Microsoft


Kristen Kreuk as … Chun-Li?! Wha?!

After a long hiatus… I’m back to post. There has been quite a drought in new posts and that’s because of two words: Law School. After making one of the most monumental (and may I say very expensive) shifts in my life, the notion of writing about videogames unfortunately took a literal backseat. Life as a 1L is tough — but while the workload and hours are long the satisfaction of being back in an academic setting is invigorating in many ways. Sure, life as a student after years in the work force is sometimes daunting but I wouldn’t trade a day to have come earlier. IMHO, the perspective I have from having a professional career before law school gives me mental freedom, patience, and discipline. Freedom to think about other things, patience to learn, and discipline to master. I suppose in some ways, it’s like tackling a new videogame.

New posts will probably come slower but rest assured the Green Pipe remains active. There have certainly been some major developments in the industry since my last few rants. Most notable are three:

1. The slow but sure rise of the PS3 (which BTW I talked about a long time ago). Sony’s console is starting to gain momentum but unlike EGM, which seemed quick to reverse opinion in its recent cover story, I’m not entirely sold that this PS3 comeback will be the equivalent of Gandalf’s march upon the Two Towers at the end of the second LOTR movie. Without a doubt, there are some key software releases coming this year, MGS4 the obvious poster child. But while I’m excited about this game, I think this is an example of the industry clamoring over a game the majority of the public doesn’t care as much about. The Metal Gear series saw its high-days with MGS2; fact is MGS3 never really caught on in terms of sales. Some argue that it was because the title was coached between GTA and Halo 2, but that to me sounds like a copout. If Metal Gear is so big and popular, it should have kept its own. After all, it wasn’t as if the coverage and advertising was any less (I can recall the barrage of MGS3 ads in countless magazines). That’s why MGS4 isn’t likely to put up the numbers of Halo 2 or 3. I’d even hint that MGS4 may not move as many consoles as people want to believe. Solid Snake doesn’t scream the same cool mystique that Master Chief embodies, and well, even Sony and Konami together can’t quite match the powerhouse marketing force that is Microsoft. And if MGS4 doesn’t move the needle that much, then is PS3 really the comeback kid? Maybe still. But I’d position PS3’s rise as more of an indication of how weak the 360 remains — in other words, it’s not that the PS3 is getting better, it’s actually that the 360 isn’t really striking a Toyota! momentum. More on that in future posts.

2. Oh, HD-DVD, we hardly knew ye’. I think it was quite apparent the format started out with a peg-leg when the 360 opted against making it the console’s format of choice. Face it, the outcome of this war might have been very different if there were 5-10MM 360 equipped with HD-DVD playback. Movie studios – the fickle giants that they are – might have seen better HD-DVD sales over Blu-Ray (an almost given since 360 would have been on the market longer) and kept its support with the format. Sony’s climb then would have been steeper, and hey, may be those price points on the PS3 would have dropped even faster.

Of course, one can look at MS’ decision now and insist it was a “smart” move. What if HD-DVD still lost? Then the 360 would be toast. That argument certainly has merit and as a company wanting to put out a game console, I suppose the last thing it needs is an achilles heel that isn’t even tied to content. There is a long list of reasons why HD-DVD probably would have lost even if 360 supported it out of the gate. But then again, there are also a lot of maybes that suggest HD-DVD could have put up a formidable fight if MS had acted otherwise. We’ll never know. Regardless how you feel, the truth is the next 360 will probably run on a Sony-owned format. There is admittedly something both ironic and humbling in that prospect. Competitors on the outside, sleeping together on the inside; who says there’s no drama and infidelity in the gaming world?

