A Wii-bit of success: The race for the middle for Microsoft and Sony

The video games industry is one of those industries that just defies all logic.  The market had been pretty solid, keeping the economic downturn at bay.  Unfortunately, in 2009, the defenses weakened and, like other industries, the video game market retrenched.  However, unlike other markets, it really did not shrink all that much.  Yes, some companies seized the opportunity to lay off staff and close entire studios, but I suspect that in many of those instances, it was either a preventive measure or a reactionary response that probably could have waited.  Whatever the case, the industry came out relatively intact.

Since the first programmable consoles came out in the mid 1970’s with the Fairchild Channel F, the parade of technology marched forward and the consoles got better, cheaper and the graphics technology always got better.  That trend continued all the way up to 2006 when it slowed a bit. In the 1990’s, Sony introduced the Playstation, Sega introduced the Dreamcast and Nintendo introduced the Nintendo 64.  All three consoles were hits, though the Playstation was THE run away hit.  Millions of the consoles were sold and, by 2000, Sony was king and the rest were has-beens.  By 2001, Sega exits the business, leaving just Sony and Nintendo.  Oh, and Microsoft.

Microsoft enters the console market with the XBOX.  XBOX was not a smash hit at first, however, it did manage to outsell Nintendo’s just released GameCube.  While Nintendo had all of the ‘hit’ games from it’s Nintendo Entertainment System era, like Mario and Donkey Kong, it could not win over many new gamers because it simply lacked the first person shoot them up games that were becoming all the rage.  Perception, too, was that the big N was for kids while XBOX and Playstation (now, the PS2 was out) were for the grown ups.

During the early 2000’s, Sony continued to dominate with the PS2.  By now, however, Nintendo had released a new handheld, the GBA.  The Game Boy Advance was a handheld version of the 1990’s Super Nintendo.  Graphics were better than the old Gameboy and, like the ‘cube, the GBA had the Mario and Donkey Kong games as well as Pokémon.  Microsoft introduces Halo, which helps sell the XBOX.  PS2 has scores of the shoot them ups and ‘adult’ oriented games.  It also has its fair share of duds and ‘shovelware’.  Shovelware are cheap, low quality games that not only seem to bulk up a console’s library, but also can serve a negative purpose:  make a system look cheap.  Sony seemed impervious to this and the PS2 trotted right through.  Seemingly, Sony was unstoppable.  They should have looked back at Nintendo.

In 1983, Nintendo released the Famicom in Japan.  Two years later, Famicom was selling big in the United States, only it was called the NES.  The NES dominated the console market from 1985 through 1991.  Nintendo followed up with the Super NES, but it did not fare quite as well as the NES, but it still sold large numbers.  Sony stopped Nintendo, cold, when the Playstation was introduced.  Nintendo took ten years to recover.

In 2005, Microsoft released the XBOX 360, the successor to the original XBOX.  The 360 was also not an immediate success, but it did sell much better than the original XBOX.  The 360 features superior graphics, improved performance and had some large companies lined up to support it.  By November of the following year, both Sony and Nintendo had their next gen consoles ready for market.

The Sony PS3 featured a new optical disc format called Blu-Ray.  Microsoft had an external drive using a competing format called HD-DVD.  Nintendo used a standard DVD drive, like the GameCube.  However, the Wii used a full sized DVD whereas the GameCube used a smaller format.  Sony’s PS3 featured graphics that were slightly better than the XBOX 360 and a generation better than the PS2.  Both Microsoft and Sony were fully engaged in the graphics war.  Both consoles featured some rather esoteric features and technology. Both consoles were expensive, with the PS3 costing six to seven hundred dollars.  Sony’s president proudly proclaimed that people would work extra hours and jobs just to buy a PS3.

Nintendo had a different tact.  Nintendo’s Wii featured better graphics than the GameCube, about on par with the original XBOX.  However, compared to the high definition graphics of the PS3 and the 360, Wii looked rather weak.  Indeed, it was derided in the press, not only for its goofy name-which seems normal now-but also for its perceived lack of performance and low-res graphics. It might as well have been the Atari 2600 compared to the other two consoles.  Nintendo, however, had several bigger guns up its sleeve.

Wanting to differentiate the Wii from the others, Nintendo developed controllers that relied on motion sensing technology and cleverly designed games around the motion controls.  They also decided to make their old library available on the new system.  Called the Virtual Console, Nintendo began refitting old games with built in emulators that would play, perfectly, on the new console.  The combination of the Virtual Console and its appeal of the original Mario games, as well as the motion controllers added up to success for the console.  Taking less than a couple of weeks, it became clear that Nintendo’s Wii was going to be big.  At least, to normal people, anyway.  The gaming media and the tech press were sure that the PS3 was going to be king of the hill. Indeed, in the first two weeks of release, the console sold out.  Funny thing happened, right before Christmas…it slowed and then pretty much stopped.  Wii couldn’t stay in stock.  PS3 was collecting dust. 

