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BBC Ponders Another Games Industry Crash

Zonk posted more than 7 years ago | from the just-like-clockwork dept.

Games 219

weirdguy writes with a link to a BBC article that poses the same question asked by journalists every couple of years: is the games industry headed for another crash? "Yes, gamers are snapping up the new generation of games consoles — Microsoft's Xbox 360, Nintendo's Wii, and Sony's Playstation 3 [PS3], but at huge cost to the industry. Hardware makers are losing hundreds of dollars on every console sold, and games publishers face an "increasingly difficult environment, as rising development costs and small user bases [mean] that return on investment in next generation games development is unlikely to be achieved before 2008," according to media analysts Screen Digest. More importantly, though, the video games publishers are facing a revolution of their business model."

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eh... (5, Insightful)

Dance_Dance_Karnov (793804) | more than 7 years ago | (#18751247)

Nintendo figured out the secret to not losing money. They make money. Crazy I know.

Re:eh... (5, Insightful)

wframe9109 (899486) | more than 7 years ago | (#18751325)

Not to mention the fact that up front development costs are smaller for the Wii... And I would imagine development costs and time would be lesser as well, seeing that there is less horsepower to work with, and thus spending days getting the acne or sweat right would be pointless.

In any case... It's a good time to be a gamer :)

Re:eh... (1)

hedwards (940851) | more than 7 years ago | (#18752295)

Nintendo also has had a tendency in recent years to make their hardware easy to write code for. Evidenced by the thriving third party games market for the GBA and I believe DS.

With a memory cart and an internet connection it isn't too hard to find a few freeware games to load on.

Re:eh... (-1, Troll)

Anonymous Coward | more than 7 years ago | (#18751425)

It's a good thing they're not losing money on those consoles, cause they're certainly not making any on games. What's the only game 90% of the Wii owners are playing? Wii sports. And are they buying others? Nope, because the gimmick pretty much ends there. Oh, wait, some people got Wii Play. Oh, sorry, right, and some other people bought into the princess franchise, recycled elf adventure game #41.

"Nintendo makes games that are fun! I can get all these awesome things on virtual console!" All the Nintendo zealots are welcome to enjoy paying $10-$20 per title for games they already bought 20 years ago because they're "more fun" and "more creative", while all the while ragging on Microsoft and Sony for selling games that "look pretty but aren't fun".

People will get tired of the Wii's one-trick-pony and Furby-inspired "marketing" campaign soon enough, about the same time they realize that plugging a system into their HDTV that actually looks good improves their enjoyment of rehashed game ideas more than a repetitive strain inducing controller.

And you know what the BEST part of that will be? Not having to see 12 identical comments pop up on Slashdot with the exact same "ZOMG LOLOLOLOL I LOVE NINTENDO! ROFL MSONY SUX LOL!" remarks as soon as any article about platform differences shows up. Sure, it'll mean the two anti-Nintendo trolls like this will disappear, too, but at least these posts break the trend.

Re:eh... (1, Insightful)

wframe9109 (899486) | more than 7 years ago | (#18751545)

You just compared an entire gaming platform, to a single purpose toy.

I suppose I could argue every other sentence which you somehow managed to get wrong, but that would be easier :-) /PC Gamer //Wii Gamer

Re:eh... (1)

Impy the Impiuos Imp (442658) | more than 7 years ago | (#18751671)

> You just compared an entire gaming platform, to a single purpose toy.

Yes, that was his point. Hence phrases like "one trick pony".

A powerful trick that sells well, but, like Guitar Hero, a single-trick novelty.

Re:eh... (3, Insightful)

wframe9109 (899486) | more than 7 years ago | (#18751877)

Yes, but how can a gaming platform be a "one trick pony?"

I mean...

Personally I see:

Entire Collection of Wii Games
Entire Collection of GameCube Games
Entire Collection of Virtual Console Releases

Even if it were only Wii games, it couldn't be a "one-trick pony" unless that one trick is playing a library of different games?

No Game Boy Player for Wii (1)

tepples (727027) | more than 7 years ago | (#18753277)

Entire Collection of GameCube Games
True, but GameCube can play more games than Wii. GameCube can play nearly all Game Boy, Game Boy Color, and Game Boy Advance titles.

Entire Collection of Virtual Console Releases
Compare to "Entire Collection of GBA Homebrew Releases" and "Large Collection of Questionably Legal Emulated Games" on GameCube with Game Boy Player perhaps?

Re:eh... (5, Insightful)

Danse (1026) | more than 7 years ago | (#18752001)

A powerful trick that sells well, but, like Guitar Hero, a single-trick novelty.

Guitar Hero is a good game. It's fun. What else is it supposed to be? Do you want it to make you breakfast too? Change your oil maybe? What exactly is it that you're expecting from a game?

Re:eh... (1)

Udderdude (257795) | more than 7 years ago | (#18753967)

I think he might have made his point better if he compared another game system instead of just one game. Guitar Hero uses a guitar controller. Almost all Wii games use the Wii controller. However, neither are paticuarly gimmicky .. no more than any other controller, in my opinion. Also, DDR uses it's own controller and people have not tired of that "gimmick" either.

Re:eh... (5, Insightful)

HappySqurriel (1010623) | more than 7 years ago | (#18751613)

It's a good thing they're not losing money on those consoles, cause they're certainly not making any on games. What's the only game 90% of the Wii owners are playing? Wii sports. And are they buying others? Nope, because the gimmick pretty much ends there. Oh, wait, some people got Wii Play. Oh, sorry, right, and some other people bought into the princess franchise, recycled elf adventure game #41.


Well, according to NPD the Wii has had 5,758,750 games sold to 2,107,500 systems in North America to the end of February which works out to 2.75 games per system above and beyond Wii sports; this (of course) doesn't include sales of Virtual Console games and (last time any data was reported) Wii points cards were one of the most popular accessories being sold.

"Nintendo makes games that are fun! I can get all these awesome things on virtual console!" All the Nintendo zealots are welcome to enjoy paying $10-$20 per title for games they already bought 20 years ago because they're "more fun" and "more creative", while all the while ragging on Microsoft and Sony for selling games that "look pretty but aren't fun".