And *finally* 3. the meteoric rise of Nintendo Gamecube 2.0 … I mean, the Wii. I’m actually not at all surprised by the Wii’s success, and I think many of us who follow games closely knew Nintendo had a hit in the making, though even I’m taken aback by the level of success the House of Mario has reached in the past 4-6 mos. Everyone keeps asking whether Wii can sustain the momentum and I’m not so sure that’s the right question we should be debating. The real question should be broader, as in can the entire industry sustain the momentum it has with the casual gamer? Because that’s the real issue; the Wii has done a phenomenal job in enlarging the gaming circle, but can Nintendo AND its competitors reap the rewards and keep them there? That’s a very tough question, and it’s interesting to see all the companies trying to woo the casual market at this year’s GDC. The community arcade from MS to WiiWare from Nintendo are good moves, but there are real questions as to whether the industry is taking the time to ensure that casual gamers understand all this (remember who we’re dealing with here) and there are serious questions about what these moves are doing to each company’s bread and butter. For Nintendo, it’s the loyalists who want only to play Zelda, Mario and Metroid — Is a bigger remake of SSBM and SM Galaxy enough? For MS, do its Halo faithful really care that Xbox can render board games in HD? And do Sony players really want to see and interact with pimple-faced teens and moms singing Britney songs via SingStar? It’s a tough scale to balance, and with limited resources, the gambles each camp is making is definitely one reason why we’re seeing fewer releases *we* (and I say we as in mainstay gamers) care about. And it may also explain the increasing “clone effect”. Flip through a game magazine today and you may have to do a doubletake to make sure you’re looking at more than two games from two genres: racing and FPS. There’s nothing like saving money when multiple titles can be released running on the same engines and the same third-party renderware. It’s a telling sign something’s up. Is it the trend for the future? Hard to say for sure. If the Wii movement continues, it might be. Whether that’s necessarily a bad thing is once again the wrong question. The question is whether the pool of hardcore or moderate gamers keep up the giant’s share of profits. If many of us fall out and start to lose interest (come on, how many Resistance sequels do I really need?), then the console audience may truly change once again over the next 5 years. By the time the next set of consoles rollout, don’t be surprised if everyone takes a Wii approach in terms of technology.

Finally, I can’t help but at least mention that Kristen Kreuk of Smallville “fame”will play Chun-Li in the upcoming Street Fighter film. If you saw DOA and could at least appreciate the martial arts action, I suppose you’ll enjoy this film. I have a hard time believing it’ll be as bad as the first Street Fighter film with Jean Claude (and Kylie Minogue as … Cammy?!). But I have to admit, it’ll be hard for this new film to beat out one of my all-time favorite lines from that flick; it’s when Jean Claude (who plays Guile, BTW) says: I’m going to kick Bison’s ass so hard the next Bison-wannabe is gonna feel it.

Any line as MacBaine-ish as that will just sound weird coming out of Kreuk’s mouth. At least she looks the part (above).

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Covers of gaming magazines are riddled with stories proclaiming the supposed demise of the PlayStation 3. This past year, nearly every major publication (EGM, GamePro) and even the niche ones (Hardcore Gamer, Play) are surmising over the potentially self-destructive road Sony has taken with its newest console iteration. Whether the topic relates to the forced implementation of the Blu-ray format or the lack of new software, there certainly appears to be no end to the death knell conversation surrounding the PS3. To be fair, a due amount of the criticism is justified; Sony has — for better or worse — made this generation’s console more about its bid to win a format war than about producing new games. And, as is common with market leaders in this industry, it has turned an almost Nintendo-like stance on its third party developers — preferring to have its brand demand respect rather than reaching out and assisting in deciphering what some publishers are declaring the most complex programming system since the Sega Saturn.

But these types of follies are by no means anything new, and although the Nintendo Wii has trounced the PS3 in the first round of competition, it’s hard to say whether this trend will continue — in fact, I think more signs are beginning to point towards Sony retaking a substantial piece of the pie in the next twelve to eighteen months. What are some of these key signs? Read on, gamers:

Post-Halo Syndrome: No one doubts that Halo 3 will sell systems but whether the third outing by Master Chief will bring in hordes of new 360 players remains a BIG question mark. As sequels go, there are probably no safer bets than Halo 3 but with the sheer flood of FPS games and look-alikes on the market, sales for Bungie’s core title might not meet the bombshell expectations some analysts are projecting. Most consumers do equate XBOX with Halo, but will new consumers be willing to pay over $300 just to play it? Microsoft certainly needs them to. The 360, despite a steady stream of purchasers, is not particularly “hot” amongst gamers — and the release periods both before and after Halo look like a casual/moderate gamer’s nightmare: that is, a desert of nothing. While we’ll see what Microsoft has up its sleeve at mini-E3, thus far 360 fanboys have to be disappointed by the lack of capitalization by Microsoft on Sony’s missteps. And sadly, there isn’t much to get excited about, either. While a few third party games have defected to 360, games like ‘Beautiful Katamari’ probably isn’t going to save the console from the reaper in countries such as Japan.

Third Party Loyalty: Yes, Kutaragi is out, but that doesn’t mean Sony’s lost its allegiance with core Japanese developers. While I do think MGS4 will eventually hit the 360, I think we’ll see something similar to the delayed release of MGS2 Substance. There is no way Final Fantasy XIII will show up on the 360 — though if the franchise does defect, expect to see more sidebar titles pop up on the Wii/DS first. SquEnix is too tied to Sony’s castle to move this title to its direct competitor. This doesn’t mean SquEnix won’t release 360 games, however. I expect new titles such as The Last Remnant to be cross-platform releases; it’s a business, after all, and SquEnix needs all the help it can get to establish a name for itself outside FF and Dragon Quest. While I realize a lot of gamers get all up in arms about the PS3 losing exclusives, I think many are asking the wrong question. It’s not so much about losing 3rd party exclusivity as it is how well do the PS3 and 360 stack up when the 3rd parties are no longer an impact?

