Too Early, Too Much
Ever since the release of the Xbox 360 and Microsoft’s very abrupt drop of support for the original Xbox, I’ve been a believer that the company launched too early. The current generation was going strong (and still is) and there was simply no need to launch a new console, aside from the fact that Microsoft’s focus was to get the upper hand on Sony and release a year before they were presumed to. That was a stupid decision and is going to cost a lot of people a lot of money.
What's even more astonishing, however, is that Microsoft initially had plans to refresh the hardware very frequently. "...considering the amazing pace of technology advances, our very first thoughts on Xbox included the somewhat misguided notion that we might upgrade the system every TWO years," Bachus said in a recent interview on GameDaily.com. "Now wouldn't that have been disruptive!"
If it were up to me, I wouldn’t have launched the 360 until this last holiday and the PS3 until this coming Christmas. Sure, the hardcore guys might have been a bit upset, but the vast majority of gamers out there, the casual ones, wouldn’t have minded at all. In fact, most probably won’t be investing into next-gen until at least late 2008. The rapid transition by Microsoft and, marginally, Sony, has caused publishers to invest large amounts of money into projects that are generally not going to recoup them that much. Most of these next-gen exclusive titles should have been done on last-gen systems at considerably lower development costs and marketed to a substantially larger user base.
One can just look at the NPD sales data and easily see my point on all this. Sales of the most successful next-gen console, the 360, aren’t even on par with the original Xbox yet. Most 360 titles briefly appear in the top 10 software sales and then quickly drop out of it; the most recent one being GRAW2. Yet, PS2 titles like Guitar Hero consistently appear in the Top 10 and only drop off for a bit of time before popping up again. There are countless PS2 titles that are selling like hotcakes (including God of War II) and even Xbox and GameCube titles that are doing well enough to warrant greatest hits labeling. Hell, the PS2 console, itself, is pretty much outselling all other consoles by a considerable margin. That is completely staggering for a seven-year-old console that still retails for $129. It still hasn’t even reached the coveted $99 price point yet but has already sold almost 120 million units (almost 20 million more than the original PlayStation). This is a completely telling sign.
People are perfectly happy with their older systems, playing games that retail for an average of $27 and don’t feel the need to upgrade until next-gen console prices come down, they get an HD-capable tv and a larger variety of games are available. However, publishers are stuck now and have shifted focus too soon (as they always seem to) and it is going to bite them. Even through this coming Christmas, you are not going to see huge sales for next-gen games. I bet that even the biggest ones, Halo 3 and GTA IV, reach only a small fraction of what Halo 2 and GTA III sold last gen, despite costing a lot more to develop.
That brings me up to the #2 mistake behind launching too early which happens to be the console price point. With the PS3 costing $600 and Microsoft just releasing its almost $500 Elite version of the Xbox 360, prices are going in the wrong direction. I think if anything, that this new generation has reaffirmed that the $300 price point is the ideal one to go for. Anything that’s higher than that and you’re going to have a substantially slower adoption rate. People can obviously wait. They have the patience and that patience seems to last longer and longer with each passing generation. I think that’s why you are going to see Sony eventually become #1 again. It is going to be selling PS3s years after the 360 and Wii are removed from store shelves because they know the importance of the late adopter. There’s no way that the PS3 is going to gain much distance on the 360 in the short term, but things will definitely change once things hit the $300 range. That’s when the large number of PS2 owners begin to consider the transition. There will be a lot of games available and quite a few of them at $30.
There’s no doubt that the $250 Wii further establishes the fact that a cheaper console will sell, but I’m not convinced that most of the people buying that system are ones that have come off the Xbox or the PS2. I think they are mostly very casual or traditionally non-gamers who have been sucked into the popularity of the system’s new control scheme. One of the main reasons I believe this is that all of the people I know who bought the Wii are still playing only Wii Sports… that’s it. They haven’t bought any new games despite having the system for six months! If that’s a trend that continues than you will see the Wii follow the same sort of path that the N64 and GameCube did. Third party titles don’t do so well and Nintendo does very well. But, that’s another blog entry for another day.
Today, I just wanted to express my belief that the main culprit behind a lot of this industry’s issues is the fact that console manufacturers release their new systems too early. This is followed by the outrageous amounts of money that they think gamers will pay for a gaming machine. Hardcore gamers will always be there on day one, for sure, but as you get further away from that crowd, you start to see that tons of bells and whistles don’t really matter unless they come in an affordable package.
