Archive for April, 2009

Who Will Reign Supreme in the Console Wars?

by Chris Connor

Newest Casualty

Before discussing what console makers have what advantages, lets take a quick look at the latest casualty in the console wars (the Dreamcast being the first casualty).  Just when it looked like Microsoft {MSFT} might have to face Linux again but in a different arena this time, the plug has been pulled on a Linux console called Indrema because of lack of funding.  Although Indrema was no match for the Xbox, Nintendo’s {NTDOY} Game Cube,  and Sony’s {SNE} PlayStation, the Linux console could have shook things up by allowing consumers to develop their own games, download MP3s, and stream videos.  In other words, Indrema was intended to be what Microsoft is vehemently against letting the Xbox turn into, a PC console.  Despite the fact that the idea sounded good and the Linux-style console was intended to come out months before the Game Cube and the Xbox, there was simply not enough financial muscle and major game developer support behind it to make it fly.

The Weapons of War

In order to come out on top in the console wars, one company will have to exploit at least one sizable competitive advantage.  That said, let’s take a look at the combatants and see which ones hold the upper hand in such key competitive factors as performance, backward compatibility, proprietary games, compatibility with other systems, and game developer support.

Performance- Winner: Xbox

With a 733 MHz processor and 250 MHz video card, the Xbox’s performance capability easily thumps those of both the Game Cube (405 MHz and 203 MHz) and the PlayStation2 (300 MHz and 147 MHZ).  Using a more detailed and technical comparison, the Xbox is able to generate up to 125 million polygons per second, while Nintendo can only generate about 12 million polygons per second and the PlayStation2 can generate around 25 million per second.

Backward Compatibility- Winner: PlayStation2

While the Xbox, has a major advantage in performance, the PlayStation2 offers gamers the choice of continuing to play games from the best-selling console of all  time, the original PlayStation.  This backward compatibility is especially important now as gamers have to wait for higher quality games than are currently out now for the PlayStation2.

Proprietary Games- Winner: Game Cube

Without question, Nintendo has a dominant position in exclusive games because it has been around substantially longer than the other two and has established such popular franchises as Pokemon, Mario, Zelda, and Donkey Kong.  Look for this factor to become increasingly important as most 3rd party game developers (i.e. Electronic Arts {ERTS}) appear to be providing games on more of an equal basis to the major console makers than they ever have before.

Compatibility with Other Systems- Winner: Game Cube

The Xbox had a chance to win in this category if had allowed gamers to play PC games on its system, but that will not happen.  Instead, the Game Cube wins in this category because it is will be compatible with the future leader of handheld game systems, the Game Boy Advance.  While there is a battle raging on the console front, there is a dominant leader in handheld gaming and the Game Boy and its sequels are it.  With that in mind, the Game Cube will wisely look to cash in on this cross compability.

Game Developer Support- Winner: PlayStation2

This was the toughest category to judge because the Xbox is gathering an amazing amount of support, but the nod goes to the PlayStation2 for its experience with developers due to the first PlayStation and its early lead over the other two consoles.  Although this is a key factor, look for game developer support to be less important going forward as most developers will supply games for all three consoles and Nintendo will be more open to outside game developers than it has in the past.

Bottom Line

If the console war comes down to which console has the best games, the Game Cube could sneak in the back door and steal the leadership position from the Xbox and the PlayStation; however, if the console war is decided by which console offers the most total entertainment value (DVD capabilities and hard drives), the Xbox and the PlayStation2 will have to battle for the top spot.  If that one-on-one battle for supremacy happens, the PlayStation2 will likely have the advantage because the Xbox will have an incredibly hard time trying to break into one of the most important game markets in the world, Japan.

Xbox: Can Microsoft Rule Gaming Hardware?

by Chris Connor

In the Driver’s Seat

After the PlayStation2’s somewhat disappointing launch, the door is now wide open for Microsoft’s {MSFT} Xbox to steal away significant market share away from the sequel to the best selling console ever, if Microsoft plays its cards right. The Xbox already stands a great chance of being the top dog of consoles due to the plethora of game makers developing games for the system and its industry-leading specs.  The fact is that no other console can match the Xbox in either processor speed or graphics.

Looking under the hood shows why.  Intel {INTC} will provide a 733 MHz chip for the main processor and 3D graphics king Nvidia {NVDA} will provide a 250 MHz graphics chip.  Compare those numbers with Nintendo {NTDOY} (405 MHz and 203 MHz) and Sony {SNE} (300 MHz and 147 MHz) and you can see why the Xbox could eventually reign as the top video game console.

