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How do you sell a next-gen console?

How do you sell a next-gen console?

Wed 29 Aug 2012 7:00am GMT / 3:00am EDT / 12:00am PDT
Hardware

With few expecting a giant gaming leap at launch, what may matter most is not what you buy but how you buy it, says Johnny Minkley

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

With not a great deal of note happening in the arid console space this summer, gossiping about next-gen consoles has proved an irresistibly fertile way of passing the time at industry gatherings.

It'll be a "quantum leap", Alan Wake developer Remedy chirruped excitedly to this site last week. Which was in stark contrast to the underwhelmed shrug I got from a middleware company I chatted to off the record at Gamescom, familiar with both Orbis and Durango.

Seven years on from the launch of Xbox 360, the first thing to say is it had bloody better be a "quantum leap" from the creaking innards of today's systems. The issue, naturally, isn't that the tech clearly will be an order of magnitude more powerful - it's how platform holders and software publishers can articulate this and "sell" the next-gen vision to spoilt-for-choice consumers via marketing and content.

That there are mixed feelings, depending on who you speak to, about the potential of the next console cycle is hardly in doubt. With official announcements from Microsoft and Sony expected well within the next 12 months, apathy from within certain quarters of the industry itself is worrying if not altogether surprising. But what about consumers?

The HD era began with Xbox 360 as a pure gaming machine; now it's an entertainment hub that also happens to play games. Microsoft always said this generation would be about software and services, and EA now explicitly sees its games less as "products" and more as "services", with Peter Moore recently observing: "Games are turning into 365 days a year live operation experiences".

"Games are turning into 365 days a year live operation experiences".

EA's Peter Moore

As consumers become ever more tied into, and therefore get more out of, their favourite games, then, the argument for upgrading to another expensive box becomes exponentially harder to make.

With little expectation of triple-A software prices falling, all the pressure is on the hardware cost and where that will fit into a diverse market. Ever since Microsoft launched its $99 subsidised Xbox 360 trial in the US earlier this year, there's been much chin-stroking over whether this model will be adopted for next-gen systems.

The irrepressible Michael Pachter is betting that Microsoft is already tying up deals with US cable companies to offer a subsidised next-gen Xbox at a fraction of the standalone price, in exchange for signing up to something like a two-year cable/Xbox Live contract.

It's an enormously appealing proposition. And, irrespective of the details of how this might work across different territories, I'm increasingly of the view that Microsoft and Sony (Nintendo, as ever, ploughs its own furrow) can ill afford not to make it work.

The obvious example of subsidised hardware in the games space to look to is iPhone. Who buys one of those for £500 (the standalone price of the cheapest 4S)? Meanwhile, we're all comfortable these days subscribing to all sorts of related services for our entertainment, from Sky and Virgin to Napster and Spotify.

"The obvious example of subsidised hardware in the games space to look to is iPhone."

The key advantage Microsoft has over Sony here are the many, many millions of customers and credit cards it already has signed up and used to subscribing regularly to a service: Xbox Live. (Sony has the credit cards - let's not go there - but PlayStation Plus is hardly in the same league as Live).

Furthermore, while Sony has broader concerns to deal with across the whole enterprise, Microsoft has the financial clout to spend whatever it takes to help make the next Xbox a success at launch. It will presumably be encouraged here by what it achieved with Kinect. Despite widespread dismay over the price - and, hands up, I thought they were nuts to come in over £100 - the reported $500m the company splurged on messaging was enough to confer 'must buy' status upon it.

As a result, Kinect remains the fastest-selling consumer electronics product in history, beating anything even Apple has achieved. But, needless to say, its success wasn't as straightforward as chucking enough money at a problem: it also had the good fortune to appear revolutionary and represent a step change, perfectly captured by its unimprovable slogan: "You are the controller".

That the reality fell so clumsily short of the vision is beside the point: at the time it captured everyone's imagination. But what step change is the next gen likely to offer at first?

The leap to HD, though it required a not inconsiderable investment in a compatible display, was a clear point of difference last time around. Take away HD and how much better to the untrained eye did a PS3 launch title look compared with, say, PS2's God of War II?

