Don’t worry ladies. I’m sure we could find some work for you to do!
Now, I don’t want to be the type to say “I told you so.” Let me instead just say that a couple of years back I made a prediction about the gaming industry and that my prediction is on the verge of coming true and that I now wish to emphasize the fact that I told you about it beforehand.
Who am I? I am the creator of a certain video game console. I don’t want to toot my own horn, but let’s just say that profits from this machine were four billion dollars higher than the Microsoft XBox.
My console consisted of a plastic milk crate with a kitten placed inside. The controller was a wooden rod that could be used to poke the kitten. I sold zero of these consoles, which cost me zero to manufacture. Therefore my profits were zero. The XBox, however, LOST four billion dollars.
Think about that, and think about how Sony plans to take a $400 to $500 loss on every single damned PS3 they sell for the first few years. Oh, I know they can make that money back on the games… if the consoles sell like hotcakes in a colony for hotcake addicts during a hotcake shortage. But only if.
It’s easy to predict the future when you don’t give a specific date, but I have to admit I agree with this guy. A crash is coming. Everyone claims that the original Xbox was a success despite it losing four billion dollars?! If that’s a success, what’s a failure?!
John has written about the pending video game crash in his PC Magazine column.
Nothing can continue to lose money forever. Except maybe the government, because one day they’ll just outlaw thier own debt.
I figure that unless the companies are really making up the money on other merchandise, we will see a death of certain video game consoles.
Of course, I haven’t heard if Nintendo is going to lose money on the Wii. If they just break even, they’ll make it up on the back end, I figure. Who would’ve thought Nintendo would be back in the spotlight?
Not only will it not happen, but the argument against a crash is so simple I’m shocked it isn’t automatically being talked about in any article:
The industry is too widespread to crash.
In the early 80’s gaming was limited to arcades, Atari’s, and Commodore 64’s. When the Atari feedbag went empty you had a glut of suppy with no comparable products: C64 gaming was limited and wasn’t thought of on the same level at the time, while arcade gaming was already starting to fade out.
Today you have three console makes for both the living room and handhelds plus a huge PC gaming space, which includes the MMOs.
One or two of the players dying out doesn’t make for a crash… it just makes the other players stronger. Moreover, when the players losing the most money (M$, $ony) are using the consoles Trojan Horse style for other techonolgies, the loss is more understood within the respective companies involved.
Moreover, you have Gen Y entering the workforce… increasing the number of game players with a job (beyond Taco Bell). Also, you have Nintendo branching away from Sony and Microsoft with a focus on cost and playability, as opposed to features and graphics.
A crash? Hardly. Put your money on gaming to become as important as office application in terms of the technology landscape over the next 20 years
Last weekend, I experienced the Xbox 360 for the first time, owned by an avid gamer and video game magizine columnist. I would argue that the Xbox 360 is certainly looking like a true success, which could not have been possible without the momentum from the original Xbox. Was it worth paying 4 billion for a large market share to launch your *true* gaming platform? I doubt it. However, Xbox 360 is certainly the right leap to take for MS to even HOPE to see if their “investment” pays off.
WELL,
I agree…
Back in the DAY…ya, Im old, ALSO..
The C64 had OTHER comapnies making games for their console, and Commie tried to SUE them, and lost. Ever hear of ACTIVISION, yep, they made ALOT of games for it. There USEd to be about 20+ makers of games…Then Others, decided it was CHEAPER and more control to be in DISTRIBUTION, ask ATARI…
ATARI and few others, HIRE out programming, to SMALL companies, and then STARVE them to DEATH. AFTEr the game is MADE, the SMALL company cuts back to a skeliton CREW, to TRY and make SOME money.
AND NOW, the MAIn distributour, is the MAKER of the machine. They are LOCKING it down, so NO-ONE can make a prog, or even distribute TO THEIR MACHINE, without going THRU the maker…ex. Xbox 360 with 3 internal backups and a kill switch IF you open it.
They are like a Crack DEALER, they will give you the BOX, but they want you to PAY for everything else. The HARDWARE wont work on any other machine, and you CANT get programs without being ON THE NET, and BUYING it from THEM, ONLY…. THIS cuts the profit margins to the GAME maker, as they go threw 1 Distributour, that THEN sells to MS or sony…
GONE are the days, when a game was MADE, it was MADE for ALL the machines and consoles.
But,
Understand… JUST cause they SAY, they are looseing money, ONLY means they AINT making the SAME profit, as they USUALLY DO…
Manufactouring costs have NOT gone up in over 20 years.. With NEW equipment, CAD/CAM, and then going to OTHER countries(even china and japan go other places) to get CHEAPER employment costs, USA markups tell us, that these units are PROBABLY 1/4 what they are selling for(AT LEAST).
One thing I’ve noticed ever since my baby came along is how repetition breeds to more interest. Before she was born, I was playing games, worrying about hardware upgrades, software changes and crap like that. After she was born (healthy and happy!) things changed naturally. While I still like to game, taking a couple of weeks off really resets your perceptions. Suddenly, I was BORED of 99% of the video games I had. If the story wasn’t any good, I just didn’t care. Sure, some FPS stuff for a couple of minutes was fun, but there was a certain blase feeling about it all… If everyone took a break from gaming, I think there would be a palpatable shift in it. But, like all good addictions, it feeds itself.
