Volume 1: Next Generation Gaming Systems, PS3, Xbox 360, Nintendo Revolution

About every 5-6 years we're fortunate to engage our eyes on a new gaming system. During this course in time, each of these companies submit a proposal to it's clients, you, on why you should buy their system over their competitors. Over the past 6 months there's been a bit of speculation to say the least of what the new systems had to offer. Notice we didn't say 'gaming' as Sony is taking their PS3 approach to more of a all-in-one home media center level first, gaming second.

So let's go through what the business model each company has towards their system and see what the big deal is. We're taking the cosumer approach in this article, as we plan to purchase each of these systems ourselves, so we take this as sort of a brainstorming process for ourselves as well as the readers.

Before we start listing each system and it's pros and cons, let's start off by with some facts. Below is an article take from Gamespot (http://www.gamespot.com/news/2005/05/31/news_6126725.html):

"The Electronic Entertainment Expo marked the start of the next-generation console war. With all sides gearing up for full conflict, opening volleys of insults and predictions are starting to surface in the media at large. The Japanese newspaper Asahi Shinbun's Friday edition featured an article with comments taken from the heads of the three console makers: Microsoft senior vice president and chief Xbox officer Robert J. Bach, Sony Computer Entertainment president Ken Kutaragi, and Nintendo president Satoru Iwata. All three contenders talked about the strategies behind their own consoles and tossed harsh words over the corporate walls toward each other.

Microsoft senior vice president and chief Xbox officer Robert J. Bach--

(NOTE: Bach's comments are translated from Japanese and not directly quoted from his English statement.)

Asahi Shinbun: What do you think of the competitors' machines? Will Sony continue to dominate the gaming market?

Robbie Bach: The other two companies' presentations [at E3] weren't surprising. Sony's [PS3's] capabilities are the same as ours. Nintendo is aiming for the niche market [with its Revolution]. The current-generation Xbox sold more than the PlayStation 2 in North America last Christmas. We will become the market leader with our next-generation console.

Sony's [PS3] will be able to use seven controllers simultaneously and connect with two high-definition TV sets. But it's hard to share a single screen with seven people, and it's also difficult to imagine a room with two high-definition TV sets. We don't know about the selling price yet, but to say the least, our cost of manufacturing [an Xbox 360] is less than Sony's [PS3].

AS: Why doesn't the Xbox 360 adopt a next-generation disc format?

RB: The next-generation disc standard hasn't been solidified yet. Sony is taking a risk. We can decide after the standard has been created.

AS: What has Microsoft learned from its previous game console release?

RB: We'll basically be starting again from square one in the Japanese market. Our current Xbox console didn't have enough software for Japanese consumers. This time, we're teaming up with powerful Japanese game makers, including Square Enix, the maker of Final Fantasy. As for Microsoft's overall game division, we plan to get out of red ink by June 2007.

Ken Kutaragi, Sony Computer Entertainment president--

AS: What do you think of the competitors' machines? Will Sony continue to dominate the gaming market?

Ken Kutaragi: Microsoft is trailing behind us, but they are not a threat. They are good at improving [on products], but we will be advancing to the next level with revolutionary technology. Beating us for a short moment is like accidentally winning a point from a Shihan (Karate master), and Microsoft is still not a black belt. Just like with their operating systems, they might come out with something good around the third generation of their release.

It isn't a bad thing to have a high price. When we released the original PlayStation at 39,800 yen ($368), Nintendo's Super Famicom was in the 10,000 yen range ($100 range). Still, everyone went for the PlayStation. This time, ours [the PS3] will be like a BMW that's equipped with a Ferrari engine. Nintendo's [Revolution] will be something like a new model of a family car. Some people might want it, but if it was me, I'd want to advance to the next level.

AS: Why is Sony's next-generation console adopting a next-generation disc format?