"I've long believed games will become the dominant entertainment form of our age, and I really don't care what platform(s) that happens on."

When you consider that the typical Sony and Microsoft launch line-up is a predictable exercise in genre box-ticking - a shooter, a platformer, a franchise sports game, an arcade racing game, something weird involving old Sega IP - day one software is generally about small steps not giant leaps.

Looking at every single launch title across PS2, Xbox, Xbox 360 and PS3, I see only a single, clear system-seller in there: the original Halo. Now, you could argue - and I wouldn't disagree - that Xbox was the only one of these systems that desperately needed a standout launch title to justify its existence. What I would say now is, for the first time in two cycles, and entering into a far less certain world as they will be, both PS4 and the next Xbox need a 'killer app' to get them out of the blocks.

I've long believed games will become the dominant entertainment form of our age, and I really don't care what platform(s) that happens on. For consoles to retain a key role in that story, though, they need to remain relevant to the masses while continuing to grow their audience.

And that's what's fascinating about this nerve-wracking moment of transition for the console business: the system-seller no longer needs to be a game. This time, it could be the contract.

28 Comments

The nice thing bout a contract approach is the built in market when it comes to upgrading the contract ( next gen console)

Posted:2 years ago

#1

Thomas Luecking

69 13 0.2
Nice article!

Posted:2 years ago

#2

Dave Herod Senior Programmer, Codemasters

528 788 1.5
The nice thing bout a contract approach is the built in market when it comes to upgrading the contract ( next gen console)
So when the two year contract you're on runs out for your Xbox 720, you renew and get... another one? New consoles don't come out that often, what would be the point in having another?

Posted:2 years ago

#3

Felix Leyendecker Senior 3D Artist, Crytek

184 204 1.1
I don't see how this comparison works. With a phone contract, you get a service you really NEED. Nobody buys an iphone to play games or listen to music, everyone wants to use it as a phone, which requires a contract.
People buy consoles to play games. What possible service can you offer to them that is such a necessity that they will happily sign a contract?

Posted:2 years ago

#4

Fyzard Brown Sales Associate, VideoGameAdvantage

39 6 0.2
@Felix Leyendecker

With the low prices of the Lumia under cotract, MS might just throw a phone in there to boot.

Posted:2 years ago

#5

Dave Herod Senior Programmer, Codemasters

528 788 1.5
I don't see how this comparison works. With a phone contract, you get a service you really NEED. Nobody buys an iphone to play games or listen to music, everyone wants to use it as a phone, which requires a contract.
People buy consoles to play games. What possible service can you offer to them that is such a necessity that they will happily sign a contract?
No one needs a smartphone. A £20 pay as you go phone does everything people need and requires no contract. Having a smartphone is just as much a luxury as a games console. But you're right in that customers tend to think that way, and a contract would need to appear like it's paying for another service that's worthwhile to them, Xbox Live gold wouldn't be enough.

Posted:2 years ago

#6
I suspect, they will either come out with nextGen console 1.5 - and you can either choose to upgrade for a fee, or you now can own your box in full, and for a small monthly fee have free demos/games,etc

I havent fully worked out how it might work yet. but I bet someone else there is...

Posted:2 years ago

#7

Felix Leyendecker Senior 3D Artist, Crytek

184 204 1.1
What I'm trying to say is:

I buy a smartphone to do something: Surfing on the go, using facebook, instagram, whatever. I need a contract to do all the things I bought the smartphone for.
For a console, not having a contract doesn't keep me from doing what I bought the console for: playing games. That is, unless the contract is the ONLY way to play games.

Posted:2 years ago

#8

Brian Smith Artist

198 94 0.5
The industry seems filled with speculation that when everyone is not impressed they are going to jump ship to mobile and/or tablet etc as a platform. What doesn't seem to be being considered though is that the console market although not growing at the rate of others may well be content enough to take up the next gen without any fuss whatsoever. It may be a harder sell but it's also a bigger market now. IMO reporting the big two/three as struggling to fit in, in some brave new world might just be wishful thinking on the part of everyone else in the industry who works in new sectors. I'm betting they aren't as sleepy and non-reactive as some think.

