The only thing worse than a Michael Pachter analysis is the Message Forum Analysis. If cliches could be collected and tossed in a bucket, the result would be the Message Forum Analysis.
The Message Forum Analyst stands up to the podium and declares:
“Gentlemen! I, alone, know what is going on. That fiendish creature that invaded our gaming called the Casual Gamer is now being absorbed by smartphones and tablets. The Game Industry is fine. It is those bloodthirsty casuals, who scampered around our market like rats, that are in trouble. The growth Nintendo had was just a bubble. As you can see now, their sales are down. The HD core market games seem to be selling just like before.”
But does the President of Nintendo have anything to say on this? Iwata publicly uses an Apple laptop and iPhone because he says “we do not view them as competitors.” Perhaps the President of Nintendo is more sensitive to what is going on in the market than the person on the message forum?
“Nonsense! Behold my beautiful cliches!”
Do you have any evidence than the cliches?
“Who needs evidence!? Let me repeat myself over and over. Cliches travel faster than the essays correcting them.”
First of all, there is no such thing as ‘casuals’. The term meant ‘New Market’ as opposed to ‘The Old Market’. An example of the ‘New Market’ is digital distribution while the ‘Old Market’ is retail. Where are consumers’ money shifting? The point with the core and expanded markets is that the expanded markets always seem ‘weak’ but gradually grow. Then, suddenly, the core market implodes. A fantastic example of this is the American newspaper industry. The expanded market was online which found a few viewers at first but steadily grew. Suddenly, the floor fell from underneath the newspapers, the Core Market.
The Xbox 360 and PlayStation 3 have only had flat performances. This is consistent with being in the Core Market. After spending a billion dollars on Kinect and investing in the ‘New Market’, Xbox 360’s sales rose not decline. Yet, the Message Forum Analysis thinks the ‘new market’ (casuals) is imploding or absorbed by handheld computers.
The DS and Wii sales were very good and now are not good. “It is because of the Casual Bubble!” screams the Forum Dweller. Or perhaps it is because of this thing called the ‘Console Cycle’. “But what about the PS3 and Xbox 360?” They cannot decline because they never went up in the first place. And from my perspective, the PS3 and Xbox 360 are pseudo-consoles and more like a dumbed down PC-connected-to-TV.
What is more interesting are the 3DS and Vita sales. If Core Market is so ‘stable’, then why are Vita sales so bad? The Vita is a Core Market device like the PlayStation 3.
“It’s those smartphones and tablets,” slobber the forum dweller. “The Core Market is fine. You hear me? Fine! But those dedicated game handhelds…”
Then why is the 3DS selling so well in Japan that is just as crazy about smartphones and tablets?
“Because Japan is just goofy!”
Here’s a more useful context:
In the 1980s, game consoles were declared dead due to the rise of PCs. The NES proved that PC gaming did not cannibalize console gaming. Ken Kutaragi, however, saw the NES as a way for computers to control and manipulate entertainment. When asked about Nintendo being Sony’s competitor, Kutaragi said ‘No, it will be Microsoft.’ As Sony’s PlayStation drew games off the PC platform and onto Sony’s platform, Microsoft had to enter the console market as a defensive action. At the start of the Seventh Generation, analysts were consumed about who would control the living room, Sony or Microsoft? Analysts were also excited about the launch of the PSP.
The PSP was the PlayStation 1 and 2 in idea. The idea was that the PSP would not just play games but play all entertainment such as movies. Sony heavily pushed UMD for the portable movies. And, for a while, the PSP was outselling the DS.
When the PSP was released, there was no such thing as an iPod that played movies. When portable movie devices became a part of the iPod (as well as smartphones), the PSP sales began to be cannibalized in the West (in Japan, people bought the PSP to get to Monster Hunter). Since Sony Computer Entertainment (this is its name) is competing directly with PC gaming (which is why Microsoft invaded the console market), it is clear that the special ‘functions’ of the PSP such as playing movies got absorbed by the ipods and smartphones that can play them. After the release of such products, PSPs were found to only sell due to the games and not the hardware’s other features. Luckily for Sony, the Japanese loved Monster Hunter. Unfortunately for Sony, the West didn’t.
The Vita not gaining any market traction anywhere, despite doing ‘everything’, not only shows that having features on the game console that are also on smartphones and ipods not selling it, Vita’s core market games are not selling it. If the core market is so lively, then the Vita should be performing in some manner.
As the Xbox 360s and PlayStation 3s age, more and more of those gamers are getting interested in PC gaming. Why shouldn’t they? Xbox 360 and PlayStation 3 are the ‘kiddie version’ of PC gaming. The transformation of PC gaming from a Workstation setting to smartphones, tablets, and who knows what else in the future will erode the ‘dumbed down’ PC game machines. When the Xbox 360 and PS3 launched, they sported all these ‘non-game functions’ like ‘Blu-Ray player’. Should their successor consoles do the same, their ‘non-game functions’ will be less attractive due to PCs no longer being a workstation. Now you know why Iwata openly uses Apple products with a smile on his face. Nintendo doesn’t compete with PC gaming. The only damage a melting PC workstation would cause to Nintendo is less third parties to draw upon. Since Nintendo has been unsuccessful in getting these PC gaming third parties since the PlayStation 1, this is not much of an issue.
Nintendo’s problem is itself. Not content for the console to be a generalized box that delivers a wide diversity of games, Nintendo set a course for the game consoles to specialize in 3d and only deliver 3d games. Nintendo has released four game consoles in this fashion: the Virtual Boy, the Nintendo 64, the Gamecube, and the 3DS. Excluding the Virtual Boy, the sales of these consoles were very weak except in one of the three major markets. Why no one points to the correlation of a Nintendo console pushing 3d with the platform’s decline has always been a mystery to me.
It is a very low probability that Microsoft and Sony will, or is willing, to differentiate their consoles from the PC trajectory. The fact that Microsoft is designing Windows 8 to follow tablet PCs may indicate that the Xbox 720 will attempt to try to co-opt instead of differentiate.
I expect the continuing tempest of the PC revolution (which is what smartphones and tablets are: personal computers) to eventually cannibalize Microsoft and Sony game consoles. Provided that Nintendo doesn’t confuse differentiation with ‘pushing’ something (like 3d), Nintendo will watch the PC Gaming Angels of Death pass overhead harmlessly.
It is not implausible that in the future there will only be the distinct Nintendo console surrounded by PC gaming. We will know when we are in that time because no one will refer to ‘playing games on consoles’, it will be as was said in the 80s: “Playing games on Nintendo” as ‘consoles’ will be referred to as ‘Nintendos’.