KK: The current DVD [format] had a slow growth during its first three years of release, but it dramatically penetrated [through the market] after the release of the PS2, and its software prices had gone down. By using Blue-ray in the PS3, we hope to boost the amount of available [Blu-ray] software and sales of high-definition TV sets. With enough product [in the market], the Blu-ray will be one step closer to becoming the standard [next-generation] format.

Satoru Iwata, Nintendo president--

AS: What do you think of the competitors' machines? Will Sony continue to dominate the gaming market?

Satoru Iwata: It's questionable what the "horsepower" of the two other companies' consoles will be used for, such as fast calculations and high-definition resolution. Creating game software in high definition will require everything from the [graphic's] models to the background to be redone, and it will bloat up development costs. And yet, it has no use for people that aren't playing with a high-definition TV set. Game consoles are not an essential product in life, so we want to make ours as compact, thin, and as inexpensive as we can so that it won't be viewed with hostility by family members.

AS: What has Nintendo learned from its previous game machine release?

SI: We launched the Nintendo DS last year, and the release of our Nintendogs, which came out this April, is being called the second launch [of the DS, since Nintendogs massively boosted sales of the handheld in Japan]. We want to push the DS's sales with the release of game software during the first year. There's a big gap between people that enjoy games that take time and playing skills, and people that don't. I'm feeling a real sense of danger about the decline in the Japanese gaming population. Patting a dog and telling it to stay [in Nintendogs] is something that anyone can enjoy. We're aiming to increase the population of game players with these new kinds of games.

AS: Sony's PS3 is adopting the Blu-ray next-generation disc format. What about the Revolution?

SI: It will be more beneficial to the consumer if we took the money for [adopting the use of] a next-generation disc format and used it somewhere else where we can present more new fun. Nintendo is a company that likes to see smiles on the faces of people that love entertainment. We're not about selling new kinds of TVs or taking control of the living room.

By Staff -- GameSpot
POSTED: 05/31/05 04:53 PM PST"

From this article, each company makes some very good points, but at the same time, we feel some of their arguments are flawed regarding why their system is superior to their competitors. In all fairness, they aren’t laying out their whole game plan with the few statements they’ve given above, but those very statements are the highlight of what they generally see themselves as their opponents. We expect each company to claim their future as being the top dog in the next generation system's race, because they just have to in the appearance of their audience.

So below, we’re going to evaluate each representatives statements and give our input in all this.

Up first is Mr. Robbie Bach: Chief Xbox Officer.

Statement One: Sony's announcement on PS3 specs not surprising.

We would first have to say that Sony's presentation of it's PS3 in terms of it's processing power meets or exceeds most supercomputers today, the PS3's specs, if it didn't surprise Microsoft, it shocked them. The fact of the matter is, with the development of a new system, it is quite hard to gauge on where to top off the processing power to balance out performance that is long lasting into the future versus the actual price that costs them to make the system. Whether Microsoft made the right choice to release their system first is something we'll witness in the next 3-5 years. It's the technological pattern for prices to drop over time, hence it's obvious and inevitable that by Sony releasing their system later than the Xbox 360 should be more powerful than and not equal to it as Mr. Bach claims.

Statement Two: Unlikelihood of having two HD (High Definition) TV sets in one room is somewhat primitive in terms of the way he sees the future (w/Televisions).

If we are to translate his statement as "it's unlikely you'll have two tv sets with 7 players in one room" he would be accurate for the most part for today's scenario as the current systems and it's games currently do not support high definition and it’s not easy to find 7 players on a daily basis.

By the time the PS3 is released the HD programming for cable and satellite television should be around 60-80% in terms of channels provided (in HD). This figure is conservative, as satellite TV services such as DirecTV has already committed to launching satellite dishes in the next two years that will be capable of hosting up to 1500 HD stations. What this all means is, an HDTV by 2006 will be as common as buying an analog television set in the '90's. In fact, in your local electronic's retailer, it is harder to find an analog television than it is an ED (Enhanced Definition) or HD set when it comes to the larger TV sizes (30 inches and up). Sure, today it's difficult to imagine two HD sets in one room, but it’s definitely not going to be uncommon during the lifespan of the next generation systems. Furthermore, with LCD flat panel prices dropping like a rock (soon to happen again with Sony’s new LCD line-up), it wouldn’t be so difficult to set up two HD LCD panels (very lightweight compared to tube TV’s) next to each other for multi-screen gaming.