Will Image Hurt the Xbox?

While Nintendo has been making consoles for over a decade and Sony was making electronic products for years before it starting making the PlayStation, this will mark the first time that MSFT has made anything even close to a console.  Remember the last time Microsoft tried to dominate a non-PC consumer product?  Let’s just say that the company has not had overwhelming success in the PDA market (it is currently no match for Palm’s {PALM) operating system).  The Xbox’s image will also not be helped by the fact that some people just don’t like Bill Gates or Microsoft.  Right or wrong, this could have a significant effect on Xbox sales; however, the biggest hurdle image-wise is the Japanese market.  Out of the top four console makers (if Sega can still be counted as a console maker for the moment), only MSFT is an American company while the rest are Japanese.  This is a very important point because the Japanese normally shun American electronic products and video games.  If the Xbox can’t breakthrough to the Japanese market, both Nintendo and Sony will have a substantial competitive advantage.

A PC Console?

Microsoft may have made its fortune from the PC business and the Xbox may be more like a PC than any other console (hard drive, modem, Intel processor, graphics chip from PC graphics card maker), but Microsoft has specifically stated that the Xbox will simply be a game console.  That said, users won’t be able to play PC games on the Xbox, which is very disappointing but makes sense given the technical difficulties of pulling it off.  To further emphasize that the Xbox is strictly a game console, Xbox buyers will have to purchase a remote control kit separately if they want to watch DVDs on the console.  Even worse, Microsoft is not adding a keyboard and mouse either, which means no email and online chatting.  If the Xbox is going to be a major player in online gaming, it better support a keyboard and a mouse so gamers can communicate with each other.  Microsoft may not want the Xbox to compete with Web TV, but the Xbox still has to be the best product that it can be.

Games and Game Makers

As with the PlayStation2, Electronic Arts {ERTS} will have more exposure than any other third party game developer by a wide margin.  Besides Electronic Arts, most publicly-traded game makers are only working on one or two games for the Xbox (Infogrames is rumored to be in talks with Microsoft about potential Xbox games, but nothing has been announced yet). Of those other game makers, look for Activision {ATVI} to reap substantial rewards with its Tony Hawk Pro Skater 2 and THQ {THQI} to continue to enjoy success with its latest wrestling title (WWF Raw is War).  Still, ERTS will generate the most attention on the Xbox (excluding Microsoft of course) with its considerable name brand and numerous titles.

When the PlayStation2 launched last fall, Electronic Art’s stole the show with the two best games of the launch by far, Madden 2001 and SSX; however, those two games will just be the tip of the iceberg for the Xbox.  MSFT’s console will get about 10 total EA games for the launch, the highly anticipated OddWorld: Munch’s Oddysee (originally targeted for the PlayStation2 but the system could not handle it), several games from Sega (some will be on an exclusive basis), and the Redmond company’s own crown jewel, Halo.

If Halo lives up to its lofty expectations (if the multiplayer is not hampered or cancelled to meet the launch date) it could turn out to be the Mario of the Xbox  - in other words, Halo could be the game that the Xbox is known for. Why is Halo so special?  This game will be one of the biggest beneficiaries of Nvidia’s chips by displaying jaw-dropping graphics in a highly scenic science fiction world.  In addition, players will be able to drive around in SUVs, tanks, and even aircraft, which is very rare for a 3D shooter.  In fact, if the multiplayer experience is handled correctly, Halo could end up being the best 3D shooter on any console period, because most console 3D shooters are no match for their PC counterparts.  When it is all said and done, Microsoft needs Halo to realize its enormous potential in order to go up against the exclusive blockbusters of Nintendo and Sony like Mario, Donkey Kong, Zelda, and Gran Turismo.

Don’t Forget about Nintendo’s Game Cube

by Chris Connor

The Most Mysterious Console

Sony’s {SNE} PlayStation2 is one of the most hyped electronic consumer products ever, the Xbox is being widely heralded as well due to Microsoft’s {MSFT} marketing muscle, and Sega’s {SEGNY} Dreamcast has flopped.  Does that sum up the current next-generation console landscape?  Not quite.  Lurking in the shadows is an old favorite in consoles, Nintendo {NTDOY} with its forthcoming Game Cube.  Without question, the Game Cube has generated the least amount of attention among the major consoles; however, the Game Cube should not be underestimated or overlooked in the upcoming wars. Read on to see why.