What's even more astonishing, however, is that Microsoft initially had plans to refresh the hardware very frequently. "...considering the amazing pace of technology advances, our very first thoughts on Xbox included the somewhat misguided notion that we might upgrade the system every TWO years," Bachus said in a recent interview on GameDaily.com. "Now wouldn't that have been disruptive!"
If it were up to me, I wouldn’t have launched the 360 until this last holiday and the PS3 until this coming Christmas. Sure, the hardcore guys might have been a bit upset, but the vast majority of gamers out there, the casual ones, wouldn’t have minded at all. In fact, most probably won’t be investing into next-gen until at least late 2008. The rapid transition by Microsoft and, marginally, Sony, has caused publishers to invest large amounts of money into projects that are generally not going to recoup them that much. Most of these next-gen exclusive titles should have been done on last-gen systems at considerably lower development costs and marketed to a substantially larger user base.
One can just look at the NPD sales data and easily see my point on all this. Sales of the most successful next-gen console, the 360, aren’t even on par with the original Xbox yet. Most 360 titles briefly appear in the top 10 software sales and then quickly drop out of it; the most recent one being GRAW2. Yet, PS2 titles like Guitar Hero consistently appear in the Top 10 and only drop off for a bit of time before popping up again. There are countless PS2 titles that are selling like hotcakes (including God of War II) and even Xbox and GameCube titles that are doing well enough to warrant greatest hits labeling. Hell, the PS2 console, itself, is pretty much outselling all other consoles by a considerable margin. That is completely staggering for a seven-year-old console that still retails for $129. It still hasn’t even reached the coveted $99 price point yet but has already sold almost 120 million units (almost 20 million more than the original PlayStation). This is a completely telling sign.
People are perfectly happy with their older systems, playing games that retail for an average of $27 and don’t feel the need to upgrade until next-gen console prices come down, they get an HD-capable tv and a larger variety of games are available. However, publishers are stuck now and have shifted focus too soon (as they always seem to) and it is going to bite them. Even through this coming Christmas, you are not going to see huge sales for next-gen games. I bet that even the biggest ones, Halo 3 and GTA IV, reach only a small fraction of what Halo 2 and GTA III sold last gen, despite costing a lot more to develop.
That brings me up to the #2 mistake behind launching too early which happens to be the console price point. With the PS3 costing $600 and Microsoft just releasing its almost $500 Elite version of the Xbox 360, prices are going in the wrong direction. I think if anything, that this new generation has reaffirmed that the $300 price point is the ideal one to go for. Anything that’s higher than that and you’re going to have a substantially slower adoption rate. People can obviously wait. They have the patience and that patience seems to last longer and longer with each passing generation. I think that’s why you are going to see Sony eventually become #1 again. It is going to be selling PS3s years after the 360 and Wii are removed from store shelves because they know the importance of the late adopter. There’s no way that the PS3 is going to gain much distance on the 360 in the short term, but things will definitely change once things hit the $300 range. That’s when the large number of PS2 owners begin to consider the transition. There will be a lot of games available and quite a few of them at $30.
There’s no doubt that the $250 Wii further establishes the fact that a cheaper console will sell, but I’m not convinced that most of the people buying that system are ones that have come off the Xbox or the PS2. I think they are mostly very casual or traditionally non-gamers who have been sucked into the popularity of the system’s new control scheme. One of the main reasons I believe this is that all of the people I know who bought the Wii are still playing only Wii Sports… that’s it. They haven’t bought any new games despite having the system for six months! If that’s a trend that continues than you will see the Wii follow the same sort of path that the N64 and GameCube did. Third party titles don’t do so well and Nintendo does very well. But, that’s another blog entry for another day.
Today, I just wanted to express my belief that the main culprit behind a lot of this industry’s issues is the fact that console manufacturers release their new systems too early. This is followed by the outrageous amounts of money that they think gamers will pay for a gaming machine. Hardcore gamers will always be there on day one, for sure, but as you get further away from that crowd, you start to see that tons of bells and whistles don’t really matter unless they come in an affordable package.
posted by Frosty @ 1:32 PM
2 comments