Well, the price is $5 to $10 and a lot of the games are considered some of the best games ever created. Personally, I never owned a Turbo Graphics 16 or Sega Genesis so I'm happy to put down $5-$10 for a game I haven't played before which is considered to be amazing.

People will get tired of the Wii's one-trick-pony and Furby-inspired "marketing" campaign soon enough, about the same time they realize that plugging a system into their HDTV that actually looks good improves their enjoyment of rehashed game ideas more than a repetitive strain inducing controller.


I think you don't understand the Wii at all ...

People are tired of the rehashed game idea regardless of whether it is in HD, SD or uses limited Wii functionality; the games people are excited about are the ones which are breaking new ground. There is a reason why Rayman Raving Rabids, Madden and Red Steel are the best selling third party games to date and that is because they offer gameplay that couldn't be done on the PS3 or XBox 360.

And you know what the BEST part of that will be? Not having to see 12 identical comments pop up on Slashdot with the exact same "ZOMG LOLOLOLOL I LOVE NINTENDO! ROFL MSONY SUX LOL!" remarks as soon as any article about platform differences shows up. Sure, it'll mean the two anti-Nintendo trolls like this will disappear, too, but at least these posts break the trend.


This would probably have more meaning if you weren't the same Anonymous Coward Sony Fanboy Troll that has been proclaiming the doom of the Wii since TGS 2005. Right now I think you're caught between the denile stage and rage stage on your way towards acceptance.

Re:eh... (3, Funny)

lpangelrob (714473) | more than 7 years ago | (#18751761)

Right now I think you're caught between the denile stage and rage stage on your way towards acceptance.

Interesting... I've also heard that denile could be a river in Egypt...

Re:eh... (1)

Broken scope (973885) | more than 7 years ago | (#18752115)

.....
Why did you have to do that? Why?

Re:eh... (1)

Sciros (986030) | more than 7 years ago | (#18752393)

Well, you said that Madden is one of the best-selling 3rd party titles because "it breaks new ground" but maybe you put a typo there and accidentally typed "Madden" instead of some other Wii title? Because Madden NFL games are some of the best-selling 3rd party titles, period (if not *the* best) across ALL consoles. And that includes PS and Xbox. By the way, more copies of Madden sold on PS and Xbox than on Cube. I imagine this would also be true of 360 vs Wii?

Re:eh... (1)

masterzora (871343) | more than 7 years ago | (#18754359)

The difference here is that EA created a different control interface to take advantage of the Wii controller's technology. It's not just that it's Madden, but that it's Madden using the motion sensing in good capacity. There is no reason to assume that the 360's version of Madden has been sold more than the Wii's version because they are in many ways different games this time around.

Re:eh... (1)

EmperorKagato (689705) | more than 7 years ago | (#18751643)

Go back to your blog anonymous coward.

By the way, I heard Paper Mario 2 for the Wii is very good.

Re:eh... (2, Informative)

MeanderingMind (884641) | more than 7 years ago | (#18751793)

It's not Paper Mario 2. That was Paper Mario and the Thousand Year Door for the Gamecube.

The Paper Mario game on the Wii is either Paper Mario 3, or it's own game (given that it's primarily a Platformer rather than an RPG).

And yes, it is good. Although I've found myself longing for another Paper Mario game in a pure RPG fashion.

Re:eh... (1)

HAKdragon (193605) | more than 7 years ago | (#18752665)

I would still consider Super Paper Mario an RPG (or at least RPG-lite), but the combat is more platform-ish than turn based like traditional console RPGs.

Re:eh... (-1)

Anonymous Coward | more than 7 years ago | (#18751821)

Dude, it has "Mario" in the title, which means it's automatically a "rehash" of every previous game with "Mario" in the title.

Re:eh... (1)

TKOTolman (1089049) | more than 7 years ago | (#18751843)

PM2 is a must have for any fan of the original Mario on the classic NES. It has much more of a classic feel to it then an RPG feel like PM1 had. If I did not have a Wii I would buy one just for this game.

Re:eh... (1)

TKOTolman (1089049) | more than 7 years ago | (#18751483)

So if Nintendo lost the "next gen war" sales they would still win. What a novel idea to "make money" on your product.

Re:eh... (2, Insightful)

CastrTroy (595695) | more than 7 years ago | (#18751617)

Which is why I don't think Nintendo was a loser with the GC. Sure they sold the least number of unit, but they made a whole lot more money out of the GameCube than MS made on the XBox. Not sure how well they did compared to Sony, but Sony sold lots more units, so I think they ended up OK in the end. To make a car analogy, it doesn't matter that Porsche sells less cars than Ford, as long as their making money doing what their doing. The big 3 US automakers seem to be the ones in financial trouble, even though they sell quite a few cars.

Source Examination? (4, Insightful)

T0wner (552792) | more than 7 years ago | (#18751927)

Unfortunately you have to pay $1500 view the detailed report [screendigest.com] BBC used as it's source. There other source is a "Gerhard Florin, executive vice president at EA and the general manager of its international publishing business." The article itself resides in the Business section and was written by Tim Weber Business editor. The article reads like an EA advertisement for investors. It talks about future revenue streams such as in-game advertising user-generated revenue, online tie ins etc... I really have to question the neutrality of the source when the main interviewee has such a huge vested interest in the revenue streams he's hoping for his own wallet will come to pass. especially in the online sector where he incidentally berates the Wii

Nintendo's efforts, scoffs Mr Barton, are "frankly stone age compared to the others".
As well as the parent poster mentioning the Wii isn't losing money on the console. Aren't the sales figures wrong on Screendisgest's graph. That to me is suggesting as of this month the PS3 is outselling the Wii by 30%. I was under the impression that these sales figures are still be released for independent review and that the Wii was selling better than the PS3 was in at least 2 of the big 3 territories.

Heres something which really caught my eye:

Players will be able to create new levels for games and share them online. "Users could create revenue for games," says Mr Barton. "The potential for this is absolutely enormous".
Step 1. Community makes maps, mods, skins etc.. for a game.
Step 2. Publisher claims it as there own IP
Step 3. Profit

This really annoys me. They can go **** themselves if they think I'm going to spend 40 hours programming something interesting for a game I enjoy just to have them take it and make money out of it to subsidise the inadequacies of their retarded business model.