Changing Its Ways

To keep from being overwhelmed by the Xbox and the PlayStation2, NTDOY is making some much-needed changes.  The most obvious change will be that a Nintendo console will utilize CDs for the first time instead of bulky cartridges.  This means that every major next-generation console will now incorporate CDs.  More importantly, the company wants to gradually shed its image as a console maker primarily for kids (Mario Brothers, Donkey Kong, and Zelda) and focus more on mature audiences like the PlayStation2 is and the Xbox will be.  With the original PlayStation finally getting game consoles into the mainstream, video games are now entertainment vehicles for people of all ages as more and more console games are incorporating mature themes.

Nintendo’s move to more mature games can be best seen with the recently released Conker’s Bad Fur Day.  Just looking at the title character (a squirrel named Conker), you would never know that this game rated M for Mature, but that is exactly what it is ranked.  The M rating, which is highly unusual for a Nintendo game, comes as a result of swearing similar to South Park and crude humor like a giant mountain of manure with corn for teeth.  Guessing Nintendo’s strategy, don’t be surprised to see more games similar to Conker’s Bad Fur Day on the Game Cube. Overall, the move to more mature games is a good one for Nintendo and must be done when considering the competitive landscape, but it should be done in a way that will not alienate its faithful younger audience.

What Makes the Game Cube Standout from the Rest of the Pack?

Unlike the PlayStation2 and the Xbox, consumers will not be able to play DVD movies on the Game Cube.  The upside of this omission is that it allows Nintendo to focus more intently on games, which should make it easier for developers to develop games for the Game Cube.  Though this is an important feature, the Game Cube’s biggest advantage will be its compatibility with what is to be the 800-pound gorilla in handheld gaming, the Game Boy Advance.  Gamers will be able to connect the Game Boy Advance to the Game Cube via a cable and then use the Game Cube as a controller.  This adds new functionality such as the ability to call an offensive football play in total secrecy, constantly having an off-screen map available for games like Zelda, or continuing a game that was originally started on the Game Cube (e.g. a gamer could start an adventure game at night, transfer the data to the Game Boy Advance and then re-enter the game the next morning while on the subway).  Though the original Game Boy does allow gamers to transfer data to and from the Nintendo 64, the actual ability to communicate came from the game cartridge itself, not the actual system.  The Game Cube and Game Boy Advance tandem marks a dramatic evolution because the ability to communicate is built into the systems themselves and not peripheral devices.  This functionality presents a strong marketing argument and is likely to be a key driving force for the sales of both the Game Cube and the Game Boy Advance.

The Components Makers

Since there is little information on which publicly traded game makers will make games for the Game Cube and what those games might be, this article will focus on publicly traded Game Cube component makers instead.  IBM {IBM} will be supplying the console’s main processor and Conextant {CNXT} will be supplying the system’s 56k modem and broadband adapter, but the Game Cube will not likely have a significant impact on the sales of those two billion dollar companies.  The companies that could be affected substantially if the Game Cube is a huge hit or failure are ATI Technologies {ATYT} (through its acquisition of ArtX), SONICblue {SBLU}, and Applied Microsystems {APMC}.  Though ATI Technologies is also a billion dollar company, it needs the Game Cube to be successful in order to keep up with dominant Nvidia {NVDA} in the 3D graphics arena.  Nvidia not only is having it chips being used in the Xbox, but has also won over former key ATI customers Gateway {GTW} and Compaq {CPQ} and recently purchased 3D graphics competitor 3Dfx.  It would be wise for ATI to maintain any advantage that it can over Nvidia, before it falls prey to the current 3D graphics king as well.

SONICblue and Applied Microsystems should be affected substantially more by the Game Cube than the other three publicly traded component makers simply because of the potentially larger percentile impact on their revenues.  APMC will be charge of supplying game developers with the hardware necessary to make games for the Game Cube, while SBLU will look to cure a problem that was blatantly evident on the Nintendo 64, a graphics blur.  SONICblue’s compression technology instantaneously decompresses textures without a loss of performance, which means substantially more detailed graphics without adversely impacting the performance of the system.  The technology has a compression ratio of six to one, which means that one MB of memory can act like six MBs of memory.  The PlayStation2 does not use this technology, so it will be interesting to see if this technological advantage for the Game Cube will have any effect on the game console wars.

