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Year in Review: The Top Stories of 2003

In an industry which is moving and growing as fast as the interactive entertainment industry, it'd be a tough job to find a single year which couldn't be described as "exciting" - but 2003 was a year which had more than its fair share of enormously important developments, as many of the predictions of pundits over the past few years came true at last.

The stakes became higher across the board, as more publishers joined the billion dollar turnover club and the market for software continued to grow. Successful companies broadened their ambitions, while at the other end of the spectrum, the wave of bankruptcies and consolidations which had been threatening to engulf the industry for years finally started to make its presence truly felt. New players entered the market, and old players exited.

Was it a good year? Arguably, yes; all the key indicators for the industry are on the up, and it's selling more games and making more money than ever before. You might disagree, however, if you're a British independent developer, or a small publisher struggling to get shelf space for your games at retail; and the marketplace almost certainly looks rather different to someone sat in EA's headquarters than it looks to someone sat in Nokia's offices.

We've tried here to select the five key stories of 2003; the five events which helped to define the year, and whose impact will continue to be crucially important throughout 2004 and beyond.

PlayStation Goes Portable as Sony's Ambition Expands

Nobody expected anything particularly exciting from Sony's conference ahead of E3 last May. With the PlayStation 2 only a couple of years into its lifespan, talk of a new home console platform was judged to be at least two years away, and the conference itself was expected to feature jubilation over sales figures, the announcement of some new software titles, and the rolling out of the customary Japanese developers (complete with comedy translators) to chatter amicably about their forthcoming projects.

We certainly got all of that; but what we also got was the surprise announcement of Sony's entry into the handheld gaming marketplace, with a console to be known as the PlayStation Portable - which the soundbite-friendly Ken Kutaragi was quick to describe as the "Walkman for the 21st century". The announcement stole the show at E3, taking the wind entirely out of the sails of Nintendo and Nokia's conferences later on the same day, and was blamed for causing a dip of some 10 per cent in Nintendo's share price.

Sceptics pointed out that the announcement didn't really say anything of substance, and more than one person we spoke to at the show opined that it sounded like Sony had simply announced it without any real plans for its launch in order to put the cat amongst the pigeons. The sceptics were silenced a few months later, however, when Sony released full specifications for the device - revealing one of the most ambitious pieces of personal hardware ever produced.

The PlayStation Portable will rival the PlayStation 2 in terms of videogame playing abilities, and will also be equipped with the ability to play back movies and music from the tiny UMD discs (effectively next generation minidisks) which the system will use. The system forms a key part of Sony's future plans, and Kutaragi wasn't kidding when he likened it to the Walkman - Sony genuinely believes that it has the potential to become as ubiquitous as that groundbreaking device was.

The first glimpse of the final PSP hardware is expected at E3 in May 2004, with the first software being shown off in early Autumn - possibly at the Tokyo Games Show - ahead of a launch for the console in Japan in time for Christmas 2004. This may well be the most important project ever undertaken by Sony Computer Entertainment, and it's sure to dominate industry headlines over the coming year - and beyond.

British Development in Crisis

If there's any one sector of the industry that is likely to look back on 2003 as an "annus horribilis", it's the UK independent developers- which in the latter half of the year saw several well-respected studios shut their doors within the space of a few months, prompting fears for the future of the independent development sector as a whole.

Not that the year started particularly well for developers, with Liverpool-based publisher Rage going into receivership in January, with over 100 development jobs lost as a result. A few months later one of the long-standing leaders of the UK dev sector took a major blow, as Argonaut saw two projects, namely Malice and Orchid, cancelled by their respective publishers.

The real woes didn't start until July, however, when Croydon-based studio HotGen went to the wall - although founder Fergus McGovern managed to salvage one of the company's GBA teams and created handheld development outfit Netherock. Weeks later, VIS Entertainment shut down its studio on the Isle of Wight as funding woes hit the company; later in the year it would also shut down its London studio.

August continued with another large development group, Kuju Entertainment, warning of "painful" cost reductions, while September saw Kaboom Studios imploding spectacularly, and taking both Attention To Detail (ATD) and Silicon Dreams with it. The company's third studio, Pivotal Games, survived thanks to being bought out by publisher SCi.

October added three more well-respected studios to the casualty list, with Guildford-based Mucky Foot shutting its doors only weeks after Lost Toys - the companies had had offices only a few hundred yards apart - and Computer Artworks shutting both its London and Brighton offices when it entered receivership. To cap it all off, another large developer, Warthog, warned of losses and cost reductions at the start of December.

If it reads like a roll call of woe, well, that's because it is - and persistent rumours suggest that several other developers may be for the high jump in 2004. It's certainly not all doom and gloom for UK development, and some studios had excellent years - we'd point out Sports Interactive and Climax, to name but two, as examples of continued success in 2003, while both Argonaut and Kuju overcame difficulties to end the year on an upward curve. However, the underlying question still hasn't been answered; nobody really knows what the way forward for UK development is, or whether the day of the small studio is simply at an end. Perhaps 2004 will deliver more answers - and hopefully, a few less closures.

N-Gage - Nokia's Misjudged Console Tanks at Launch

On paper, it looked like a plan that couldn't possibly fail - Nokia, one of the most respected names in portable consumer electronics and one of the most recognisable brands in the world, launching a combined games console and mobile phone with software support from some of the biggest publishers in the industry.

As soon as the plan left the realms of paper and become embodied in a real device, however, the cracks started to show. The world debut of the N-Gage was held in London, and revealed a piece of hardware which had some major design flaws - such as the need to remove the battery in order to change the games - as well as early software which hinted at serious limitations in the system's power.

