After approximately 7 years with the current generation of video game consoles, the upcoming holiday season is looking to be huge for Microsoft and Sony. In February Sony announced the Playstation 4 along with a variety of features and specs, games, and a general release window of holiday 2013. Microsoft has yet to announce their console, known to the press as Durango, but are expected to unveil it at E3 2013. (E3 is the Electronic Entertainment Expo where the major contenders in the industry each hold their biggest press events and announce the latest titles in their brand.)
Both of these companies must tread carefully, as a new system is both a considerable time and money expenditure. This past November Nintendo released the follow-up to their Wii, the Wii U, to a lukewarm reception. The line-up of games initially released with the console weren’t exceptionally outstanding or used the unique qualities of the system to display the potential of the Wii U. Perhaps the biggest mistake Nintendo made was not knowing their audience. Why was the Wii so popular? Because of the accessibility it presented to consumers of any age that could just pick up a controller and play. Clearly the higher-ups in the company could not recreate this unique selling point for the Wii U.
What are the challenges Sony and Microsoft face? There’s clearly a variety of them. They’ll most likely never gain the accessibility that a system such as Wii offers, and instead will aim for that through peripherals such as the Xbox 360’s Kinect. As a result of the economic slump there’s likely more emphasis on the system being affordable; however, the addition of recent technology in the new systems means that they’ll probably be selling for upwards of $400 to $500. Moreover the systems need a good set of exclusive games and developer names associated with them. If 2 different systems are released at similar price points and the features are relatively the same, oftentimes the deciding factor are the games that a consumer can only get on one system and not the other.
The final point I’d like to mention is that both Sony and Microsoft need to have awareness in the manufacturing of their consoles. Going back to the Wii example, during the initial release of the Wii units were often backlogged for weeks or months and would-be buyers had difficulty finding systems. This means there might’ve been a possible loss of sales as consumers gave up trying to buy a Wii. Sony and Microsoft need to ensure an adequate amount of stock for the first season of their new consoles.
Do you think the recent recession will have a huge impact on the sales of these new systems? Will Nintendo be able to recover from the mediocre release of the Wii U? What will be the deciding factor of what consumers choose to purchase?
12 thoughts on “The Future of Games”
I believe you have a lot of valid points. First of all, I believe the recession will have somewhat of an impact on the sales of the new systems. A lot of kids want the latest and greatest gaming system and will typically beg their parents until they get it. On the other hand, kids may want to keep their same gaming system because they already have so many games that are compatable with it. I think the deciding factor for consumers (mostly parents) to purchase is whether or not they see the system being successful in the long run. Parents don’t want to continue buying these systems while paying hundreds of dollars and have them not being used after only a year.
In response to the questions you posed at the end. I would assume that the WII U has already dug it’s own grave. Nintendo assumed the original WII’s Success would carry the new console to high sales volume, but consumers seemed to realize Nintendo’s strategy. The company essentially released a console that was only utilizing current gen hardware as a supposed “next gen” product. It would seem that the attempt was to release without competition from Sony or Microsoft, but failing to garner considerable sales in that exact situation seems to spell disaster for the console and Nintendo. As far as the new Sony and Microsoft systems, it is clear that hardware and price will be the original determining factors. While Sony has revealed the specs for its new console (and they are impressive and likely to be superior to Microsoft’s) it also has a huge price tag to go along with it. It will be interesting to see if Microsoft elects to utilize slightly lower end hardware in an attempt to make a play for a “bargain buy” (if an upwards of $300 purchase could be considered a bargain) in order to generate sales. Each will have a slew of original titles (Sony usually gets the nod in quality there) with launches, but the true factor may ultimately be more fiscal than performance based. Good post overall.
I believe the recession may have some impact on consumers’ decisions to purchase these new consoles. However, I don’t think that the impact on sales will be that significant, game consoles have many devoted fans who will go to great lengths to purchase one upon release. The release during the holiday season will also be helpful as many people save up for that time of the year and a game console would be an ideal gift from a parent to a child. In regards to your question about what the deciding factor is when choosing which console to buy, I think it comes down to personal preference and brand allegiance. It’s likely that the specs of the PS4 and next Xbox will be fairly similar, therefore choosing which one to buy will depend more on factors like what the consoles the consumer has already played on, or what console their friends/family have.
I would also like to tackle the questions that you asked. I believe that the recession will have little to no impact on the new video games systems that will be released. I remember when I received my xbox360 in junior high, and it has been the longest wait I have endured between video game counsels since. Society is ready for new gaming devices, and I think they are quite sick of still using the 360 and PS3, as these technologies are starting to feel out of date. Going back to the prices, I do believe that will be crucial in which video game system does more successful. I remember when the PS3 and 360 were first released they were about the same price, however 360 had more memory, and a larger memory PS3 was $100 more. In the long run the price will ultimately decide which device does better, however both will succeed. Americans are ready for another gaming counsel, it’s been far too long since a new one has been released.