Forget Palm, the Game Boy Advance is the True King of Hand-Helds

by Chris Connor

Taking Handheld Gaming to the Next Level

After more than ten years of Nintendo’s {NTDOY} Game Boy dominating handheld gaming and putting competing portable games systems out of business like the Atari Lynx, Sega’s {SEGNY} Game Gear, and NeoGeo Pocket Color, the Game Boy Advance will hit U.S. shores on June 11 (after having already launched in Japan). Although the Game Boy has changed its size and color in the past, the Game Boy Advance marks the first time that the Game Boy will have a true sequel performance-wise.  This sequel will not only enjoy a quantum leap in graphics (8 to 32 bits) over Game Boy Color, but it will also feature a larger screen.  According to Game Boy.com, the Game Boy Advance performs 17 times faster, extends battery life by 50 percent longer, improves picture resolution by 66 percent, and displays over ten times the number of colors (onscreen) than the Game Boy Color.  Furthermore, Game Boy.com says that the Game Boy Advance can deliver a better picture than “current 32-bit and 64-bit consoles playing on a 27 inch television”.  Now that is what I call a performance boost!  These improvements should serve to make handheld gaming more enjoyable and popular, because handheld gaming has been hampered somewhat by rudimentary graphics and small screens.

Although the Game Boy Advance’s performance will not rival that of Sony’s {SNE} PlayStation, which is also 32 bit, the Game Boy Advance can outperform older game consoles like the Super NES (Nintendo Entertainment System).  Obviously it won’t be possible to play Super NES cartridges on a Game Boy Advance because of the size difference of the games and the systems, but don’t be surprised if a plethora of former Super NES games or Super NES style games make their way on the Game Boy Advance.  Being able to play Super NES caliber games would definitely be a giant step up in the game play department as opposed to former Game Boy games.

Furthermore, the Game Boy Advance will let gamers “talk” to Nintendo’s next generation console, the Game Cube.  Gamers can connect the Game Boy Advance to the Game Cube via a cable and then use the Game Cube as a controller.  This adds new functionality such as the ability call an offensive football play in total secrecy, constantly having an off-screen map available for games like Zelda, or continuing a game that was originally started on the Game Cube (e.g. a gamer could start an adventure game at night, transfer the data to the Game Boy Advance and then re-enter the game the next morning while on the subway).   Though the original Game Boy does allow gamers to transfer data to and from the Nintendo 64, the actual ability to communicate came from the game cartridge itself, not the actual system.  The Game Boy Advance marks a dramatic evolution because the ability to communicate is built into the system itself and not a peripheral device or third-party cartridge.  This functionality presents a strong marketing argument and is likely to be a key driving force for the sales of both the Game Boy Advance and the Game Cube.

Which Game Maker Will Benefit the Most from the Game Boy Advance?

Activision {ATVI} presently has the most exposure to the Game Boy Advance with its widely popular Tony Hawk 2 scheduled to be released on same date as the Game Boy Advance’s U.S. launch.  In addition, ATVI has several games, including Spiderman, X-men, and Doom, scheduled for release in the U.S. after the launch (if they can’t meet the launch date).  Doom may rival even Tony Hawk 2 in popularity on the Game Boy Advance because it is one of the most popular games ever, will be very similar to the original, and will be the first major first person shooter on a handheld.  Until now, playing a 3D shooter like Doom on a Game Boy would have been a ridiculous experience because of the original’s systems many limitations.  Now, the Game Boy Advance ushers in an era where shooting monsters and friends in 3D is now possible on a handheld.  Imagine being able to play Doom in all its original glory on a long flight or when waiting at the doctor’s office.  Given the ability to network up to four Game Boy Advances at once, fans of the immensely popular first person shooter genre will likely jump at the chance to buy Doom on the portable gaming system.

THQ {THQI} appeared at first glance to have had a comparable lineup, but so far, no dates have been set for a U.S. release for any of the company’s games (this will likely change in the future).   3DO {THDO}, however, will be active right from the U.S. launch with its Army Men Advance.

The Much-Hyped PlayStation 2

by Chris Connor

Brimming With Potential

If Sony {SNE} had played its cards right, the PlayStation2 would definitely be in the driver’s seat as the Xbox and GameCube are set for release in the fall.  The dominant leadership in consoles and the chance to grab a substantially large user base for a full year was right there for the taking, giving SNE distinct advantage in the upcoming next-generation console wars. Certainly the PlayStation2 had a lot going for it: it is the sequel to the best-selling console of all-time, its graphics are at least four times better than its predecessor (128 bit versus 32 bit), it took advantage of the DVD player finally hitting the mainstream, game companies were lining up in droves to develop games for it, and Sega’s {SEGNY} Dreamcast was not a real competitive threat.