Anyhoo, adventure games seem to be more pleasurable now. Not RPGS. I like my life. But I don’t mind enjoying a visual story once in a while, and maybe adventure games need to make a comeback. Like Monkey Island…
Name, I agree with you. While I was never an avid gamer, I’d go to and host lan parties. I owned an Atari as a kid, then a N64 and a Dreamcast as an adult.
But once my kids were born, I didn’t have the time for it. I’d much rather watch a movie then spend days trying to master the moves to get through the BS to get to the next level, to start the learning all over again.
Time is too precious for wasting days on a video game for us old folks.
#2,
But SMALL companies cant make it ANYMORE…
It used to be, that a small comapny could sell 1000 units and make there margin after.
NOW they need 100 more people just to get the game running, and they CANT direct sale, they have to cut their margin to get threw a distributour, and STILL sell the first million copies.
In europe and Japan, there are 10 times MORE releases then in the USA….I WONDER why? The Game makers ARENT making the money over here, its the DISTRIBUTOUR… ARARI is one major distributour..
Look at the NAMES on the box’s… 1 group MADe the game. the OTHERS are subsiderary of the distributours…
Look up, ENLIGHT, and SIRTECH…they made some NICE games…
I used to think that people would tire of repetitive and boring things. TV sitcoms are hanging on and they remade King Kong for the second time, so what do I know?
I think it’s important to note that the Nintendo machines have never sold at a huge loss, if any, despite what I keep hearing from John and others in podcasts.
“TV sitcoms are hanging on and they remade King Kong for the second time, so what do I know?”
Actually, as far as I can tell sitcoms are over. Has there really been a hit sitcom since Friends went off the air?!
And let’s not forget that the remake of King Kong bombed.
What about the poor little kitty in the box!
“What about the poor little kitty in the box!”
I’m sure he starved to death a long time ago. Nothing to worry about any longer.
The industry? Yes. Microsoft? No.
Microsoft will wipe out Sony and Nintendo with product dumping and get people locked in through the networking effects of their Live services.
You think Microsoft cares about a measly 4 billion when the gaming industry takes in 11.5 billion annually? They just have to outlast their competition. After they drive out Sony and Nintendo, they can charge whatever they want. Hey, it worked for Windows and Office.
“They just have to outlast their competition. After they drive out Sony and Nintendo, they can charge whatever they want. Hey, it worked for Windows and Office.”
So let me get this straight. Massively increasing the prices of consoles and games will not affect the gaming industry?!
It worked with Windows and Office because businesses require them. How many individuals do you know that actually own a full copy of Office?! And because there are hardly no costs associated with producing those programs, once they’re written they merely have to be printed and sold at 80% profit margins. Thus the $250 copy of XP Pro can be sold to OEMs for only 50 bucks. And it’s almost pure profit!
Consoles have to be built, suppliers have to be paid, and retailers have to be compensated. There will be no 80% profit margins for the Xbox 360. If they set the price high enough, no one will buy it.
TRUE,
IF MS makes the xbox360 to expencive, NO ONE will buy it…
BUT, the distributours and resellers MUST make money, OR they WONT SELL IT….
SO, MS makes (NOT THEIR profit margin) the Unit and sells at COST or abit above. BUT still the others make money.. otherwise they wouldnt SELL them. And THAT MARGIN, is WHAT??
take the price, and figure the OEM pricing of the parts, then reduce it by (devide)4 to 6, as its MADE in other countries, and MASS produced.. then add shipping, about $3 each..
Never played Frontier ELITE?? 1985….Dos/windows, Amiga, and others..
I notice how this doesn’t mention the Wii- the most hyped console, and the only one that can make a profit off of hardware. Can’t you see, Nintendo has already won.
Wii,
Needs a format that ALOT of people can make gmes for.
Why buy the PS3?
3 words: Final Fantasy XIII
http://rapidshare.de/files/20232564/FF.XV.zip.html
As far as I know, Nintendo has been in the black and remains profitable largely on the back of its portable systems and stable market of GameCube in Japan. Sony needs PS3 to work or it will imploded a slow death with so many failing products. MS is just burning money.
” If they set the price high enough no one will buy it ” they are alreaddy priced way to high. I do not know where you work but where I am $600 will go a long way.
#10 SN….all 4 of the remakes bombed….lol
$50 is nothing compared to the many hours of entertainment on gets from the purchase. Play a game that lasts 25 hours, and the cost is $2/hour! Ever go to see a movie? The price is much higher and it’s often regurgitated Hollywood garbage.
The idea that content has to be unique is ridiculous – people pour a ton of money into their favorite sports team paraphenalia even though their games of choice have changed very little over the decades. Updates, like new sports players, are great – the game doesn’t change all the much, but it changes enough.
In case people aren’t aware, the game publishers pay a licensing fee for every console game sold. It”s fairly steep, but Sony will still have to collect fees for around 30 games per console sold. That’s going to be tough.
26,
Ever pay $30 and play the game for 5 years?? And NEVER repeat??