Statement three: Xbox 360 not adopting to a next generation format, will do so once a standard has been solidified by the industry.

Xbox 360 is expected to launch some time in November 2005. The next generation disc standard isn't going to be decided by that time and even if a standard is agreed upon in the next few months, Microsoft won't have the time to go back and remanufacture the systems to follow that standard. If Microsoft truly believes the importance of adopting either HD DVD or blu-ray technology, then they've certainly made a mistake by releasing their system earlier than the rest. From our perspective, we'll buy the Xbox 360 based on it's games not because it can play DVD's in HD format or do anything outside of that. We would suspect that Microsoft has already made a decision to go with either HD DVD or some other proprietary format (especially when we're nearing it's expected Nov. 2005 launch date) for the obvious reasons. Choosing blu-ray wouldn't set them apart from Sony, furthermore, given this is Sony's technology, we can't see how Microsoft would offer their generous support even more.

They don't stand to risk of releasing two different versions of the Xbox 360 just to change the disc format. It would be too costly and certainly leave the customers that have already purchased their system with a bad taste in their mouth. We personally feel HD DVD isn't absolutely necessary at this point to help them win over the consumers. As always, great games will decide who is victorious.

Statement Four: Japanese software support from Enix.

This is a huge step for Microsoft and one thing for sure is in order to be dominate in this gaming industry, one cannot capture just the Japanese or U.S. market, but both of them. Microsoft did a superb job in the U.S., but admittedly failed in the Japanese sector. The only thing left is to see if the Japanese gamers will welcome the system itself, with aesthetics playing somewhat an important role.

Ken Kutaragi, Sony Computer Entertainment President

Statement One: Microsoft not a threat.

Given the track record of the PS 1 and 2, we would have to agree with Mr. Kutaragi. Until Microsoft shows that it is supported by all the major markets, U.S., Japanese, European, they and Nintendo will continue to battle it out for 2nd place.

For the time being and even through the life of the Xbox 360 and PS3, the importance of having a strong online gaming infrastructure (which Microsoft does) is not terribly important. The number of high speed broadband subscribers are relatively low compared to those who still function on dial-up connections.

Statement Two: Sony adopting the Blu-ray technology for PS3.

We would have to agree that Sony is taking a risk on pushing their blu-ray technology through the PS3 before the industry has widely accepted the next generation disc standard. It is obvious that by doing this, they're force feeding the consumers to eventually have the industry adopt it as the standard.

First and foremost we feel that no matter what Sony has claimed the PS3 will be, we see it as a gaming system. The integration of blu-ray technology to the PS3 is definitely exciting, but how it affects how games are made should be somewhat of a concern to game developers. If Sony requires most games for the PS3 to reach high definition TV resolution (at least 1024 x 768), this would mean that once again, programmers (as they did with the PS2) will be forced to learn the new CPU architecture of the PS3 to optimize all it's capabilites. The good old days of 2-D sprites are over, with games graphically more advanced in every way, all comes down to the developer spending more of their resources to make the game, leaving them less of a chance of ever turning a profit. So the whole idea of advancing too fast too soon for Sony’s PS3 may not necessarily mean it's such a good thing for them. If they provide the programming tools to their 3rd party developers for the PS3, this could only help them push out more games to help them gain momentum and eventually increase their market share over Microsoft and Nintendo.

Satoru Iwata, Nintendo president--

Statement One: High production costs of games to fulfill next generation console's processing capabilities.