Nintendo isn't losing money (4, Insightful)

FadedTimes (581715) | more than 7 years ago | (#18751251)

Nintendo doesn't take any loss when someone buys the Wii.

Re:Nintendo isn't losing money (-1, Troll)

IrquiM (471313) | more than 7 years ago | (#18751645)

They are talking about next-gen

Re:Nintendo isn't losing money (1)

MeanderingMind (884641) | more than 7 years ago | (#18751725)

So they're talking about the PS4 and Xbox 720?

I really wish this "next-gen" term would die, it only obfuscates meaning. It's an "in word", something only "insiders" understand and "get". Even then, what does it actually mean? It seems to be used for both the current generation of systems (That's right, current. They've been released, it's not "next" anymore) and sometimes to talk about HD.

I've personally come to loath the term.

Re:Nintendo isn't losing money (1)

Grave (8234) | more than 7 years ago | (#18752143)

Microsoft isn't losing money on the 360 anymore, either. Sony is the only one losing money on their shiny new console.

Now, the XBOX division itself is still losing money, but that has more to do with the incredible amount of money thrown at developers for support and marketing than it does the hardware. Microsoft didn't make any money from Gears of War, I'd bet. No, they offered Epic a great deal - the best marketing money can buy, and no royalty fees. (That is speculative, but it is not uncommon for deals like that to be made in exchange for exclusives that can help move consoles--which in turn move more software.)

Re:Nintendo isn't losing money (2, Informative)

AndersOSU (873247) | more than 7 years ago | (#18752161)

Neither does Microsoft apparently. So I guess, "Hardware makers" means Sony...

Re:Nintendo isn't losing money (4, Funny)

HAKdragon (193605) | more than 7 years ago | (#18753419)

I would hope that Microsoft doesn't take a loss when somebody buys a Wii, or the console market is more cut throat than I thought. ;)

Re:Nintendo isn't losing money (0)

Anonymous Coward | more than 7 years ago | (#18752185)

Generally retail stores buy product at 40-50% off of the suggested retail. With a standard retail of $250, and a cost of $158, 250/158 = 0.632. Meaning retail only gets a 36.8% margin. While this is not good it is believable to me. This implies that Nintendo is making nothing, off of each Wii, and would actually be loosing money if they gave retail a better (closer to standard) margin, or spent ANY money on marketing, or shipping, or packaging, etc. Yes they may be loosing less money than Microsoft or Sony, they are probably not making money on the Wiis themselves.

Consoles are a retail loss leader (2, Interesting)

tepples (727027) | more than 7 years ago | (#18753547)

Generally retail stores buy product at 40-50% off of the suggested retail.
Except video game consoles. Retail chains sell consoles as a loss leader (after overhead) to get people to buy games and accessories.

Nintendo (3, Funny)

cyphercell (843398) | more than 7 years ago | (#18751253)

This would be where Nintendo laughs on it's way to the bank.

Re:Nintendo (1)

shoptroll (544006) | more than 7 years ago | (#18751911)

*inserts "It Prints Money" image macro*

This isn't new (1)

wampus (1932) | more than 7 years ago | (#18751267)

I was under the impression that most consoles have been loss-leaders for some time now, at least at launch, with the real money coming from licensing.

Re:This isn't new (1)

cyphercell (843398) | more than 7 years ago | (#18751355)

I think the difference is at which point the consoles become profitable. The 360 and PS3 are going to be leading for a while and the question is whether or not market penetration will make up for the losses. I think it's safe to assume that Microsoft will be able to survive. Once again reiterating the fact that this gen of consoles has Sony fighting it's way out of a corner.

Re:This isn't new (1)

Guppy06 (410832) | more than 7 years ago | (#18751813)

"I was under the impression that most consoles have been loss-leaders for some time now, at least at launch, with the real money coming from licensing."

"It's the way things have always been done" doesn't mean it's sustainable.

Re:This isn't new (1)

ADRA (37398) | more than 7 years ago | (#18752255)

From my recollection, PS2 was the first console to be sold at a loss for launch. After maybe the first year they started making profits on the unit. The xbox units have never made a profit off just the hardware. Maybe the make it up in Live, which could arguably be considered a part of the hardware depending on your mindset. For Nintendo, I was under the impression that they make it their mission to not sell consoles at a loss. I don't know specifically if they've ever had first year losses like the PS2 did.

Re:This isn't new (1)

rjung2k (576317) | more than 7 years ago | (#18754033)

The only Nintendo console to be sold at a loss, from what I heard, was the Gamecube -- and the loss was only $10 per unit.

Re:This isn't new (1)

SethraLavode (910814) | more than 7 years ago | (#18754269)

The loss taken on the GameCube was only immediately after the price drop to $99. The system was reengineered shortly afterward(removing the digital video out, etc.) to bring it back to profitability.

Wii is not a loss leader . . . (4, Informative)

div_2n (525075) | more than 7 years ago | (#18751285)

Hardware makers are losing hundreds of dollars on every console sold

Since the Wii allegedly only costs about $158 [younewb.com] to make and is sold for $200, I don't find a compelling reason to take the rest of the article seriously.

Re:Wii is not a loss leader . . . (4, Interesting)

LWATCDR (28044) | more than 7 years ago | (#18751537)

Nintendo's plan,
1. Sell the console for a profit,
2. Make fun games.
3. Make it cheap and easy to develop for.
4. Profit.

I still find it all very interesting. I still see the occasional article about how the PS3 will win in the end but I don't know anyone with a PS3 yet but I know a lot of people that have 360s and that want Wiis.

I predict that Microsoft will win the hardcore gamer market and possibly the video delivery market. The Wii will win the broad based gamer market. IE even the hard core gamers will have a Wii next to their 360.
Sony I just don't know. They may end up in third place this time.

Re:Wii is not a loss leader . . . (1)

Ant P. (974313) | more than 7 years ago | (#18751981)

Sorry, but 3 should be "?????", unless Nintendo released a linux dev kit for free without anyone noticing.

