Landmark Search

An industry on the move needs landmarks to steer itself by. PlayStation Vita and Star Wars: The Old Republic are two such landmarks.

With less than a fortnight to go before the games industry shuts down for Christmas and the New Year, the biggest questions of 2011 are yet to be resolved. We know that our business is in transition - it would take a truly remarkable act of head-burying in an astonishingly deep sandpit to avoid that conclusion - but as yet, nobody quite knows whether 2011 is going to be seen as a turning point in that process. It has the hallmarks of a watershed, the hype of a pivotal year - but the facts simply aren't in place yet.

I say this primarily because two of the most important test cases for the future direction of the market and the speed of the transition are only now rolling out, after a year of nervous anticipation. Sony's PlayStation Vita won't raise its head outside Japan until next year; Electronic Arts' Star Wars: The Old Republic won't start to produce useful data for a few months yet. How each one fares is absolutely crucial to our understanding of the business.

The cases of these two products - so dissimilar on the surface - correspond to a remarkable degree. Each one is an expensive, high quality product that's had major investment and carries a premium price tag as a consequence. Each one is competing in a market that's still dominated by an aging rival (Nintendo DS, World of Warcraft) but whose future is commonly seen as being cheaper, more nimble products with new business models, rather than another monolithic, dominant product.

Opinion is strongly polarised over how well PlayStation Vita will do in the market, but few people are willing to argue the case that Sony will ever release another dedicated handheld platform after it.

Both of them, significantly, have been called out in public, by senior commentators and industry figures, as being the last of their kind. Opinion is strongly polarised over how well PlayStation Vita will do in the market, but few people are willing to argue the case that Sony will ever release another dedicated handheld platform after it. Equally, there's a cautious optimism around Star Wars: The Old Republic that's tempered by the sense that it's probably the last of the high-budget, expensive, pay-to-play MMORPGs.

The obvious question, then, is whether these products are swansongs or death knells for their respective categories. Will dedicated handhelds and pay-to-play MMOs go out with a whimper, or with a bang?

There's another question, though, which the stats we eventually get from these two launches will help to answer - are we actually right about the direction of the industry? In discussing the rise of free-to-play, or the increasing importance of social network gaming, or the ubiquity of multi-function mobile devices, it's easy to get comfortable with the prevailing wisdom. We shouldn't forget that the conventional wisdom regarding where the market is moving is nothing more than a theory, and while it may seem perfectly logical, it's subject to human error and bias.

That's why we need to see the performance of landmark products clearly - in order to gather data to shape our views of where the industry is going, and how fast it's going there. The success or failure of Vita and The Old Republic will tell us incredibly important things that could either confirm or overturn our assumptions about industry trends. Most likely, this data will do neither thing, but will refine our perspectives. Some things we presently believe are probably right. Others are probably wrong. We just don't know which, yet.

In the case of handheld consoles, there's also an unanswered question over the Nintendo 3DS. I've always maintained that the 3DS does not have the potential to match the eventual market success achieved by the DS, and I still think that's the case. Earlier this year, however, it looked like the console might be an outright flop - with plenty of commentators ready to pile on and declare the console still-born. Now it's selling bucketloads in Japan thanks to Monster Hunter, and doing remarkably well overseas too, suggesting that the strong Christmas Nintendo needed for the console has become a reality.

Does that mean we're all wrong about iOS reshaping the face of this market? No - but it's new data, and it's important to assimilate and understand it rather than dismissing it as a blip or claiming that Nintendo's "fanboys" are somehow distorting the market in an unrealistic way. In a market where conventional wisdom says that smartphones are the only game in town, millions of consumers have bought 3DS consoles. There's a transition happening, but perhaps it's not the transition we thought - perhaps it's slower, or less complete, or simply more complex than the simple narrative of "everyone drops dedicated consoles and buys an iPhone".

I suspect that similar complexity will emerge as we start to get an understanding of what happens around the forthcoming launches of Vita and The Old Republic. Vita is a powerful multifunction device that isn't a phone - unlike the 3DS, it can be seen in some ways as a stab at the iPod Touch market, for example, and perhaps even nibbling around the fringes of what the iPad does for some of its consumers. Will it work? It won't sink the iPad, of course, but it'll be interesting to see what it can do in the market, and will give us a deeper picture of a market that's not only in transition, but also in the throes of rapid growth.

It's easy to declare The Old Republic the last of the would-be WoW-killers.

The Old Republic, meanwhile, is a game that conventional wisdom consigns to the bin of history - an expensive MMORPG with a front-loaded cost structure and premium monthly subscription, adrift in a world of free-to-play business models. It's easy to declare it the last of the would-be WoW-killers. Yet the sheer power of the brand recognition and of EA's marketing machine, not to mention the credibility with the core market afforded by Bioware's involvement, make it something special - and the excitement over freemium doesn't change the fact that over 10 million people are still paying for WoW every month, so it's obviously not a dead business model, even if it's an old one.

Because the games business so often runs on the basis of making good guesses about what's going to happen 18, 24 or 36 months down the line, it has become very full of people who may not actually be great educated guessers, but are extremely good at giving the impression of being utterly confident and informed in their predictions. This makes videogames an industry where conventional wisdom tends to become accepted fact long before it has any right to be anything other than challenged theory. That makes data - proper, quantifiable data coming from the only place that matters, the marketplace itself - incredibly valuable and important.