Ball Dropped

Although the PlayStation2 has sold about 10 million units world-wide thus far and enjoyed the biggest launch of any console ever in the U.S., it could be said that Sony has dropped the ball and left the door wide open for the upcoming Xbox and GameCube.   For starters, SNE was forced to slash the size of the initial PlayStation2 launch due to parts shortages, which created multiple frenzies at electronics retailers.  Everybody seemed to want a PlayStation but there was no way to get one unless you wanted to pay outrageous prices on eBay {EBAY}.  Six months later, prices for the PlayStation2 have dropped considerably on eBay, but it is still nearly impossible to the console at the nearest electronics retailer.  There has also been ample criticism over the quality of the console’s 26 launch titles.  Industry insiders feel that the games were rushed to meet the launch date.  Finally, rumblings that Sony has irritated game developers (making games for the PlayStation2 is reportedly a major challenge and Sony has been less than helpful to developers), publishers (lower than expected operating results because not enough PlayStation2 consoles have hit the market yet), and electronics retailers (Sony has allegedly threatened various major game retailers with less unit shipments if those retailers don’t remove Xbox ads from their stores)  have been surfacing.

Combined, these factors threaten Sony’s reign, especially if Nintendo {NTDOY} or Microsoft {MSFT} do a better job in execution.  That said, the SNE should get its act together with the Playstation2 once it can ship more units.  In addition, the quality of games for the market-leading console are already improving significantly with such leading titles as the Bouncer, Onimusha (the first million seller for the system), Gran Turismo 3: A-Spec, Dark Cloud, and Twisted Metal: Black.

Which Game Makers Will Benefit the Most from the PlayStation2?

So far, Activision {ATVI} has been the most prudent game maker and posted the best operating results, because it has seriously limited its PlayStation2 exposure from the start.  Nevertheless, don’t expect that the PlayStation2’s struggles will last forever.  If the PlayStation2 juggernaut ever does get finally rolling, several of the key game makers with large PlayStation2 exposure should reap rich rewards given the build up in demand for the console and quality games (see table below for the breakdown of PlayStation2 exposure of several publicly-traded game makers) .

Surprisingly, two out of the three game makers with the biggest PlayStation2 exposure, Interplay {IPLY} and 3DO {THDO}, are trading under $2 per share. IPLY appears to have at least two mega-hits on its hands: Run Like Hell and Baldur’s Gate: Dark Alliance.  Run like Hell intends to generate substantial unit sales by scaring gamers silly as they must constantly run from ultra-intelligent, relentless aliens seeking to kill them.  If Interplay can capture the same success that the Baldur’s Gate series has accomplished on the PC for the PlayStation2, it will definitely have a blockbuster on its hands and the top role playing game on the PlayStation2.  3DO will look for similar cross-platform success with its ongoing Army Men franchise and High Heat Baseball 2002, which are also big hits on the PC.  High Heat Baseball 2002 stands a good chance of being the top baseball title on the PlayStation2.

The other game maker with the most PlayStation2 exposure is of course Electronic Arts {ERTS}.  As can be expected, Sony has given EA special treatment because the company is the largest independent game maker in the world.  SNE also does not want Electronic Arts to have a major presence on the Xbox, so it will try to make the game developer as happy as possible.  The big blockbusters on the way from Electronic Arts are expected to be Sled Storm 2 and Medal of Honor Frontline (the original was the best-selling 3D shooter on the first PlayStation).

The other game makers may not have as many major PlayStation 2 games as the aforementioned companies, but Take Two {TTWO}, Eidos {EIDSY}, and Infogrames {IFGM} are worth watching.  Take-Two should attract controversy again with its latest installment of the notorious Grand Theft Auto series.  In the latest installment, crimes will be substantially more realistic because of the quantum leap in graphics for the game.  Infogrames will go after the top spot in vehicular combat, but this genre will be flooded with new titles in the near future.  Eidos’ Project Eden and Herdy Gerdy are two ambitious games in development that eventually become monster hits; however, the company has a reputation for not delivering the goods due to past disappointments such as Daiktana, Omikron, and Urban Chaos.  THQ {THQI} also should be watched for future WWF {WWF} wrestling titles.  Currently, THQ is focusing all of its PlayStation2 efforts on Red Faction, while its bread and butter has always been wrestling games.  Red Faction will likely be a hit, but the company is creating significant risk by placing all of its eggs in one basket.