Re:Wii is not a loss leader . . . (1)

Floritard (1058660) | more than 7 years ago | (#18752113)

The Nintendo dev kit is ~$2000 which is like an order of magnitude cheaper than the competition AFAIK. And to the parent, I paid $270 for my Wii...

Re:Wii is not a loss leader . . . (1)

tepples (727027) | more than 7 years ago | (#18753705)

The Nintendo dev kit is ~$2000 which is like an order of magnitude cheaper than the competition AFAIK.
The Windows dev kit is $900 for a PC+OS+monitor+keyboard+mouse and $10 for someone burning a copy of Dev-C++ [bloodshed.net] . And did you forget that Nintendo states on warioworld.com that it sells dev kits only to studios with a leased office space detached from the residence (that is, not home-office microstudios that are looking to get their shareware into Wii Shop Channel)?

Re:Wii is not a loss leader . . . (1)

poot_rootbeer (188613) | more than 7 years ago | (#18753981)

Sorry, but 3 should be "?????", unless Nintendo released a linux dev kit for free without anyone noticing.

No, 3 shall stand at "cheap and easy to develop for", which the Wii is, even if they aren't giving away Linux devkits for free.

Anyone serious about developing for the Wii will find the experience cheap and easy (compared to other consoles). I'm sorry if it's neither cheap nor easy enough for your tastes.

Re:Wii is not a loss leader . . . (4, Interesting)

shoptroll (544006) | more than 7 years ago | (#18752123)

I think your prediction is on target if the current trends stay the course. They did a poll on GameFaqs a day or two ago asking who owned what "next-gen" system. The ranking (from top pick decresing) goes: None, Wii, XBox360, Xbox360 + Wii, PS3, All 3, PS3 + Wii, and finally PS3 + Xbox360. I'm not going even going to suggest that this is the most accurate polling system ever to grace mankind. Here's the poll results: http://www.gamefaqs.com/poll/index.html?poll=2722 [gamefaqs.com]

That said, I would not classify GameFaqs as a casual gamer's haven. Most of the traffic is going to be generated by Hardcore gamers looking for info. Maybe casual players looking for info on Zelda or Final Fantasy, but if you look at the Top 10 lists, this isn't casual corner.

So, the Wii is making inroads on the hardcore gamer. Actually, I'm surprised that the system is the only next-gen system in almost 25% of the responses. With 17% dual-booting with the Wii60 combo and about 12% going it alone with the 360, I think it's very very understandable why there have been a large number of PS3 exclusives going multi-platform. Sony has, for lack of a better word, been shunned big time by the community at large.

However, it's still to early to tell if we're truly in the middle of a paradigm shift. Nintendo's strategy of appealing to a large audience with a cheaper system is obviously working. MS is holding their own, and Sony can easily get back into the game if they want to. This is still too close to call.

Re:Wii is not a loss leader . . . (1)

CastrTroy (595695) | more than 7 years ago | (#18752363)

Also, there's a lot of people that want Wiis, but can't find them. On the other hand, if you want a PS3, it's quite easy to find one [futureshop.ca] . And still, nobody is buying them.

Re:Wii is not a loss leader . . . (0, Troll)

Maxwell (13985) | more than 7 years ago | (#18753937)

That site has a ton of XBOX360's in stock, so I guess they aren't selling either. And holy cow, look at the DVD's sitting on the shleves at Best Buy. Obviously NO ONE is buying DVD's anymore! Otherwise they would be sold out....right?

The BB in downtown toronto had 15 ps3's last week. (And dozens of PSP's and DS's.) This week they have 2 PS3's left so SOMEONE IS BUYING THEM. There are, what, 50 BB in canada? At 60 per month, that's 3000/month in Canada alone. They are selling, just like Xbox360, psp they are just not in short supply.

Can we please drop the stupid 'they are in stock so that proves no one is buying them' concept?

And while we are on this topic, can we also please drop the 'I don't know anyone with a PS3 but I know for a fact that everyone on earth wants a Wii'

Please.

JON

Bias against the smallest studios (1)

tepples (727027) | more than 7 years ago | (#18753641)

Make it cheap and easy to develop for.
Except for microstudios. For a development team working out of their homes with a nearly complete title that runs on Windows OS, it costs a lot of money to meet Nintendo's demands. The team needs to have incorporation or limited partnership papers. The team needs to have office space that is detached from any residence. (Source: Warioworld.com)

Re:Bias against the smallest studios (1)

LWATCDR (28044) | more than 7 years ago | (#18753833)

Compared to PS3 and the even the 360 the Wii is cheap and easy. The cost of tools really is a small cost when you look at development costs.
As far as I can tell none of the consoles are all that friendly towards microstudios. Low cost PS3 requires you to install Linux and prevents access to the graphics chip and I think the 360 makes distrbuting your own software not so easy but I really don't know.

Re:Bias against the smallest studios (1)

tepples (727027) | more than 7 years ago | (#18754037)

As far as I can tell none of the consoles are all that friendly towards microstudios.
So what strategy do you recommend for a microstudio's game that could be the next Bomberman? Four players can't fit around the typical 17" to 19" PC monitor, and even the PS3 is outselling set-top PCs.

Re:Wii is not a loss leader . . . (1)

earthbound kid (859282) | more than 7 years ago | (#18753647)

I predict that Microsoft will win the hardcore gamer market and possibly the video delivery market.

US or Japan? I agree with you if we're talking about the US market, but the 360 is dead in Japan in spite of already having some great releases out. In Japan, Wii is already the best selling next-gen home console, but the PS3 has also overtaken the 360. Now, I guess it's possible that the 360 will bounce back in Japan, but I just wonder why it hasn't done that well yet. I think what we're going to be looking at is a market split with Japan lining up behind the Wii and PS3 but the US going for the 360 and Wii. Nintendo will laugh all the way to the bank, and the next next gen systems will all be launched a little early (4 years instead of 5) and the market will reconfigure again.