We couldn't agree with this more. It's a tough call on what position to take whether you should market the latest and greatest technology or take a seat back and produce games that are less than graphically stellar and focus more on the storyline along with great game play. On one hand, you have to please what the consumer would perceive as superior. It's natural that someone who buys the latest technology wants the best they can get for their money or sometimes they just want the best. When all three systems are going to be released, the price points of them will remain relatively close to one another, so price won't be the determining factor here if one were to choose just one system. One of the biggest factors may be to convince the buyer that it's the horsepower under the hood that runs the show or as Nintendo feels, it will be the games that will determine who stays on top. We can only wait and see which marketing scheme works best. When your system is not the most powerful of the bunch, you do have to resort to other claims to make yourself look smarter or at least appear that way.

Statement Two: Nintendo's position on next generation disc format.

Nintendo wants to focus it's resources on how to make good usage of the next generation disc format to benefit the gamer directly. This statement is reinforcing their belief above saying it's not the 'super' technology that brings gamers in, but the games itself. This leaves a big question mark on what medium exactly Nintendo will be using for it's Revolution.

So what does this all mean?

When the smoke clears from all this tech talk, each of the companies will have some holes to fill in order to make their business model a success. Sony has the technology and almost the entire 3rd party industry backing them up. Microsoft has the superior edge in it's online infrastructure and the recent 3rd party support from the much needed Japanese game developers. Nintendo has their strong Mario, Zelda and Metroid franchises with it's hard core followers.

We seriously had to wonder about Sony claiming their system more of a all in one entertainment system less a gaming system. The only thought that comes to mind is, “Is the only way they can justify a speculated high price tag of around $500.00?” With all the juice under their hood the actual product cost of each PS3 is definitely more than $300.00, at least with the current rate. We highly doubt Sony will be releasing the system for more than $399.00, $349.00 being the more realistic price to remain competitive (for the U.S. market, Japanese market will be more). Sony is well aware that this time around, it isn’t going to be as easy as the PS2 vs. the Xbox and if they do release the PS3 $100.00 higher than the Xbox 360, they’ll certainly lose ground.

Microsoft’s strongest weapon in this whole race is their superiority with the online gaming infrastructure. With their Xbox Live, users pay an annual fee which allows them to play any game unlimited times using the same user name (Tag Name) and password. With Sony’s online games, you must register to play each game separately, which is inconvenient and definitely sways gamers away that seek live head to head challenges. During the lifespan of the next generation systems, this shouldn’t hurt Sony to the extent of losing market share, but gamers can already see the future of gaming is online, so with the online foundation already laid out for Microsoft, this can only help them gain momentum now and much more in the future.

We see Nintendo as always a contender, but not the big giant they were in the NES and SNES days. Unless you’ve lived under a rock the past 10 years, Sony has single handedly taken the big giant down. Since then, Nintendo hasn’t been the same, losing more third party software support to both Sony and Xbox. We just hope Nintendo knows what they’re doing, because we just don't see what the big selling point of their systems are besides the obvious Mario, Zelda sequels, which is getting a little overused. We know they’re coming out with a system called the Revolution, but what exactly does it offer that the Xbox 360 or PS3 doesn’t? If the consumer doesn’t know what they want you to think about the Revolution, then by logical standards, they may end up where they left off with the Game Cube, fighting for second place. The gamer’s age range are much older now compared to the NES/SNES days, who now expect more adult like themes, be it violent or more realistic to the life we live, these type of games just sell. Where Nintendo stands in their positioning with the online network is also questionable as well. Offering free service to it’s users is great, but at what cost and if it’s anything like Sony’s set up, this idea would be another bust, setting them back once again.

Being the gamers we are, we'll buy all 3 systems as we feel it's important to have all 3 remain healthy and competitive for the consumer's long term gaming benefits. Once again, we see Sony taking tops with Microsoft and Nintendo fighting it out for second. It'll be more interesting the next time around when more and more games go on-line, which Microsoft has a huge edge over both parties at this point. If Sony slips and doesn't see how huge this will be, well, it seems like Mr. Gates saw it coming all along.