That data, however, takes a while to arrive. Hence the irony; 2011 will be remembered as a pivotal year for the games industry. Until we see the figures start to pile up in 2012, though, we'll have real no idea in which direction we're pivoting.

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Latest comments (8)

I would say there are other indicators, which are looking positive: Skyrim shipping 10m is extremely impressive (not a 'traditional' hard-core gamers purchase), and 3DS sales doing really well (tailing out its first year on the market).

3DS has sold something like 800k units just in Japan, for the last 3-4 weeks (and 350k last week), over 3m for the year (again - just in Japan). Software sales haven't quite matched it - but the tail is important here (and the biggest weeks of the year to come). The 3 big 3DS titles has now sold 2m, in 3 weeks (again, just in Japan).

The PSV shouldn't have too much trouble selling out in Japan over launch (the PSP has such a strong following) - lets see how it does next year, and how the software titles for it sell.
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Greg Wilcox Creator, Destroy All Fanboys! 6 years ago
The Vita will do well, but will also do even better if Sony and its first/third party developers maximize the product value and develop as many games as possible that allow for user-created content.

Simple stuff like Ridge Racer will sell at first based on the name alone, but I really think Namco Bandai dropped the ball by not adding MORE content such as a track editor and the ability to create your own vehicles (or choose from cars spread across the franchise's long history). Hell, even Rage Racer back on the PS1 had a fun editor for making decals for your rides! While a number of Vita games also add Play. Create. Share. functions, it would be wise for developers to think outside the enhanced or updated port box (which will also help justify the cost of games if new users are concerned about this should they be looking at the Vita as opposed to a mobile device)...

I've a bunch more nutty ideas, but I'm in the process of doing an article about this, as it's been on my mind for a while.
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Klaus Preisinger Freelance Writing 6 years ago
Outfitting your kids with your two-year old smartphone just makes the most sense.

You get the upgrade anyway, so there is not that much in terms of costs involved. You get the same "pacifier" effect at family gatherings and other events you have to drag the kids along than you would from a Gameboy. The costs of the games are lower, Nintendo might argue quality over quantity, but at some point the quantity is big enough to compensate for the fact that each game is only fun for two hours at best. Your kid wants a cell phone anyway and you want your kid to be in reach all the time. Remember when you grew up and your parents had no way of knowing where you were really, or place a call to get you to come home? These days you just put a tracer software on the phone for real time offspring surveillance, or geofencing (just don't overdo it).

So what exactly are the Nintendo and Sony products adding to the "parent experience"? Not much. So the parents, clever bastards that they are, will fork their kid their old 3G and be done. It will the parents who ultimately allow a device to turn into a must-have. Good news for iOS and Android, because they cater to kids and parents alike. Bad news for specialized devices, which will still sell good, but not as good as previously when they had much more status and parental backing.
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Show all comments (8)
Curt Sampson Sofware Developer 6 years ago
I think that the design of the Vita not to be easily sharable might be a bit of a minus for it. Unlike a phone, I don't see a lot of households buying one for each person in the house, and if it can't be easily shared, perhaps they won't buy one at all. I'm mystified as to why they didn't just design it to work with multiple accounts like the PS3.

And even for the odd single-owner situation, it doesn't always work. My case is one in point: I pre-ordered it, but haven't bought it because it's even worse for switching between my Japanese and US accounts than my PSPs are. When someone who spends a thousand dollars a year or more on gaming products isn't buying your new and otherwise wonderful handheld console, you might have a bit of a problem.
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I don't have any doubt that Sony & Ninty will struggle to hold on to the "very" casual gamers - as these gamers will be satisified by gaming on their phones. But I also don't have any doubt, that in general the gaming experience on phones (& tablets) generally bites (for most types of games).

Can smartphones act as a gaming "portal", to get more people playing games - and hence more people interested in non-casual titles?

Also interested to see what would happen, if say Nintendo - would release just *one* title on Android phones, as a teaser (and stick heaps of 3DS/Wii pointers in it) - even the original Super Mario Bros... surely that would not only bring in a truckload of $, but act as free marketing. Try a tagline like "You enjoyed this? Imagine how much more fun it would be on a 3DS.." (or something like that).
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Daniel Hughes Studying PhD Literary Modernism, Bangor University6 years ago
Er, just thought I'd point out this article has appeared on another site under a different name with no link to this original article:
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Tony Johns6 years ago
In 1975, all there ever was were PONG consoles...until the Atari 2600 arrived and Space Invaders became a home console port for that system.

In 1985, people said that Videogames were only just a fad that would die out...until the NES came around.

In 1990, people said that multimedia consoles and CD add-ons were the next best thing in gaming since slice bread....until the SEGA CD failed and the 3DO perished.

In 2000, people thought that 2D Gaming was dead and everything would now be in 3D...until the GBA continued to fight for the 2D gaming for the period before the iPhone and iPad devices.

In 2003, people thought that Nintendo would never get back their market dominance that they used to have...until the success of the Nintendo DS and the Wii.

As history has gone, all these market analysis's and people who get paid to make predictions have often been wrong.

The real history of the videogame industry is that there are always surprizes around the corner and that market survival is one successful product away but bankruptcy is only one failure away.
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Wasib Hussain Studying International Business, Finance and Economics, University of Manchester6 years ago
Good read - makes sense.
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