Re:Wii is not a loss leader . . . (0)

Anonymous Coward | more than 7 years ago | (#18752181)

So how much are they profiting when you factor in how much the stores are actually paying for them (they have to make a profit too, you know), and any costs between the manufacturer and distributor.

It would be optimistic to say they break even.

Re:Wii is not a loss leader . . . (0)

Anonymous Coward | more than 7 years ago | (#18752399)

The Wii is $250USD

Cheaper videogames? (1)

Canthros (5769) | more than 7 years ago | (#18751293)

Sign me up!

Well, okay. I don't actually wish ill on game devs, but I am kinda blase about the hardware end of the business. And the article fails to note that Nintendo doesn't sell its hardware at a loss, correct?

Correction (4, Insightful)

adnpryde (563071) | more than 7 years ago | (#18751297)

Microsoft and Sony are losing hundreds of dollars on each system sold, while Nintendo makes a profit on every console. This just seems like a sky-is-falling article that doesn't take into consideration the massive growth of the online and casual markets, as well as the huge growth of portable.

Re:Correction (1)

Maul (83993) | more than 7 years ago | (#18751523)

There have been thousands of articles written since around since the 16-bit days (or earlier) predicting the "second crash." I tend to take each one with a grain of salt. That isn't to say a second crash could never happen.

At worst case right now, Sony and Microsoft could fold out of the console business. Nintendo will likely stick around because they know how to make money, even when they don't have the top selling console. As long as Nintendo sticks to that, I don't see a "full crash."

Re:Correction (1)

Impy the Impiuos Imp (442658) | more than 7 years ago | (#18751715)

I don't even know if there are any crashes -- like the music industry, there are just long stretches where few if any real "hits" are produced, then, for better or for worse, along comes someone with a couple of catchy tunes with a "hook" in 'em.

Re:Correction (1)

CastrTroy (595695) | more than 7 years ago | (#18752521)

Who the f*** decided that sentences on the Internet shall no longer be formatted with two spaces after a period?!
Since somebody else decided that extra whitespace in HTML documents should be ignored. So, even if you type two spaces, it shows up as 1 in the web browser. I personally think they should fix that.

Re:Correction (0)

Anonymous Coward | more than 7 years ago | (#18751535)

Actually, Microsoft break even on each unit sold these days. It's amazing what a year without a price cut does to profitability.

Losing Money? (0)

Anonymous Coward | more than 7 years ago | (#18751303)

That's odd... I thought Nintendo was making a profit [younewb.com] with every sale. Nice researching, BBC.

Re:Losing Money? (4, Informative)

91degrees (207121) | more than 7 years ago | (#18751451)

The XBox 360 is apparently slightly better than break even [techspot.com] now as well.

Re:Losing Money? (1)

Dorceon (928997) | more than 7 years ago | (#18752175)

Good, now they can start digging themselves out of the hole made by all the below-cost sales they already made.

Re:Losing Money? (2, Insightful)

91degrees (207121) | more than 7 years ago | (#18753265)

Hole?

They spent roughly 4 billion on creating a console empire.

Biuying a console empire would have cost a lot more than that.

Re:Losing Money? (0)

Anonymous Coward | more than 7 years ago | (#18752647)

Thats break even on the sale of 1 console. There are plenty DOA's and breakdowns they have to replace/repair under warranty so they still lose on the hardware.

Article Author fails at Journalism (0)

Anonymous Coward | more than 7 years ago | (#18751411)

Though Sony and Maybe microsoft (not sure on MS) may be losing money on the hardware, Nintendo is making a profit on their hardware. It's not being sold at a loss (neither the DS Lite nor the Wii).

I don't think the industry could crash again like the Atari crash. The market is just completely different, not to mention the Atari crash was America only, and the Video game market is now a global market.

PC (1)

Xtense (1075847) | more than 7 years ago | (#18751453)

Even IF Nintendo would be losing any money and all this doomsaying actually came true, there is still our beloved PC platform. If consoles turn out not to be profitable anymore (which i seriously doubt), in my opinion the developers won't just sit there like lemons but will jump ship and go back to the oldest harbor that kept them safe for all these years.

Re:PC (1)

Grave (8234) | more than 7 years ago | (#18752235)

Actually a number of developers are looking at the consoles as the primary profit driver thanks to increased piracy on the PC. id has shifted their development focus to the 360/PC, whereas it always used to be the PC, with ports for the consoles being made available later on by third party companies. Now id is talking about simultaneous release on both PC and 360, with the PS3 being a possibility (though last I heard, it wasn't Carmack's focus). Valve is expected to do the same starting with HL 2: Episode 2 and Team Fortress 2. Same for Epic (and many of the myriad games using UE3).

Re:PC (1)

Xtense (1075847) | more than 7 years ago | (#18752753)

That is, of course, true, but that console-dying-developers-moving thing was just a hypothesis :) . Also, while it does require significantly more effort to pirate games on consoles, it's not impossible of course, so it IS possible we'll actually see a reverse tendency - console developers running away to the PC market. But, to be honest, i just don't see it happening in the next 10 years.

Lack of Innovation (5, Insightful)

bhunachchicken (834243) | more than 7 years ago | (#18751549)

The main problem stems from the fact that there is just a constant deludge of first person shooters and racing games. The Xbox 360 is by far the worse offender in this regard. There seems to be little else on the platform worth looking at.

The other issue is that the cost of development is becoming so high now that devs are less willing to take risks on new IPs and gameplay styles. Look at Clover Studios - They made Viewtiful Joe, Okami and God Hand, all great games that did nothing but cause the company to fold.

I wouldn't be surprised if as this console generation moves on developers make more money from the smaller downloadable games on Playstation Network, etc. than from the big box retail ones.

Re:Lack of Innovation (1)

pizzach (1011925) | more than 7 years ago | (#18752489)

I agree with you except on Viewtiful Joe. The sequel was released for the PS2 first, which hurt the sales of the GameCube version when later released. The ironic thing was that the GameCube sales were still larger than the PS2 sales. Disclaimer: I may be wrong on any and all points. This information is second hand.

In short, no. (4, Insightful)

MeanderingMind (884641) | more than 7 years ago | (#18751647)

There will be no Video Games Industry Crash. However, we may see a dramatic shift in the industry.