I believe the economy with have a minimal deciding role in the mind of gamers. Even during a recession, consumers tend to save up money or simply purchase new gadgets with credit cards (i.e. the iPhone 5). Retailers are also providing customers means to purchase new products. When I purchased my PlayStation 3, I took advantage of BestBuy’s 0% financing for 18-months. Although the economic recession has caused some people to become savvy shoppers, new gadgets and electronics are the one type of products that consumers will rarely be frugal on. Luckily for gamers and parents, companies like Sony or Microsoft are not pumping out new consoles every couple months or even years.
Growing up I was a very avid gamer but have stepped back in recent years because of being too busy with school and work and such. But I have still followed the industry and if this generation cycle is going to be anything like any other console generation, the only thing that’s really going to get people to switch over is games. Both Microsoft and Sony are going to need to have some strong titles out of the gate to really get these consoles going.
In regards to the recession, I don’t think that is nearly as much of a factor anymore. If people want to play video games, they’re going to find a way to play video games. Of course there are better ways to spend money but real gamers will find a way. I doubt that there will be another Wii boom of console sales because people got their fix with the fad of the Wii and have moved on. With these new consoles, I think if the price is too high that will also deter a lot of people so they have to find a price point that they can manage but also won’t stray away customers.
I remember the huge uproar that happened with the first Wii, and I remember being excited getting it for Christmas. The commercials for the Wii U looked really cool, but I understand that it could be too difficult to understand. It was interesting to learn that the sales for this system were way down. I think that both Sony and Microsoft need to come up with something that makes their new systems better than the old versions whether this be through a new way of interacting and playing with friends or a lot of awesome new games.
I definitely agree with the economy having very minimal effect on the boost on sales, because if it is released around the holidays, parents and gamer alike will spend on those systems and everything attached to it. I do feel that people, especially in the U.S. tend to want the latest and greatest and that is what both Microsoft and Sony need to focus on. Plain and simple. With so much competition, little factors such as aesthetics like color, the ease of use, etc will ultimately be the drivers to boost sales.
I also believe that the recession will have minimal effect on sales for these new systems. Marco makes a good point when saying that consumers purchase new gadgets with credit cards, even during a recession. Also with these new systems coming out around the holiday season, people will be willing to spend the money to get there. Now regarding Nintendo, I don’t think they will recover from the mediocre release of the Wii U. The Wii when it first came out was something new and people wanted it. However, Microsoft and Sony were able to come out with similar products (Xbox Kinect and PlayStation Move). For Nintendo to come back into the gaming race, they are going to need to come out with something new and unique, and be the first to do it. For the deciding factor between Sony and Microsoft’s new gaming consoles, I agree with Hendricks about the little factors such as color and ease of use boosting sales. However, I think the main driver to boost sales will be the exclusive games that each company can offer, which will be their competitive advantage over the other.
I definitely think that the recession will play a role in many consumers opting out of purchasing the new system, however I do not think there will be any considerable loss in profits. Much like the apple iPhone, the iPhone outsold its predecessor every time it came out which came out in 2007 right at the start of the economic recession and the price point was in the similar range. The point of this is to say that no matter what the economic situation, the latest tech gadgets whether they are game systems or cell phones will sell well if they have the capabilities customers look for.
In terms of the Nintendo Wii U, it is hard to tell if they will recover unless they totally revamp their system like Sony and Microsoft are doing. I do believe that the deciding factors between the new devices will be what they can do and what games the console will support. Also, the console systems must be able to support add ons to promote different gaming styles (motion sensing, movement recognition technologies, updated Internet connectivity with much faster processing capabilities)
As a gamer myself, I have been trying to follow the state of the video game industry as well, and this post makes a lot of interesting points. In terms of the recession having an effect on video game sales, I do not think it will make as huge an impact on consumers as most other posts are saying. According to the Entertainment Software Association’s website, the industry was still going strong in the economic slump of 2009 by contributing $4.9 billion to U.S. GDP. Though some people may consider it a luxury, video games have a strong market to both young and old, and I believe its interactive qualities will continue to boost its sales regardless of the country’s economic condition.
I think the key to the big three video game companies’ success in the console competition is to make sure their product is relevant to consumer needs and desires. The PlayStation 4 is making an interesting pitch by incorporating aspects of social media, e.g. gamers can watch live feeds of other people playing games. In a world that’s becoming increasingly interconnected, I feel it was a proper path to take. The Wii U slightly missed this market by focusing more on continuing gameplay for the gamer even if the TV wasn’t available, but I don’t think this was an absolute need for consumers. I believe that product features like those in the PS4 will be more of a factor than unique accessories like the Wii U’s gamepad with gaming consumers wanting more bang for their buck.
I believe the recession will effect the sales of the new consoles but it could drive up the sales of the previous models because those prices will be reduced. Either way, Sony and Microsoft will be gaining huge number with the release of the new consoles. Just as some of the other comments, having a holiday release will cause huge numbers and every kid will want one. Im sure even a lot of adults will be dying to get their hands on the latest gaming console. In the end, Sony and Microsoft is dominating the market and Nietendo will be considered a 2 tier gaming company soon if they don’t do something drastic.