For 2007, Sony had the worst time trying to sell its fancy and expensive console.  A couple of redesigns and special packaging would spark sales for a short time, but, ultimately, the console failed and Sony was losing money on the console.  Microsoft, even with a year head start, also could not beat the little white console called Wii.  It seemed like Nintendo had a bona-fide winner on its hand, yet no one wanted to recognize that. For the next three years, it was to be the year of the PS3.

Microsoft had its share of problems that have cost it almost as much as what Sony was losing.  Called the Red Ring of Death, a condition that occurred on far too many of the Microsoft consoles, has cost the company millions of dollars.  RROD was caused by several things, including poor design and rushing the console to market.  Many of the quality issues have been fixed, but the damage is done.  Problems aside, however, the console, at least in the US, still sold in respectable numbers, far more than PS3 did.

2009 rolled in and Sony decided that, in fact, it would really like to sell its console to more people.  They went back to the drawing board, trimmed some features and reduced the price of the PS3.  This time, however, the ploy paid off.  The PS3 ‘slim’ has sold far better and, in fact, moved more consoles in the first two months of the re-release than it had sold in several quarters in a row.  Once again, the mantra is ‘2010 is the year of the PS3’.  Problem is, Nintendo nearly moved more Wii’s in one month than Sony sold PS3’s in all of 2009.  That’s got to be pretty depressing for both Sony and Microsoft.

All three companies have reduced the price of admission for each console, with Wii and XBOX both costing about two hundred dollars to enter and the PS3 is three hundred dollars.  There are reasons to buy each and, depending on ones tastes, there is room for two or even all three.  The PS3, for example, has the Blu-Ray player which, thanks to some double-crossing by Warner Brothers, ‘beat’ the HD-DVD format.  Microsoft’s XBOX has integration with Windows and other services on its side as well as some great games.  Nintendo has the great games, the player interaction and, well, games. 

Nintendo and Microsoft are best positioned to enter the next cycle of gaming.  Certainly, Nintendo will have to up its game a bit and Microsoft needs to ensure that its next console is not only reliable, but also has games that appeal to a greater audience.  Sony will more than likely remain in the game, but will have some serious rethinking to do.  Of course, they want to appear to be an upper-crust company, so they may not learn from the mistakes they made with PS3.

The remainder of this generation of gaming console will continue to be owned by Nintendo.  Six of the top ten best selling games for 2009 were for the Wii.  XBOX had two, PS3 had one and the Nintendo DS also had one.  Games like Wii Sports Resort, Wii Fit, Mario Kart Wii and Wii Play outsold games like Madden NFL, Call of Duty (on PS3) and Halo 3.  This success proves that the motion control and weaker graphics of the Wii were not the death knell that most thought.

In fact, motion control is being shoe horned into both the PS3 and the 360.  Sony’s solution is a goofy Wii-mote like controller with lit-up colored balls on top that are tracked by its innovative Eye-Toy camera.  Microsoft is eschewing the physical controller altogether for the one controller that everyone has:  your body.  Called ‘natal’, the Microsoft solution also uses a camera that analyses the video and translates that motion into in-game action.  It remains to be seen whether or not these two companies can succeed with these, uh, interesting takes on the motion control game.

By all means, Nintendo should have fallen flat with the Wii.  Logic says that game players want the fancy graphics, the violence, the ‘immersion’ and all of that mess.  People wouldn’t want to settle for less.  Logic also says that people don’t want to PAY too much either.  Both XBOX and PS3 were, initially, over priced. Yes, you got a lot of tech for the money, but most could not afford to spend that much.  They could, however, spend three hundred dollars for a Wii, an extra controller and a game. Oh, wait, they didn’t need to buy a game since, in the US, Wii came with a fun game already:  Wii Sports.  Taking full advantage of the console, Wii Sports was intuitive, easy to play and very addictive. It also got the user off of the couch and was ‘free’.  It came with the game.  So, you have three hundred dollars for a Wii, versus four, five, six hundred or even more for the other two consoles.  What would you buy?  Exactly, most did and the Wii became a success.  Nintendo could not keep it in stock.  For NEARLY THREE YEARS, the Wii remained sold out.  As fast as it was stocked, it would be sold out.  Mid-2009 saw that supply increase and it is now easy to buy the console.  That, and the price reductions of the other consoles, led many to think that the Wii reign would soon end.

As 2009 closed, PS3 did, in fact, out sell the Wii.  For two months.  However, the total number of Wii’s sold will, likely, never be matched by Sony’s PS3.  For every one PS3 sold, Wii sold three consoles.  Even in the latter half of 2009, it was still about two to one.  December, 2009 saw near record sales of the Wii.  Three years after it was launched, Wii still out sells all of the other consoles.  Combined.  That’s just amazing.

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