What we are seeing is the end of hardcore dominance of the industry, nothing more or less. The perceived demands of the hardcore are insustainable, driving companies to make consoles that lose them money in order to gain some ill-defined future benefit. Whether it is the companies or the hardcore themselves that are to blame for the previously shrinking industry is uncertain and largely irrelevant.

What we are seeing is the introduction of video games as a true form of mass media. Talk to anyone on the street and you will be hard pressed to find someone in this nation who hasn't read a book, watching a movie, or viewed a painting or photograph. What's more, each of these forms of media has subsections that cater to particular tastes. Video games have not been mass media because they didn't reach everyone, only an elite few who knew what was going on. Now the "casual" gamers and even those who do not game at all have been targeted, and they will be the driving force in the future.

Right we are in transition, and it's confusing people. Depending on the person, some hardcore gamers are afraid that the Wii and DS are the harbingers of the end. Will games like Guilty Gear, Counter-Strike, and Armored Core survive in an industry focused on the majority? Having been catered to for decades, the prospect of losing attention is frightening. However, the fear is unwarranted. Despite the fact that games like the Sims, Bejeweled and all manner of "casual" games have invaded and perhaps dominated the PC, we still see games such as Supreme Commander, Hellgate: London, and the odd MMORPG tax video cards in SLI and quad-core CPUs.

In the future, the majority of games will be like summer blockbuster films. This is not bad, because the volume of games will increase such that we will still see the same number of "hardcore" titles, including AAA ones.

There will be no crash, but there will be a paradigm shift/revolution.

Re:In short, no. (1)

TKOTolman (1089049) | more than 7 years ago | (#18751957)

I have to agree hard core systems make no point, in a year it will be outdated. The games that I would want to play with a system like that are better on a PC that I can update with better video cards and ram and so on. So how can a console compete with a PC for the hardcore market? I don't think it can.

Re:In short, no. (2, Insightful)

MeanderingMind (884641) | more than 7 years ago | (#18752033)

It is important to note that at this moment console systems take in greater revenue than PCs, at least according to the article.

I'm somewhat skeptical about it, because the chart at the end is based of a analyst report from approximately one month after the launches of the PS3 and Wii. While the report itself is not suspect, you'd think there'd be a similarly credible and more up to date analysis and projection after 6 months.

It also seems to be weird citing a report that places a large emphasis on success for Microsoft and Sony's systems in an article alluding to an industry crash.

Re:In short, no. (1)

rlp (11898) | more than 7 years ago | (#18752093)

Interesting analysis, but I disagree that games will go entirely to the 'mass market' blockbuster. If anything I think games will move to the 'long tail' model. There still will be blockbusters, but there will also be small games that will find their own marketable niche. These will be developed by small companies, or even individuals and sold as downloads. Review sites and on-line word of mouth will steer people to these games.

I'm most familiar with Nintendo's Virtual Console which offers various game company's back catalog, but nothing new (yet). I expect that to change, and I expect small niche games in aggregate, to be quite profitable for console makers.

Re:In short, no. (1)

AndersOSU (873247) | more than 7 years ago | (#18752429)

I don't know about the long-tail. My take is that video games are far too expensive to produce to succeed with that type of a business model. Really the only media that do well in a long tail economy are books and webpages, and both of those can be done well by a single person. Now there might be some single author video games out there, but they in no way resemble half-life.

I think the movie analogy is apt. The video game industy can do better with the movie model IMO because the serious money will be invested in mass-market appeal games, but the engines etc. can be reused for hardcore lower-budget games.

Console makers' policy toward microstudios? (1)

tepples (727027) | more than 7 years ago | (#18753821)

If anything I think games will move to the 'long tail' model. There still will be blockbusters, but there will also be small games that will find their own marketable niche. These will be developed by small companies, or even individuals and sold as downloads.
Allowing any individual to develop and sell shareware on the walled-garden platforms would be a significant change in policy for the console makers, who have historically shunned microstudios. I don't see that happening this generation.

Its beginning to feel that way to me (2, Funny)

mcnut (712202) | more than 7 years ago | (#18751689)

I was an avid gamer about 6 months ago, and I have been excited about a few games to come out recently, but I just don't see a reason to buy them anymore. The games I was excited to see come out this quarter I could live with or without now. Am I.. growing up?!? nooOO!

It's the pirates, I bet (1, Funny)

Opportunist (166417) | more than 7 years ago | (#18751801)

Outdated business models? Costs that aren't offset by the revenue? Prices that don't match the value?

Usually, when those stars are aligned this way, the culprit is someone copying the content.

Are we headed for another "game crash" article? (2, Insightful)

tgibbs (83782) | more than 7 years ago | (#18751841)

Ah, the perennial "is another game crash around the corner?" article. Always a good bet if you can't think of anything substantive to say.

The answer, of course, is no. The "game crash" of '83 marked the end of the game fad. Electronic games had become a novelty, and virtually anything would sell...and then the novelty wore off. And like the end of any fad, what was once cool became decidedly uncool for a time.

But something is only a fad once. Videogames are now just one more form of entertainment, competing with movies, TV, music, etc. The industry is transforming. Improved technology has driven up the cost of development, so that game production is more and more characterized by the same hit-driven economics that is typical of the entertainment industry as a whole, posing new challenges for the industry.

But at least we don't have to worry that everybody is going to simultaneously lose interest in videogames.

Re:Are we headed for another "game crash" article? (1)

DaveCBio (659840) | more than 7 years ago | (#18752009)

I agree. The market now is substantially different. This is like saying, "Are we headed for a movie or TV crash?"

Actually, the article says "revolution" (2, Insightful)

cgenman (325138) | more than 7 years ago | (#18751869)

The BBC article seems pretty well thought out, and only mentions the word "crash" once, under a picture of Burnout Revenge. For the most part, it's an article about the alternative revenue sources that have been rising up to defray the additional costs of development, including advergaming, Korean-style online accessory sales, and cell-phone game tie-ins. They even go out of their way to point out that total game sales are expected to rise by 800 million dollars this year, even if the console transition will make it difficult to break even on a next-gen only title.