Posted:2 years ago

#9

James Boulton Tools & Tech Coder, Slightly Mad Studios

136 172 1.3
The way things are going, it looks like your next gen consoles will be a box which will do pretty much everything media centric. So PVR, blu-ray, music player, streaming films -- a straight evolution of the current services. It also seems like games are going "cloud"-ward.

These things do require a service provider. Partnering with a cable company makes perfect sense. As for renewing the contract, there are always incentives to extend your contract, it doesn't need to be a new console. It really is identical to the phone analogy.

People wont be buying next gen consoles just to play games, some people seem to be missing this point entirely.

As it stands my PS3 just gets used as a blu-ray player and nothing else, as it does that very well. Next gen consoles will end up doing things better than the leading brand of whatever media device is out there, and suddenly you find a new market.

Posted:2 years ago

#10
With Generation-8's launch, the whole hopes of an industry rest on the need to have the player-base embrace and adopt the business model constructed by the trade; supporting a confused online / offline approach (be this a subscription model with retail, or full DLC plan).

Comments like - "It'll be a "quantum leap", Alan Wake developer Remedy chirruped excitedly" - do not help, we all recognize that Gen-8 system from Sony and MS will not be 'graphical marvels' (the Nintnedo Wii-U looking more like a 1.5 system). They may slightly improve on the 1080p, but they will not offer a fidelity of resolution or graphical impact that will "wow" the audience greatly. Their content will have to do the talking, and already there are concerns that the latest PC hardware will surpass them (the DAYZ syndrome and example).

The fundamental issue is that if the audience approaches the Gen-8 systems coolly, can the consumer game scene still continue and survive? The doom & gloom mongers citing the 1984 crash and the similarities with today's market seem to point to a immanent collapse as more and more studios tumble. I however see a greater margin for destruction, as we have built a business model on a lie - and have only gone and over-hyped the opportunity.

Now that 3D in games has been brushed aside, we see a clamber for a return to VR - next it will be locked down subscriptions and DLC. All these do not offer s 'step change' in player experience, all these just shore-up the leaky ship that is the current consumer game scene. An industry that has depended too long on hype, and who have alienated their player (customer) base to the point that they are abandoning the scene in droves!

2013 will be more than a make or break situation for console manufacturers - it could mean the total restructuring of the game publishing sector, and those that support it!

Posted:2 years ago

#11
Alternatively they could brings exciting IP and fu games in 2013 whatever flavour of hardware is prevalent

Posted:2 years ago

#12

Caspar Field CEO & Co Founder, Wish Studios Ltd

40 93 2.3
'They may slightly improve on the 1080p' LOL!

Posted:2 years ago

#13

Joe Winkler trained retail salesman, Expert

171 4 0.0
Sony said that the Playstation 3 will be able (pre-release) to show games in native 1080p. Now they are telling they'll get a resolution of 4K. That means 99% of Playstation 3 games run in 720p, so we get 1080p this time with 1% of the games upscaled to 4k.

I personally don't want the best graphics as long as the gaming experience is worth playing. And I have no need for new consoles if the do not improve in both functionality and innovation.
If I need to subscribe to something worth it (like xboxlive) I am happy to use a service worth paying for. Even if most of the customers are willing to subscribe for a mobile device it's still hard to explain why xboxlive is worth 5Ä a month and PS Network is for free. Even if there are much advanteges some people still think "free" is better than good.

The Wii console made it's way to the top by being "something new" at that time (not to mention DreamEye and Eyetoy). Microsoft closes the distance with the Kinect device.
But what the industry needs is a hardware base that is able to combine all the devices at home. A recording tool to not miss the best tv shows, a video on demand service, the opportunity to play every media at home and a control device everyone understands how to use. On the other hand it still needs enough buttons to be used as a core gaming device. Both Microsoft and Sony try to reach that with on-demand services and stuff like PlayTV. Improve everything we currently have and it should do.