Much can be forgiven on the grounds of early hardware and software, but when the same problems were manifest at E3 in May - at which the device was showcased at a cringe-inducing press conference featuring the now legendary "N-Gage Rap" and a lengthy appearance for John "Daikatana" Romero - questions had to be asked, even more so once the company announced its $300 (c. £220) price point.

By the time the N-Gage rolled out in October, in one of the quietest launches ever seen for a new piece of gaming hardware, few people in the industry seemed to hold out much hope for the device - the main differences of opinion among those we spoke to being over how badly the system would tank, and how quickly Nokia would learn from its mistakes.

In ways, we're still waiting for answers to both of those questions. Nokia refuses to give sales figures for the device (although it did attempt to pass off an 400,000 ship-out figure as a global sales figure for a while), and market research firms such as the UK's Chart-Track don't follow sales in a wide enough sample of retailers to be representative. However, we do know that the system is now available for an effective price of under $100 in the USA (once rebates and free software are factored in), and that's without a mobile phone contract; while in the UK, it is now available for free with a monthly tariff, but seems to be having as much trouble shifting units in mobile phone retailers as it is in games retailers.

As to the second question - expect an answer in the first half of 2004, when Nokia is likely to announce a successor to the N-Gage. The Finnish giant is certainly not about to give up on the games industry by any means, and it considers the N-Gage as an evolving platform rather than a single device - so it's entirely probable that the next evolution of that platform will be in retailers in time for Christmas 2004.

Sega and Sammy - A Dramatic Courtship

When it was first announced, it seemed like a corporate match made in heaven, as the iconic Sega brand and its myriad talented development studios stared lovingly into the eyes of cash-rich gambling machine giant and wannabe game publisher Sammy - but by the end of the year, Sega's merger plans had turned into a shotgun wedding in one of the most dramatic corporate U-turns the industry has ever seen.

Sega's planned merger with Sammy was originally announced as a done deal, with only a few final details to be hammered out ahead of the completion of the transaction in October, but matters became more complicated when rival publisher Namco very publicly expressed an interest in merging with Sega - and Sega announced that it was considering Namco's proposal, despite the previously announced Sammy plans.

Within weeks, the whole affair had turned into a debacle on a grand scale, with Sammy fuming over Sega's "betrayal" while Namco set spurious deadlines for a response from Sega on its proposal. Eventually, Sega dropped both of the proposals just ahead of E3 in late May, and rumoured bids from Microsoft and EA never surfaced - with the company apparently deciding that going it alone was its best option after all.

Even talks with EA over a North American sales alliance seemingly came to naught, and the industry assumed that the matter was closed when Sega president Hideki Sato and COO Tetsu Kamaya both stepped down from their roles at the company in acceptance of their responsibility for the merger fiasco, with Sato being replaced by now president Hisao Oguchi.

Sammy, however, had other ideas - and in early December, it shocked the industry by buying a massive 22.4 per cent stake in Sega from its onetime parent company CSK, making it into the single largest shareholder in the publisher. Sammy president Hajime Satomi has been making clear since then that he wants the company to make some significant changes to its direction - and has publicly warned that if Sega does not comply, Sammy will simply buy more stock and complete an aggressive takeover.

Sega fans on the Internet treated this news as a death knell for the company - especially once Satomi-san announced that he wanted Sega to focus on arcade games for Sammy's Atomiswave platform rather than on home console titles. However, the fact remains that Sammy will be able to improve Sega's financial position significantly - and we haven't seen the entirety of Sammy's plans for its new acquisition yet by any means. The shape of the new Sega is something which will be keenly observed when it emerges in 2004.

Nintendo - Bouncing back in Q4

Nintendo has struggled to stay in the home console race throughout this generation, and it looked for a while during 2003 like the company had finally succumbed - with the first loss in its entire history as a console manufacturer being reported for the first half of the year. Closer reading of the figures showed that in fact, the company's operations were still profitable, with the losses being attributable to a weak dollar impacting on the value of its overseas reserves - but it was an ominous sign, nonetheless.

There must have been an air of relief in the company's Kyoto headquarters, then, when the sales figures from the USA and Europe began to flow in during the fourth quarter. The first price-cut to the GameCube hardware since its launch proved to be a huge success at a time when some retailers and publishers had started to write off the platform, and the Cube showed significant year on year sales growth at a time when the Xbox and PS2 were either stagnant, or in decline.

US sales figures for November proved that the company's established franchises still have what it takes, as Mario Kart: Double Dash became the best selling game in the country for the month as a whole, and altogether the Cube's market share climbed to a healthy figure somewhere between 20 and 30 per cent in most key territories in the West.

It was absolutely vital for Nintendo to have a big Christmas in 2003, and the company did not disappoint. Whether it can continue this inertia into 2004 remains to be seen - but the company may yet have a few more tricks up its sleeve. Despite vigorous denials that an investment in Bandai late in the year represented anything other than a financial manoeuvre, comments from the son of Bandai's founder a month later revealed board-level struggles at the giant media and toy company over closer ties to Nintendo and the possibility of a merger or takeover. Such a move would create a Japanese behemoth that could pose a serious threat to Sony's dominance of the console market there - and with the GBA still established as the top dog (and indeed, just about only dog) in the handheld space, these occasional glimpses of Nintendo's fangs prove that it's still not a company to be taken lightly.

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Rob Fahey avatar
Rob Fahey: Rob Fahey is a former editor of who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.