First/Second Parties Wrap Up: Sony’s core teams are FINALLY bringing out some of the games that will help define its system in the eyes of consumers. Two of the biggest games coming soon are HEAVENLY SWORD and insomniac’s UNCHARTED. Both not only look stellar, but also potentially different enough in style and direction to cast the PS3 as a console of choice. Sony’s knack for the cinematic should be lightyears ahead of Microsoft’s and I suspect we’ll get a nice view of that when these two gems ship. I admit though that while UNCHARTED will probably play like a dream, I still have some doubts over Ninja Theory’s gameplay design for HEAVENLY SWORD — though even it merely mimics God of War’s schema and innovates on nothing more than graphics, Sony still has a heart-stopper heroine it can flaunt in front of its core male demo.

Whether Sony’s first parties are better than 360’s is arguable — though I’d say PS3’s are probably better. Microsoft seems to be loaded with critical guns but not commerical ones. Lionhead and Silicon Knights are no Sucker Punch and Insomniac; and Rareware is nothing more than a shadow of its former self. Sure, 360 has Bungie but after Halo, Bungie might be a one-trick pony.

Price Gap Probably Gone: CEO Stringer made it clear that the PS3 needs a price refinement and CEOs don’t go around saying things like that unless they’re serious about doing it. Although sales of the PS3 are slow, a huge barrier to entry right now is the price tag. When PS3 can hit the $400 price mark, it’s likely to sell thousands more than the 360 per month. If the price difference becomes marginal — something I suspect will happen in the next two to four months, Microsoft might be surprised to find how quickly the ratio of 360 to PS3 units flip over. Will the PS3 be the market leader by the end of 2008 — probably not; I think the Wii will keep its lead for one more year. However, by the end of 2009, PS3 should have surpassed the Wii as the console of choice for gamers.

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I’m honestly not sure whether initiatives like this work as well anymore but Microsoft intends to mimic what it did for Halo 2. You may recall the now well-known (and to some, infamous) “I Love Bees” campaign MS pulled for Master Chief’s second outing. In that instance, MS didn’t do a particularly great job of hiding what the URL was referencing; it appeared at the very end of a Halo 2 video trailer. It appears MS doesn’t care about being covert with the Halo 3 effort, either. The XBOX division sent out a “mysterious” email that linked to this website. There have also been sightings of people on street corners handing out fliers with the question, “Who are the Ancients?” Not that I’m saying these campaigns are ineffective — already hundreds of people are posting and speculating on the links and info hidden between the lines — but are they really doing anything for MS. And by that I mean are they moving the needle on more sales? Ultimately, the Halo 3 base that is most excited about the game are probably the only ones interacting with this tease so by that measure it’s probably not doing much. If MS is interested in generating new stories then it’s likely to have that effect. What makes MS’ viral efforts effective is that the company isn’t reluctant to hold back juicy, not-yet-revealed information from being discovered through these programs. Unlike some gaming companies that end up failing to deliver any exciting pay-off, Bungie/MS have given up some major details in the form of storylines and in some cases character shots and screenshots. Granted, this is the final game in the trilogy so there might be some diminishing level of interest, but this is still likely to help contribute to the crazy hype machine that is Halo.

PS3 and the Wii

You have to appreciate great journalism — and few newspapers dish out consistent quality like the New York Times (the Washington Post is probably the closest, and don’t even think about mentioning the WSJ. That paper and NYT don’t belong in the same sentence). The NYT provided a piece on the State of Videogames the other day, and it’s a nice read — much to the delight of Wii fans, Sony continues to absorb a barrage of negative publicity, and the situations made worse by idiotic comments from Sony Reps that either make no sense or are SO deliberately PR spin that they’d make Tony Snow proud. GameSpot kindly posted these comments from the NYT — without the rest of the article, they are akin to when Atari Reps insisted floundering Jaguar sales were not a reflection of apathy but of consumers wanting to hold out for 2-3 more killer apps. And some of us who use it as a paperweight are still waiting on those killer apps.

