13 June 2013

Wall Street Geeks out: Xbox One vs. Playstation 4

In all the analysis, and opinion, and hand-wringing, and shouting over the two newest entries to the console gaming market, I have to say I find it hilarious to listen to the financial talking heads pretend that they know anything about video games.  Most of them probably think a Halo is only something you associate with angels, or that Drake is just a really bad rapper.  To listen to them wax poetic about how Microsoft's corporate fortunes are now tied to Master Chief and how important the next version of KillZone is just makes me laugh.  But be that as it may, everyone has an opinion on what is going to happen now in the next round of "console wars."  Before we get to that though, just a brief word (and obituary) on Nintendo.  How the mighty have fallen.  Even during the dark days of the GameCube, the Big N could still rely on the latest version of Mario or Zelda to save them from total obscurity.  I don't think that is the case any longer.  Most people don't even include the Wii U in discussion of serious game consoles anymore.  I'm not sure if they will survive as a producer of hardware by the end of this cycle.

The Not-so-good, Bad, and Really Ugly

The main question that presents itself in the contest between the Xbox One (XB1) and Playstation 4 (PS4) is:  Who is the target audience?  If we are talking about the hardcore gaming demographic, they are feeling rather put off by Microsoft and the XB1, as evidenced from the rather amusing video that was put together which emphasized the TV and multimedia capabilities of the XB1 rather than its gaming merits.  While I'm sure there are plenty of fantasy football enthusiasts among gamers, I don't think they care if their gaming machine can track their stats in real time while they play Halo.  Ok... maybe they do, and that's what Microsoft is counting on.  But forgive me if I sound skeptical about that feature being a top priority among the hardcore demographic.

Then of course we get to the more controversial aspects of the XB1.  First you have the mandatory internet connectivity.  No you don't have to be constantly connected to play single-player, offline games.  But the XB1 needs to "phone home" via the Internet at least once every 24-hours or it "bricks" itself essentially and you can't play anything.  I don't think this is going to be a dealbreaker in the long run.  Yeah it is going to suck for deployed military, and yeah you can't take your XB1 camping with you, but again to the hardcore gaming segment, this is mostly going to be a non-issue and I would argue also a non-issue to the "casual entertainment" segment that Microsoft is also courting.  Most of those folks will be online all the time anyway to do things like streaming Netflix or Hulu Plus. 

But then things really start to get painful.  Microsoft is going "all in" on digital distribution with the XB1, essentially making the physical disc copies of games meaningless.  Now this very well may be the trend of the future, but I think Microsoft is getting ahead of itself here and trying to dictate a change in the market rather to responding to customer needs.  Furthermore, and more importantly, this transition is changing the way used games will be handled on the system.  Honestly I still don't fully understand the policy as it stands.  Loan once?  Recipient has to be on your Friend List for 30 days?  Publishers can choose to block transfers and sales entirely?  It is a convoluted mess.  Long story short, you do not own your games on the XB1, you simply possess a license.  And again, this may be the trend of the future, but it is not yet the "here and now," and XB1 may pay dearly among the hardcore gamer segment for trying to dictate this change.

Finally there is the price point.  XB1 comes in at $500.  This was a full hundred dollars above most estimates, and more importantly, $100 more than Sony is pricing the PS4.  This is a big "psychological" number and is really going to turn off a lot of potential customers outside the hardcore gaming demographic.  Most people who already own a DVR or some other kind of TV device are not going to shell out $500 for something new that just happens to play games.  (I'm not going to get into the "controversies" around the Kinect and whether it is listening to you all the time and recording you banging your wife between Halo sessions.  I'll save the tin foil hat stuff for other folks.)  Gamers will pay $500 for the latest and greatest, but with the negatives noted above, that segment is already skeptical about the XB1 and so this high price point does the console no favors.

Who are we Fighting For?

The PS4, as you might assume, avoids many of these issues.  It does not require an Internet connection at all to play single-player, offline games.  It does not have any kind of strange used game policy.  Sony is promoting digital downloads also, but not to the level Microsoft is.  And the PS4 is going to be cheaper, as noted above.  So as I said at the outset, the question really is who are both companies trying to appeal to?  Microsoft tried to "get back" the gaming segment with their E3 presentation, highlighting important franchises like Halo and totally downplaying the multimedia aspects of the console.  Sony gleefully "kicked" Microsoft when they were down, emphasizing the noted differences in policy between PS4 and XB1. 

Microsoft is obviously gambling that they can attract more of the "casual entertainment" market, much like Nintendo tried to do (and mostly succeeded) in the last generation with the Wii.  But as Nintendo also found out with the Wii, innovation alone does not move consoles.  You still need to make good games.  The Wii (and the Wii U) were both done in by the lack of titles that people actually wanted to play.  So if Microsoft thinks that XB1's fancy multimedia capabilities will carry the day, I think they are sadly mistaken.  And I think their E3 presentation shows that they know it too.  They need hardcore gamers to buy the XB1 at launch and generate momentum for the system.  Then as time goes on, they can rely on the "casual" segment to buy in and carry things forward.  But those people are not early adopters.  They don't need the "latest and greatest."  Time will tell if the strategy will pay off.

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