If the next generation fail- and there are good reasons for that, we could be facing a disaster comparable to the videogame crash 1984. Thanks Mr. Williams for posting some of my thougts ;)

Great article, Cheers!

Posted:2 years ago

#14

Brian Lewis Operations Manager, Aeria Games Europe

141 93 0.7
The console of the future is designed to play online games/media. This will require a contract for this connection. Just like a phone requires a service contract to be useful, they are designing consoles that will require an online connection as well.

This is the reason that the console manufacturers are talking to ISPís. They are looking to sell a device that will need an ongoing service contract to be useful. This deals with the change to digital downloads (on the pc), opens up the F2P market, and allows for all sorts of media streaming/downloads.

Edited 1 times. Last edit by Brian Lewis on 29th August 2012 3:09pm

Posted:2 years ago

#15

Hugo Sieiro Technical Producer, Things With Wings

2 2 1.0
I totally agree.

I can easily see a near future where you just sign up for BT vision / Sky / Virgin / Netflix or whatever platform is out there, and instead of a cable box, you get a console to enjoy the content and also play games, connect to your tablet, play media etc...

Right now we buy a console to then buy content for it, in the future we will sign up for content (free games, films, arcade etc...) and we'll get a console to play the content on (like we do with a smartphone, we 'buy' access to a telephone line and 3G internet and we get a smartphone with our contract)

I think it is the natural next step for the video games industry

Posted:2 years ago

#16
Not by much! :)

Posted:2 years ago

#17

Justin Cooney Director of Developer Relations, OTOY, Inc.

3 0 0.0
I think it would be interesting to compare XBLA vs PSN / PS+ subscriber #'s, on a WW basis.

Posted:2 years ago

#18
Rather than the comments about great games, and player loyalty - I think maybe some in this industry need to look at the customer base and how unhappy they are with what the industry is doing at the moment.

This video is a great example... and not the only one:
http://www.newgrounds.com/portal/view/601967

Posted:2 years ago

#19

Craig Page Programmer

390 233 0.6
You sell the next generation consoles by being honest, and admitting that games from the last generation weren't actually rendered at 1080p or even 720p (isn't call of duty still just 1024x600?). Then have side by side comparisons on a 65" TV or a projector.

Posted:2 years ago

#20
@Craig,
Honesty would be difficult at this point!

Too many lies and hype - also who would do the presentation - no one trusts the manufacturers, no one trusts the magazines!

In creating this hot-house environment, the industry has left itself no means to come clean! I think that it will take a 'visible' improvement, but Gen-8 will not look THAT much better to a fully stuffed PC; so they hope that AAA titles will prove influential to the player-base.

I lay down the gauntlet to the consumer media to start reporting the issues - what is the true performance of these games, what is the value for money against DLC and subscription - but to get the ball rolling what is the value of the developers (tell us about THQ impartially, and what ever happened to Atari?)

Honesty at this point could re-build bridges (remember customers are not teenagers anymore) and if you want people to consider shelling out for Gen-8 consoles, you had better have a strong message!

Posted:2 years ago

#21

Greg Wilcox Creator, Destroy All Fanboys!

2,196 1,176 0.5
Feh. I use a N-Gage QD, buying time as I need it. I have no use for an all-in one phone or device that once it's lost or stolen, has all your life on it and even if it's found right away, will force you to be a bit more paranoid when you get it back. I want my game consoles to play GAMES. period. I don't watch sports, I can see movies on cable, i don't give a crap about social and I sure as hell don't need something to suck money automatically from my wallet each month if I don't use it. Of course, all are the big deal thse days, so it's not as if I expect things to change at all.

I also don't give a hoot about HD p's and i's, whther PC is "better" or faster or whatever, or if a console can render all the blades of grass in Central Park without melting into a puddle of plastic and solder. For me, "next gen" will be all about who the hell makes the best game experiences on a platform i care about because it can play games on physical media once the damn cloud collapses.

But that's just me.

