Posted by: seanmalstrom | June 21, 2016

Malstrom’s Crystal Ball

The Internet is buzzing (bzzz…. bzzz…. bzzzz…..) about a DFC analysis that predicts Microsoft will leave the gaming market.

The overall question now seems to be not if Microsoft will exit the game business, but when and how. Of course, that leads to many other questions such as how is exiting the game business handled? Is Xbox spun off? Does Microsoft find a buyer? Or does the company just shut Xbox down? DFC feels the latter option will most likely not occur but it is clear something must be done.

Unfortunately the value of the Xbox brand is in serious flux with much of its advantage tied to the Microsoft Windows 10 operating system.

There’s nothing new here. The Analysts have been pointing to Microsoft’s eventual departure from gaming for a long time. Malstrom, ahem, also said the same thing nearly a decade ago. While the hardcore gamers are foaming at the mouth, let me explain why everyone with a brain is predicting Microsoft’s departure from console gaming.

Why is Microsoft in console gaming in the first place? The answer to that question is why they will leave. A company like Microsoft has no business in the console business. Microsoft was content to stay away as does companies such as Apple (shut up about the Pippen). What changed was Sony’s entry. The success of the PlayStation was making more and more game companies develop their games for Sony’s systems. Sony’s PlayStation was also evolving to be more of a media center in the living room. Microsoft entered the console market as a defense strategy against Sony. Microsoft intended to prevent Sony from ‘taking over the living room’ (which didn’t matter because the cost of TV screens collapsed and everyone had a smartphone and tablet) and to prevent developers to use only Sony’s system to make games. Microsoft wants developers using their system.

“How do you know this, Malstrom?”

Ballmer told us. Do you not remember, dear reader?


Three factors motivate Microsoft leaving console gaming:

One- Sony’s threat of disrupting Microsoft’s software operations have fallen with the rise of mobile devices and the implosion of game consoles being a ‘top set box’.

Two- Windows needs help in order to survive as less and less people use traditional PCs and Windows. Microsoft will have Windows absorb Xbox and integrated Xbox into Windows. Xbox doesn’t ‘die’, it becomes ‘absorbed’.

Three- Console gaming has been a total bust for Microsoft. Each generation, they do it wrong. First Xbox blew up four billion dollars. Xbox 360 had the red ring of death. Xbox One is confused and doesn’t know if it wants to be a top box, do DRM, or what. Microsoft gaming is only successful in the United States and UK. Outside English speaking areas, Microsoft doesn’t exist. Microsoft has no gaming presence in Eastern Asia, for example.

With Microsoft cutting its losses (absorbing the Xbox technologies and brands), what will Sony do? Sony will keep doing its standard thing of more ‘power’ of a dumbed down PC with some popular trend (right now it is VR).

The real question is what will Nintendo do? My guess is that the NX does two major things. The reason why people do not see these two things is because they keep looking at the recent past and keep thinking ‘funky hardware with funky controllers’ such as the Wii and Wii U. That is shallow thinking.

Nintendo is not about hardware. Nintendo is not about software. Nintendo is about games. With games, there are consuming games (i.e. the consumer. If a hardcore gamer is happening to be reading this, consumer means YOU, the beautiful reader) and developing games. Both define the game console.

How we consume games is very important. Nintendo clearly doesn’t want us to consume games the same way we would on a PlayStation or Xbox. The differentiation in the past was through graphics and power. The NES was DIFFERENT than other systems and still distinct to this day. The SNES was DIFFERENT from the Genesis. But was the N64 and Gamecube that much different? Thus, Nintendo focused on the input instead of the output. The Wii offered a much different consuming of games with the Wii. Wii U seemed to be more of an act of executive selfishness than anything else. But to figure out the NX, we need to figure out the games.

“But Malstrom,” the beautiful reader says, “we do not have the NX games before us.”

Oh, but we do, dear reader, we do. Zelda BoW “WOW!” will be an NX game. Smash 4 might be NX. Pikmin 4 will probably be NX.

One distinction of Nintendo consoles from NES, SNES, N64, Gamecube, Wii, and Wii U all share in common is the communal experience of multiplayer. Give me Mario Kart or Wii Sports party any day. What I expect Nintendo to do is to leverage their DeNa (sp?) partnership of the online company to push that experience out into a communal system with other NX users. In other words, I expect a true account system. I expect true multiplayer that will be beyond the PC multiplayer that Sony/Microsoft systems use.

While we do not know if the NX will combine handheld and home console game consumption, we do know that it will combine handheld and home console game development. What this means is that instead of two pipelines to make games, there will be only one big pipeline. NX could have double or triple the first party software that the Wii U had. This is necessary for NX to go anywhere.

Quantity of third party games on a game console is overstated but its true purpose is in probability. The more software on your console, the greater probability of breakout hits (such as GTA 3 for PlayStation 2).

Is there any history of Nintendo consoles being pushed greatly by a third party game? I can’t think of any. They helped, but they did not have the impact of a Super Mario Brothers or Wii Sports. I can only think of Street Fighter 2 which was huge for SNES, maybe Konami and Capcom games for NES, and a few others.

NES had a huge First Party push because NES came out in 1985 by launching Famicom (launched 1983) games and arcade ports. United States got Super Mario Brothers from the start, Japan did not. We also got all of Nintendo’s past arcade games which are awesome (Donkey Kong, Mario Brothers, etc.).

Wii had a huge First Party push because Nintendo wisely declined HD development at a time when Sony and Microsoft were struggling.

NX will have a huge First Party push by combining development pipelines of handheld and home console.

Above: Only Malstrom readers will not be surprised that NX will launch with a tidal wave of software.

NX will launch with Zelda: Breath of the Wild. Maybe Smash Brothers 4. Pikmin 4. Obviously, it will have some other games Nintendo isn’t telling us about and third party games. Already, this has surpassed the Wii U launch, N64, and Gamecube launches. I do have a soft spot for the ineffectual launch of the SNES (my favorite launch list ever), the NES launch was able to use past Famicom games, and the Wii launch was great to me because of the addition of Virtual Console software.

NX is going to be a big launch. Save up your money. There will be MANY games you want to buy at launch. I’m buying Zelda, Smash, and maybe even Pikmin 4 plus others. What are you going to buy, reader?



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