This isn't the worlds most accurate article about the state of costs and revenue sources in gaming, but it's a good overview of how things probably look from within a large publisher.

Failed attempt (4, Interesting)

Anonymous Coward | more than 7 years ago | (#18752007)

This is another succesfull attempt at disinforming the masses.

We all know the reason for next gen consoles, excluding the Wii. They are here to satisfy another agenda.

Microsoft: Monopolise the gaming market. (DX 10, VISTA, Entertainment system)
Sony: Monopolise the DVD format market.

Move along nothing to see here.

Re:Failed attempt (0, Troll)

badboy_tw2002 (524611) | more than 7 years ago | (#18753235)

Actually, I think its more like:

Microsoft: Make Money.
Sony: Make Money.
Nintendo: Inspire the masses, bring a new era of creativity and end world hunger through friendship created through the joy of gaming....I mean, Make Money.

The strategies might be different and some definately better for those of us that love gaming, but the end goal is always the same. And if you don't think that Nintendo wouldn't love to be the 800lb. Donkey Kong it was in the old days so it can throw its weight around in the same way Sony has burned itself doing, think again.

Mainstream penetration (1)

strider2k (945409) | more than 7 years ago | (#18752141)

I will use my personal observation about the DS in a small family reunion of my girlfriend. During one of the long boring speeches, a few of her cute cousins reached into their purses for a DS. About 5 DS were used to network Big Brain Academy. Now, I was shocked since it's semi rare for me to see females with video games. It's even rare when I see CUTE females with them. Usually, they would be too cool and play cell phone games. It's even weirder that one of the cousins is in a sorority. My point is that video games are decoupling from the typical nerd stereotype.

Wii is not a loss? (0)

Anonymous Coward | more than 7 years ago | (#18752369)

I suppose you guys who are saying the Wii is profiting Nintendo directly actually have some sources to back that up?

That $158 figure doesnt say anything about how much the stores are purchasing them for, and how much cost is between the manufacturer and distributor. Put your sources where your mouth is.

Re:Wii is not a loss? (1)

metamatic (202216) | more than 7 years ago | (#18753199)

Well, I don't have a web page to back it up, but a friend who runs an electronics resale store (shopthejunkyard.com) tells me that the margins on the Wii are razor-thin to nonexistent, for the retailer. Maybe Wal-mart squeezes a few dollars of margin out of Nintendo, but it's nothing like the $80 margin Nintendo would have to be giving stores to be selling the Wii at a loss.

It'll happen... (1)

Jaysyn (203771) | more than 7 years ago | (#18752443)

... right after the "Movie" crash....

Re:It'll happen... (0)

Anonymous Coward | more than 7 years ago | (#18753463)

Why the scare quotes? Crash [imdb.com] won the Oscar [oscars.org] for best motion picture of the year.

Or perhaps you meant the crash of the movie industry? Pbbbbbttt.

Happens with every hardware cycle (2, Interesting)

Tord (5801) | more than 7 years ago | (#18752835)

There is always a shakeout between game companies at the beginning of each new generation. A few things combine to make this happen every time:

1. Many people stop buying games for the old system since they already have decided to buy the new system... as soon as it falls a bit more in price. This makes a gap in the market until the next generation has moved enough units. Many developers and publishers don't have enough cash to survive this.

2. Timing is hard. When should you stop developing for the old system and start developing for the new? With 18-24 months time-to-market it's hard to know if your new game should be made for the old or new generation. Make the wrong choice and you might find yourself move as much as two years too early or late.

3. Every new generation has so far demanded higher budgets and larger teams. Many companies that are too small will fail to make the switch.

4. It takes time and costs money to learn a new system and you will also need to develop new tools and engines. Either you will have to invest extra heavily in your first title for the new platform or settle for lower quality, which is likely to give you less sales...

I've been working in the industry for almost ten years (not anymore now though) and I'm surprised that everyone seems to be caught off-guard every time it happens....

Sales figures (1)

wilsonthecat (1043880) | more than 7 years ago | (#18752991)

PC games
2006: $3.9bn
2007: $3.7bn

I wonder if they have factored in World of Warcraft in these figures, or its imminent demise in the next 9 months. The game is like swarm of locusts on the PC games market at the moment (still after 2 years). More people play WoW than people who have PS3s, XBox 360s and WIIs (according to the Times Online). This is stifling all competition in the PC games market making it stagnant. It appears with the new expansion, the playerbase is slowly dying away though, which could actually be beneficial for other games producers.

Of course you could argue a lot of people who play WoW simply wouldn't play games on their PC otherwise.

Re:Sales figures (1)

Rayonic (462789) | more than 7 years ago | (#18753903)

I wonder if they have factored in World of Warcraft in these figures, or its imminent demise in the next 9 months.

It appears with the new expansion, the playerbase is slowly dying away though

Uh, have any sources for this? Other than your bitter anti-WoW fantasies, that is. Internet forums and "people I know" don't count either.

Frankly, I loved the expansion changes, and look forward to the coming patch. IMO, most people quitting are either "hardcore" whiners or people upset (heartbroken!) that they can't keep up with the hardcore whiners.

Re:Sales figures (1)

wilsonthecat (1043880) | more than 7 years ago | (#18754205)

Sorry but your reply looks like so many other World of Warcraft player's lingo: excessive use of the word "whine" and refusal to have anyone criticising the game.

My sources are the official forums, which have almost daily posts about players quitting and all their friends quitting, and also from in game friends on 3 different servers. Infact there was a forum post that was 25 pages long post about this not too long ago. This might be the old timers who are now bored of it, but I'm sure that represents a hefty chunk of the pie. The Blizzard statistics also seem to contradict themselves, give their account numbers as totaling 7 million, while their headline proclaims 8.5 million play the game. If you want me to quote official figures, sorry I don't work for Blizzard and I doubt Blizzard will ever post a PR with "WoW account subscribers down by 1 million since March!".

Coming this year: Crysis, Unreal 2007, Team Fortress 2, Warhammer Online plus a whole variety of other games. I think only the most optimistic World of Warcraft diehard fan would not see that the game is due to lose players to these big titles coming out.