Posted:2 years ago

#22

Dave Herod Senior Programmer, Codemasters

528 788 1.5
I think that it will take a 'visible' improvement, but Gen-8 will not look THAT much better to a fully stuffed PC;
But a "fully stuffed PC" costs thousands. And the idea isn't that next gen consoles look better than a current top-end PC, they just catch up. Even at launch, Xbox 360 and PS3 weren't as powerful as a top-end PC of its day, but they weren't far off.

Posted:2 years ago

#23

Aleksi Ranta Product Manager - Hardware

292 154 0.5
you get a service you really NEED
You offer a contract that includes the nextgen hardware, including the music, including the tv-series, including the complete service. I would argue that to most early adopters of hardware and new relases in games, the consumers considers the purchase
as based on a NEED to consume the content.

Posted:2 years ago

#24

John Bye Lead Designer, Future Games of London

486 457 0.9
Sony's PS+ service is a great example of how a contract system could work for next-gen consoles, giving you a big library of free games plus free one hour trials of games you still have to pay for, moving console gaming over to more of a subscription service or even rental model, but with the option to buy games at retail if you still want a physical disc.

Although they kind of shot themselves in the foot by offering so much value for your £40 a year. I've got so many free games waiting to be played on my PS3 now, the last game I bought at retail was Skyrim over six months ago, and I still haven't finished that.

Edited 1 times. Last edit by John Bye on 30th August 2012 1:08pm

Posted:2 years ago

#25

Bruce Everiss Marketing Consultant

1,692 594 0.4
The platform holders need to totally desert the bricks and mortar high street and physical distribution of content. If they don't then big bad Apple will come along and have them for breakfast. Like they did with the music industry.

The Microsoft 2 year Live contract is just genius. They could go at an eye waveringly low price from launch. A fantastic piece of marketing.

Nintendo are in a different world, it is their properties that matter the most, the hardware is almost incidental. Everyone has to play the new Mario, Zelda etc etc

Sony are a big worry. They came third in the current generation having come first in the previous two. They don't have the money to out muscle Microsoft and they don't have the IPs to do what Nintedo do

Posted:2 years ago

#26

Nick Parker Consultant

306 186 0.6
What's in the box for providing rich internet based services will be more important than a quantum leap in tech spec for the gaming experience. I think there's going to be a few "wow, that's cool" reactions to services we can only guess at and I wouldn't discount any of the three for providing them.

Posted:2 years ago

#27

Al Rhodes Web producer/designer

25 15 0.6
If you are going to dwell on a iPhone analogy, then you should notice that the differences between various versions of iPhone are hardly earth shattering. Oooh, multi tasking, I remember that one...they couldn't do that with an OS upgrade?

Why guess what people will want next? MS and Sony need to look at how gamers use their consoles today (like they don't have the stats?) and improve those aspects and benefits. Upgrade the nuts and bolts stuff. In these days of dlc or purchasing games as downloads, renting or buying HD movies and adding music and video to their consoles, they need to beef up the hardware considerably. 1000 GB hard drive as the entry level basic machine. Minimalise load times and game update downloads and installs. Carry a network live TV provider like Sky, BT or Virgin. Even better have their own live broadcast channel.

You want an innovation that actually would make a difference to gamers? It is about time that Sony, Microsoft, Ninetendo and PC online gaming providers worked out a deal where someone playing (say Black Ops) on the future Xbox can play their friends who happen to own the same game on PS4 (or whatever) and their friends on PC can join in too. Is it too late for Nintendo to ugrade the infrastructure for Wii-U? I think not.

Retro games should be ported to ALL consoles regardless of IP. Mario 64 on xbox and ps3 would be awesome. These games are 'dead' to new consoles so why not give them an after life with a new audience (or revive their old ones). How the Tony Hawk games are starting to come back in HD dlc form is brill.

Gaming should be an all-inclusive, pain-free experience or at the very least irritant free. The only frustration should be when someone else kicks your butt online.

Who wouldn't want to buy into that?

Posted:2 years ago

#28

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