To gamers, the fact that Wii outsold the PS3 during the holidays is not news — after all, Sony barely got enough machines out the door after several production delays. Nintendo, on the other hand, didn’t run into that problem — and I think that’s primarily because the Wii’s infrastructure is indeed GameCube’s on steroids. I don’t mean that as a dent to the Wii (so fanboys stay at bay!); come on, it’s a technological fact based on the specs and many 3rd party developers have expressed the same sentiment.

So should Sony be running scared about now? The answer? “Not yet.” Sony is right to say this is a marathon, not a sprint. However, a little anxiety is healthy, and may help take Sony’s hubris down a few notches. While economists always try to predict markets, the fact is markets are unpredictable, and that alone is why Sony should be a little worried about recent trends. While the past suggest console penetration ranks can be altered, that window has gotten smaller and smaller each generation. Sony’s troubled leap from the gate might have done enough damage to keep PS3 down for a long time, and given most consumers don’t spend $600 on consoles until the Holidays, that means Sony will have an even harder time moving hardware while 360 and Wii continue to sell and grow their libraries. Sometimes, being an “impulse buy,” as Sony describes the Wii, isn’t such a bad thing.

This scenario might be improved if demand for PS3 was still high, but that craze has clearly come and gone. PS3s are now sitting on most store shelves for weeks before they are claimed. In fact, stores in my area have them in ample supply — and no one is buying them. Of course, a system is only as good as its games, so Sony is hoping exclusives will show PS3’s muscle in the coming months. Unfortunately, there is cause to worry in this department, too.

How “good” (and I mean visually for now) games will be and for which system they release for depend in large part on penetration. All these rumors about MGS4 going 360 and Ubi Soft dropping Assassin’s exclusivity are happening because PS3’s penetration numbers are falling well short. It doesn’t help that PS3’s development costs a whole bunch more than 360’s, and that the software backing the system is notoriously complicated. You know it’s pretty bad when Hideo Kojima goes on record to say the PS3 architecture is outright confusing.

Exclusive titles drive console purchases — it’s what has kept Nintendo in the game and the reason why Microsoft wines and dines Japanese developers on a weekly basis. Without killer exclusives, differentiation in the console market is hard. Perhaps in this sense, Sony is right — its real competitor is the 360, not the Wii (Though I’d argue that either way, it loses ground). As more publishers/developers decide to include 360 versions, what will happen is graphics downscaling; PS2’s huge penetration meant Xbox ports looked decidedly less stellar (since the games were being made first for PS2 and then for the Xbox). Poetic justice may exist because the 360 looks like it’ll be returning the favor this generation. If Microsoft keeps a penetration lead, there won’t be enough to make consumers fork over the extra $200-$300. Most gamers will settle for a 360 and see the few games they don’t get as a wash since Microsoft has its own killer exclusives. Sony’s decision to ignore the Wii might prove fatal in this scenario. Like what Ross Perot did to Bush, Sr. and what Nadir did to Gore, Wii might swing in to steal Japan’s market, which will compel developers there to hop on board Nintendo’s development train. That’ll mean PS3’s edge in the Japanese market (the one place 360 can’t break into) could be gone or at least diminished. With fewer games coming out of Japan, more pressure would be applied to Sony’s 1st party teams. That wouldn’t be ideal. Sony would be draining more funds to make more games — and that’ll be a losing proposition. Look back at PSX and PS2 — all of Sony’s best games came from 3rd party exclusives. While Sony has made some headway with its own titles, the fact is SCEA, SCEJ, and 989 can’t compete alongside HAL, Bungie, or Lionhead.

What this would mean is the end of Sony’s grand strategy …

The purpose of the PS3 is essentially twofold: (1) populate CELL and (2) win a format licensing war — let’s be frank about this. Sure, there will be DMC4, Heavenly Sword, and FF13 — but that’s not Stinger’s ultimate point now, is it? The reason Ps3 is so expensive is because the Co. spent billions in R&D to build those two elements. The PS3 is the frontline in making sure Sony not only recoups the investments, but profits many times over. Without enough PS3s in households, the CELL will remain expensive to produce, and the same will hold true for Blu-Ray discs and players. If Sony has to cut prices deeper to move PS3s then it might win the format war, but the time it’ll take to get back in black will be seriously lengthened, not to mention the jaunting reality that disc-based delivery might very well be gone next-gen, which would render Blu-Rays defunct right when Sony breaks even. Now you know why Stinger’s supporters are walking around like they have ants in their pants.

The irony in all this is that Sony’s consumer electronics and movie divisions are now as rosy as ever. What once were seen as the laggers dragging down the whole Sony empire are now what save Sony’s earnings report. The PlayStation division, on the other hand, is now looking more and more like the reason why Sony’s profit margins will be squeezed for years to come.