That isn't an "anti-WoW fantasy" as you call it, the game served me well for a few years and is a quality game. I do however like to play more than 1 game, and hope that other games besides recycled EA WW2 shooters will be able to remain profitable for the PC market.

All you Wii naysayers, your number is up... (4, Informative)

7Prime (871679) | more than 7 years ago | (#18753103)

I've had a Wii for a while now, and while I enjoyed it, my personal opinion, alone, hasn't convinced me, one way or another, what the draw of the console will be. Last night, this question was proven to me, once and for all.

I brought it to a BBQ that another friend of mine was hosting. Half of the people there were gamers, and half of the people there were decidedly NOT gamers (Chinese students, a few hippies, some others). At first, all my gamer friends screamed for some "SMASH!" and that went on for about 45minutes in the other room while everyone else went outside and sat around jawing.

Then I pried the GameCube controllers away from the gamers, and stuck in Wii Sports. The other half of the party suddenly rushed inside and grabbed controllers. They'd obviously never played or seen the games before, since they had no idea what to do, but within 5 minutes, everyone had made their own Miis, and were smacking tennis balls around to their hearts content. We alternated Wii Sports and WarioWare for the next few hours. By the end, many of the non-gamers were coming up to me, asking me how much the Wii cost, and where they could get them. I was pretty shocked, myself. I'd heard stories like this before, but hadn't really witnessed it in person, and was pretty amaized at the degree of involvement everyone had. Also, it was a party... none of us were sitting around, alone, brooding over a scummy screen. We were joking with eachother, making cracks all the time--we were interacting with each other even more than if we'd been doing most other normal party activities. In the end, the host came up to me and thanked me profusely, saying that everyone there had had a blast, and bringing the Wii was exactly the thing we needed.

Just the other night, NBC news ran a piece on how retirement communities were getting into games... although the only games they showed were Wii games, there was no mention of PS3 or 360 titles. It's clear, the Wii is a phonominon, like no other we've seen in videogame history. We are entering a period of unknowns, in gaming... this is the LAST time to be making doomsday prophecies for the game industry.

This guy from the BBC needs to get out more, see what exactly is going on in the world. He sounds as closeted as a 15-year-old gamer in his mother's basement.

Re:All you Wii naysayers, your number is up... (0)

Anonymous Coward | more than 7 years ago | (#18754087)

That sounds very encouraging. The question that remains is, can Nintendo snatch defeat from the jaws of victory?

I mean, other than Wii Sports and Wario Ware, do they have any other games coming that will appeal to this new casual gamer crowd? Metroid, Mario, and Zelda are awesome, but only seem to appeal to regular gamers. (As is evidenced by the Gamecube's level of success.)

Piracy is good for you shock (3, Funny)

Bearhouse (1034238) | more than 7 years ago | (#18753127)

This gem tucked away at the end of the article: 'As it turns out, software piracy can be good for you. "We have extremely strong brands [in Asia] thanks to the pirates; they have created millions of consumers - not customers,"...' That's why copy protection / prevention has been so weak in Microsoft products for years, and will probably remain so as long as 'free' alternatives exist. Quoting St. Francis Xavier: ''Give me the children until they are seven and anyone may have them afterward'. (Sometimes mis-attributed to Joseph Goebbels, albeit in a deformed way). In other words, get 'em young and they'll be asking for Vista & Outlook instead of Ubuntu & T'bird...

A vicious cycle... (0)

Anonymous Coward | more than 7 years ago | (#18753263)

...in which for some reason Nintendo seems to be the one that survives, and pulls the industry back on its feet. Back in the Atari-age video games crash, it was the NES that got the industry back up, after all.

I think Microsoft and Sony might just be learning a lesson... there's a reason hardware doesn't just rush to 20million cores and 8x SLI: there's costs involved that prevent it from just jumping there, regardless of whether the technology gets researched and released easily.

The 360 was supposed to be, just like the original Xbox, the top console in graphics. Sony raised the bar by matching (give or take) the 360's prowess. That's why the current video game market is divided by people into the 360/PS3 market and the PS2/Wii/portables market. Oh, and guess what? The PS2, the DS, and the Wii are the ones that are actually making any money out of this deal.

Seems to me everyone is getting what they want. (1)

ZombieRoboNinja (905329) | more than 7 years ago | (#18753327)

Nintendo is selling oodles of consoles and games, which is obviously their game plan. I don't think anyone doubts that they're happy with this generation so far.

Xbox 360 is selling decently, they're well on their way to being the "mainstay" system for hardcore gamers, and they're selling all sorts of crap that used to be free through their online service. Plus, they've got some great exclusives lined up (Mass Effect woo!) and they haven't even played the Halo card yet.

Sony isn't selling as well as they might like, BUT they seem to have achieved their primary goal with the PS3: leveraging the console to push Blu-Ray over HD-DVD. Their console sales may suffer, but for some reason Sony seems to think that achieving Blu-Ray dominance is paramount, so I wouldn't guess they're disappointed quite yet.

So really, while Sony and MS might each prefer to be grinding all opposition beneath their iron heels, it's not like they're failing at what they set out to do here.

I think the analysts are lying (4, Interesting)

tkrotchko (124118) | more than 7 years ago | (#18753875)

I think for the most part the analysts are lying when they say Microsoft or Sony is losing hundreds of dollars on each console. When you look into all these pricings, they generally including costs that are comparable to retail.

Not to mention that when you look at this article:
      http://www.ps3focus.com/archives/167 [ps3focus.com]
It claimed a $100 loss if Sony sold at $500. But the retail is closer to $600 suggesting at worst Sony is breaking even.

But then you look at this article:
        http://news.cnet.co.uk/gamesgear/0,39029682,492853 30,00.htm [cnet.co.uk]
Which suggests at $600 Sony is losing $240.

I say it's all nonsense. I think Sony & Microsoft like this analysis of pricing because people lap it up and think "Oh gee, for $600, I'm getting something worth almost twice as much! What a deal!". It plays on greed.

The only people who know how much the console makes (or doesn't make) aren't saying. Everybody else is talking out of their ass. Everybody.
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