what determines a game console’s market share?

16 01 2007

(Ed. note: I realize some of my loyal readers don’t care about game consoles and such, but sometimes my nerdiness sneaks out.  🙂  I’ll try to not make it too much of a habit…  If you aren’t going to read this but normally read my posts, look at it this way — you now have 2 to 3 minutes back of your time.)

In the current generation of gaming consoles, the Microsoft Xbox 360, Sony PlayStation 3, and Nintendo Wii are all fighting for market share.  This happens every few years as a new generation of consoles are released.  This year’s battle is interesting because they aren’t all using the same strategy of throwing the latest and greatest hardware at the user.

How much of the game consoles “war” is about the technology?  While there are some people who are lured by the number of gigaflops the GPU can do, a lot of gamers don’t care.  There’s also the mantra that it’s all about the games and gameplay, which I think is partly true.  But there’s another factor which is often left out of these discussions : marketing.

In the fourth generation of gaming consoles (which consisted of the 3DO, Sega Saturn, Sony PlayStation 1, and Nintendo 64), the N64 actually had the best graphics hardware. It even had exclusive rights to two of the most critically acclaimed games ever, Super Mario 64 and Zelda: The Ocarina of Time.  But the console got only 23% of the market share.  So the console with the best hardware and (arguably) the best games didn’t win, in this case.

The only time so far that the console with the best graphics technology was the best-selling console was in the third generation, which was the Super Nintendo (SNES).  (The source for this information is : Good Enough: Why graphics aren’t number one.  You can find more info like this there.)

Marketing plays a huge role in generating “buzz” (hype) over new consoles.  The companies want people getting excited about the new technology and new games so they’ll talk about it.  These days, price is becoming a large factor, too, which I suppose you could file under marketing.  A lot of gamers just don’t have $600 for a console (plus $50 for another controller, $50-60 per game, plus a few extra accessories and cables).  The PS3 can easily cost over $800 once you get going, and that’s with just a couple of games (because it doesn’t come with one).  The Xbox is expensive, too, costing about $500 for the console with the features you’d want.  Nintendo chose a different strategy — not using the extreme cutting-edge technology so they can sell the console for $250 (and include a very fun game).

One factor which isn’t really fair is momentum.  By that I mean the situation where once a console takes the lead in market share, it gets more good games, because it’s less of a risk for developers to invest lots of time and money into new games.  So your market share can really take off once it gets established.  Even if a console isn’t the best among its competitors, if it can gain a lead in market share, that lead can grow just because it has a lead, since more games become available.

Some people speculate the PS3 is trying so hard to be graphically superior that it has alienated many developers.  Being a programmer myself, I’ve used good development tools and some not-so-good development tools, and it makes a big difference.  If Sony makes it extremely difficult for developers to write games (as well as expensive), it’s less likely they will make the investment necessary to put out a lot of games.  Most game development and publishing companies don’t say too much about each system because they don’t want to burn bridges, but Gabe Newell, the co-founder and managing director of Valve Corporation (which makes games like Half-Life), had some strong words about the PlayStation 3 in a recent interview :

The PS3 is a total disaster on so many levels, I think It’s really clear that Sony lost track of what customers and what developers wanted.  I’d say, even at this late date, they should just cancel it and do a “do over”.  Just say, “This was a horrible disaster and we’re sorry and we’re going to stop selling this and stop trying to convince people to develop for it”.  The happy story is the Wii.  I’m betting that by Christmas of next year, the Wii has a larger installed base than the 360.  Other people think I’m crazy.  I really like everything that Nintendo is doing. ~ Gabe Newell

The Wii has a lot of market share to gain if it’s going to take first place from the Xbox 360 or surpass the expectations of the PS3, but it’s certainly possible.  There’s a lot of “buzz” about the Wii (and rightly so, IMHO), and they’re still hard to find in stores.  Everyone that has played mine has enjoyed it, even people who don’t normally like video games.  (You can read my review of the here.)

So what’s my point in all this rambling?  🙂  It’s difficult if not impossible to predict who will gain the most market share.  The best technology is not guaranteed to win.  Personally, I am rooting against Sony, because they are taking away many of our freedoms with their DRM-infected Blu-ray drives and their rootkit fiasco (and from what I’ve heard, Sony hasn’t learned the right lesson after that debacle).  Sony is also trying to force the Blu-ray drives on people whether they want it or not using the PS3.  (They tried this with PSP — it’s a great idea and great technology, but they force you to repurchase movies and PS2 games using their exclusive UMB format.)

Also, I think Nintendo should get many kudos for trying something new with their controllers and the method of gameplay.  So far, I’m really enjoying it.  I hope they do well…

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19 01 2007
Beppo’s Blog » Blog Archive » Will having the best graphics make the PS3 a success?

[…] As I discussed recently about the “console wars”, there are three main players fighting for market share : Microsoft Xbox 360, Sony PlayStation 3 (PS3), and the Nintendo Wii.  The Xbox 360 was first to market by a year, so they have a sizeable lead, but that usually doesn’t determine who ultimately “wins”.  Many people (particularly PS3 “fanboys”) are expecting the PS3 to win because it has the most advanced graphics hardware.  While great graphics are helpful in selling a game initially, it’s not as important as many people think. […]

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