Videogame Consoles Get Ambitious

The Videogame Console Class of 2006 is head, shoulders and then some above previous generations of consoles and even some classes of desktop PCs. And it seems their developers have ambitions to match the horsepower of their consoles.

Sony  and Microsoft  made features like DVD playback and Internet play secondary to the videogame experience with their previous consoles. Sony’s PlayStation 2 and Microsoft’s Xbox were not particularly good DVD players, but they could play DVDs, which was a start.

With the release of the Xbox 360 and PlayStation 3, Microsoft and Sony are trying to expand their consoles beyond just playing videogames and making the Internet an integral element of game play. Within reason.

“They’re ambitious with reasonable aspirations,” said Van Baker, research vice president with Gartner. “It’s like they said, ‘ok we’ve got this connected console; why don’t we leverage it to offer more content and make a little extra in the process?'”

Adding services and capabilities to the console makes it more valuable, and it provides incremental income possibilities. “So it’s them trying to expand revenue opportunities and make the overall platform compelling for more gamers,” said Baker.

Also motivating the two companies is the success of iTunes, according to Peer Schneider, network director for the gaming site IGN.com. “Now we have the same going on for TV shows. If you miss a show, you can go online and download the show. The thing is, people don’t want to watch it on their PC or their iPod, but if your Xbox 360 lets you watch a TV show the way you watch it for $1.99, it’s worth it,” he said.

Microsoft and Sony have upgraded their online offerings between console generations. Xbox Live originally was a means to connect with other gamers via a specific game to play head-to-head. And Sony’s online effort for the PS2 was split between Sony games and third-party publishers.

But with Xbox 360 and PlayStation 3, things changed. In the age of social networks, Xbox Live and PlayStation Network were significantly enhanced to become online meeting places and digital entertainment centers where people can talk to friends while playing games and appearing on webcams.

Plus, the PS3 has memory-stick and SD card slots, along with a USB port and a built-in digital image player. So rather than look at pictures from your digital camera on a 19-inch monitor, you can show them off on a 50-inch TV.

Nintendo, the one-time king of the console hill, has taken a different tactic. It’s gone for a cheaper console, the Wii, which is also available at a lower price. It is making a modest online effort, though nowhere near as comprehensive as Sony’s and Microsoft’s. Nintendo’s focus remains on simpler games geared toward a younger, non-hardcore gaming audience.

The DVD Factor

Sony and Microsoft have also placed greater emphasis on DVD playback. The Xbox and PS2 could play DVDs, but both suffered from compatibility problems, and their playback quality was considered sub-par compared to dedicated DVD players.

Sony made its new Blu-ray  DVD format a hallmark of the PS3. Blu-ray is meant to replace the DVD format we’ve all come to know and love as a VHS killer. A dual-layer Blu-ray can hold 50GB of data, which is five times the 9.4GB capacity of a single-layer DVD.

But Blu-ray is not the only format battling to replace your DVD player. Toshiba’s HD-DVD was formally adopted by the DVD Forum, the industry trade group that shepherded the DVD format from the drawing board to the market in the 1990s. Since Blu-ray is a Sony creation, you get one guess which format Microsoft adopted.

However, Microsoft followed a different tactic. The Xbox 360 uses a standard DVD drive. Its HD-DVD drive is not a part of the base Xbox 360 console; it’s sold as a $199 add-on, which kept the price down. The core Xbox 360 is $399, whereas the PlayStation 3 is $599.

The only Blu-ray DVD player on the market, from Samsung, has been widely panned as poor quality and costs $1,000. Sony has a Blu-ray player coming out, which will also cost $1,000, so the PS3 is a $400 price break for people looking for a Blu-ray player.

Whether this is a worthwhile sales gimmick remains to be seen. “Neither company will tell you that they expect someone who’s not a gamer to go out and buy one of these consoles to play Blu-ray nor HD-DVD discs,” said Baker.

Au contraire, said Patrick Seybold, a spokesperson for Sony Computer Entertainment America. Sony wants the PlayStation 3 to have a 10-year lifespan, he said.

“It goes back to future-proofing the console. We want to make sure when they open the box to a PS3, it’s not like driving a car off the lot, where you lose value as soon as you start using it,” he told internetnews.com.

Seybold said he knew a lot of people who purchased the hard-to-get PS3 consoles for the Blu-ray player. “They aren’t gamers, per se, but they are home enthusiasts. Instead of spending $1,000 for a Blu-ray player, they’re spending $600 for a Blu-ray player that also plays games.”

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Microsoft has already tried that. It introduced TV and movie downloads on Xbox Live in November, but Schneider said the service is still troubled. “Even on a fast connection, you start the download in the evening and come back in the morning. It’s clearly limited in the infrastructure.”

The company said it’s working to make Xbox Live play nice and improve response times. According to Aaron Greenberg, group marketing manager for Xbox Live, download speeds will depend upon the bandwidth of the Internet connection the gamer has and the format and length of the video content.

“Many homes will be able to watch standard-definition content shortly after initiating download while high definition content will generally require more time to download.”

The other aspect of downloadable content is in playable demos. Baker said that with development costs approaching $20 million for a game, publishers can’t afford expensive disasters.

“If you can do demos and trailers via a download service, and if it’s a stinker, they can put a bullet in it before development gets too far. Now they are making smarter decisions and don’t have to spend development costs before they make a go/no-go decision,” he said.

Schneider said that a demo of a minor title from game publisher Capcom turned into a hit on Xbox Live and IGN’s Xbox 360 site, so much so the game now has much greater reader interest than was expected. “So anecdotally, yeah, [demos are] changing things.”

Baker said the evolution of the gaming platform to become an online platform puts a powerful, connected device in the home, so at that point, as long as it doesn’t impact the product, add more services to justify the purchase of the console.

It’s The Games in The End

But, he adds, both companies remain gaming companies, first and foremost. “Talk to Microsoft or Sony. They will tell you they’re in the gaming business; they’re not in the business of selling movie playback machines.”

Schneider said the two companies are moving slowly. “Nobody’s sure that consumers will download a significant amount of non-interactive content on their console. So everyone is getting their feet wet. Pricing is certainly an issue. Will people pay $20 to download a movie? That’s the same price you’d pay for a DVD and more than the cost of a rental,” he said.

Despite their efforts, both companies say gaming is still the central concern of the consoles. “The PS3 is first and foremost a device aimed at the gaming audience. We want to make sure they take full advantage of the gaming experience,” said Seybold.

Baker considers the new consoles “gaming plus.”

“You can’t make tradeoffs on the game experience, or you’ll lose your core audience. If they can provide extra added things that give them added revenue opportunities, then that’s a worthwhile thing to do, but not at the expense of the gaming experience.”

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