market. THE market. The market where you can sell 100 million consoles. The market that provides you with the foundation to layer on additional features as technology costs continue to drop and even more games are developed for the platform. Microsoft and Sony are battling it out in the trenches. Nintendo isn't playing their game. Interestingly enough, they are clearly winning. Just look at the stock price.

Sheesh. Kind of the way it has played out, huh? Now I know that the mucky-mucks at Sony and Microsoft will pooh-pooh this survey as they do most other forms of market feedback, but that's ok. We know the truth. The market has spoken. The only question is, who is really listening? In one word: Nintendo.

Comments

[Davefromoz]

A thought occured to me as I read some of these gaming entries that it's kinda amusing to see console gamers being referred to as 'hard-core gamers'. As a PC gaming enthusiast I always considered my niche that of the hard-core gamer and the Playstation, Xbox crowd the casual gamer.

Does this mean I can call myself super extra hardcore now?

[Wille]

I already own an Xbox360, in which I am very dissapointed about the quality of games: there is simply nothing new or compelling.

However, I am considering buying a PS3, not because of the games, but because of the Blu-Ray player, it's a reasonably priced Blu-ray player, with the added advantage of being able to play PS3-games, should something good come out..

..so for me as an "early adopter", my reason for buying a PS3 would be the blu-ray player, nothing else..

So in my book, the PS3 will be a paranthesis in terms of games, however it may have a bigger role to play in swaying the direction of the blu-ray/HD DVD wars..

[Warmwaterpenguin]

@Richard A.

I've gotta say, Rich, I don't see anything to support that position. Besides the fact that the Wii could have *half* the attach rate of the PS3 and still be vastly more profitable, I think you're grossly underestimating the appetite of the casual gamer.

The sheer level of exposure is huge. Go to your local electronics store and compare the size of the PS3 or 360 section to the Wii section. If you want to project that to where we're going, compare the DS section to the PSP.

A userbase of that size can't be ignored. Not by retailers, not by publishing houses. Devs and hardcores and other technophiles may want to push boundaries with the other consoles, but the movers and shakers who pay the money to those devs and produce the games are no fools. These things snowball, which we've already been seeing.

The gaming press may contend that its "too early to call it" but as an investor, calling it early is your job, and Nintendo is about as safe a bet as you can get at this point.

[Jeff Shirley]

Comment #2, the Ps2 simply wrecks that analogy. Power meant nothing last cycle, even if they studios had their own engines set for PC or Xbox. Once the PS2 became market dominant it got everything casual, or hardcore. You can't conveniently section the market when it suits your needs.

And commenter #1 is in for a rude awakening if he thinks Wii isn't going to sell any games this holiday. And he would be a plumb fool to not have Nintendo stock. The DS and Wii are both worldwide phenomena that have led Nintendo to billion dollar fiscal year profits (you know, profits, instead of losses.) Even if Halo 3 and the 360 sell gangbusters, it might not alleviate the 360's crippled profit strategy (Somehow losing money with the top selling system and the top selling game last holiday), because even if Halo 3 brings them a profitable quarter, it won't save the year.

[Richard A.]

It's going to be interesting this Xmas. I'm sure Nintendo will sell a ton of Wiis, but they will fail miserably at selling software(were the real money is at).

I'm not to sure i want to be holding Nintendo stock when MSFT announces record software sales, while Nintendo has nothing to show for it's larger console base.

[Darren Herman]

I think what we're finally seeing is the gaming market broken out. We've always had Xbox and Playstation, both of which are 'hardcore' consoles which can play the simple games up to the most advanced. Nintendo recognized that not every gamer was hardcore, so they designed a system around the casual gamer. Since the market for casual gamers is much larger (in terms of people), we're seeing a shift in the industry. Xbox and Playstation were built for power/graphics... something Nintendo, at this moment, doesn't need.

[Yaser Anwar]

4th gaming post in no time. Wow. I think you will be getting a job offer from MSFT or Sony sooner than I thought!