Microsoft's Rush To Xbox 2 A Danger?

Game Boy writes "Brit games business site Gamesindustry.biz has posted a fascinating editorial asking whether Microsoft is about to shoot itself in the foot over Xbox 2 by rushing to launch the console years ahead of its rivals' next-generation platforms. It's a pretty good analysis of how Microsoft is thinking about this marketplace, and why they could be pretty drastically wrong - I work at a major games publisher, and a lot of people here are worried about exactly the same things, but it's rare to see anyone actually discussing them openly. Xbox has done pretty well so far, but Microsoft could be heading for a disaster that even Bill's billions won't dig them out of..."

backfire, well we'll fire back!

[2057]

Well I actually like the Microsoft plan to release it before their rivals, because to be honest, there are people who would buy this. If they release in between ps2 an ps3 they maybe able to pick up on the ps2 heads who are looking for the latest system. And if they are the only ones releasing during these years that will increase their profits, because there will be no competition, people will always buy whats new even if they already have something similar.

Re:No, no, no

[7Ghent]

Gaming platforms != movies

A gaming platform is an investment that you'll spend several hundred on, games, controllers, etc.. A movie is just a movie. Because I see a movie this weekend doesnt mean I won't see one next weekend, even if it's similar. However, if I buy a console this weekend, I'm definitely not buying one next weekend.

Your analogy sucks.

Re:No, no, no

[Anonymous Coward]

The XBox outsold the PS2 in April of this year due to the $150 pricing, that was rapidly reversed in May with the matching PS2 price cut.

"First-Mover Advantage" Won't Help...

[GTRacer]

...If PS3 is backwards-compatible. Follow me here - Sure, Xbox 2 (or Ybox, or why bother?) will have prettier graphics and a lot of "new-tech" cachet. But the fracture in the game-space of having two incompatible Xboxen might be the opening PS3 needs to keep Sony on top.

Since PS2 dev won't have to stop for PS3, all the investment and tricks learned will still be valuable. Sure, some developers and publishers will stop PS2 coding, but look at how many PS1 games are still out there!

Microsoft won't have that, and they're also asking gamers to keep two systems. Sony is effectively saying "Upgrade to the $350 PS3 by trading in the PS2 for $100, and keep all your games!".

Much less risk to go Sony.

I still want an X2, but I know who's getting my money first!

GTRacer
- Read the FA for once!

Xbox has NOT done pretty well so far

[Anita Coney]

The Xbox is in a catch 22 situation. Because it loses so much money on every console, the more it sells, the more Microsoft loses.

The loss estimates so far are in the billions:

Here read this:

http://www.itworld.com/App/4201/030203xboxlosses /

this is about their losses in 2002 doubling!!

in this more recent piece the Biz magazine says Msft has lost BILLIONS so far.

http://www.gamesindustry.biz/content_page.php?se ct ion_name=pub&aid=3489

Here's an article on its big loses in 2003

http://www.1up.com/article2/0,4364,1519194,00.as p

here's an article talking about how they are losing money despite sales increases:

http://seattle.bizjournals.com/seattle/stories/2 00 3/06/02/story7.html

Re:Backwards compatibility

[GPLDAN]

*IF* the Xbox2 will be backwards compatible (and considering the architecture of a proposed PPC chip and all, that will be very surprising)

I'm having trouble finding articles suggesting what will happen one way or another. I can't see how they would freeze out current Xbox owners, and expect to sell new expensive consoles. People would go nuts. But, as you say, Intel vs. PPC. Any links on this issue?

Re: you've got your consoles confused

[mapmaker]

It was the Sega Saturn that got trounced by the PS1 and N64. The Dreamcast got trounced by the PS2 and Xbox.

But your point is right on. Sega proved it not once but twice!

Re:No, no, no

[Fjord]

Think back in 1999, The release of Armageddon was very hyped at this time, Hell, McDonalds had a friggin contest for it.

Why not use a more parallel example of Dreamcast and PS2. Dreamcast had PS2 beat in time, but the PS2 whomped it.

I am not totally sure on this, but has the Xbox managed to outsell the PS2 in any month except for when the Xbox was first released

Yes, just recently [slashdot.org] when Xbox dropped its price to 149. The PS2 retook the lead [slashdot.org] following its own price cut.

Re:Poor sales/titles

[SIGALRM]

See Gamespot [gamespot.com] some more recent sales figures from April 2004, still supports my original assertion. [slashdot.org]

Re:No, no, no

[vitaflo]

The PS3 is so highly anticipated right now, that developers are already writing games for it, studios have already put aside funds. The same cannot be said for a next generation Xbox.

There are no dev kits yet for PS3, nobody is writing anything for it, unless you mean writing design docs.

MS has already given XNA to devs, and they very much are already developing games for Xbox2/Xenon.

I am not totally sure on this, but has the Xbox managed to outsell the PS2 in any month except for when the Xbox was first released?

Xbox outsold PS2 by over 100,000 units in April when it dropped its price to $150.

I think this will be great for Sony to see what they can enhance upon for their game system, considering the PS3 has been in development for what? 3-4 years now.. perhaps longer? I think they might have a slight advantage and a better product.

Xbox2/Xenon has been in devlopement for just as long, so has Nintendo's next console (Revolution). Who has the "better" product remains to be seen.

Re:You don't understand the power of the Microsoft

[Kadagan AU]

You must not have read the whole article. I think that the author made a very good point when he said:

Microsoft, still a relatively small player in the games industry, just doesn't look like a company that has the influence needed to force a shift like this. It may be backed up by the biggest software company in the world, but publishers will still look at the bottom line - in this case, installed base and cost of development - and base their decisions on that alone. Herein lies the arrogance; Microsoft isn't used to making decisions as an industry small-fry, and it's trying to act like an industry leader in an industry it simply doesn't lead.

You must have missed that part ;)

Re:History says this is bad, mmmk.

[RatBastard]

Completely different hardware architecture. It's a lot harder to emulate a hardware platform that it looks. Even with computers six times faster than the XBox there are no working XBox emulators out there. And look at the horsepower needed to emulate a PSOne on a PC.

The PS2, one of teh few consioles to bother with backwards compatibility, has a PSOne core burried inside of it to do I/O operations for the PS2. It was pretty cheap to flesh out the core and let it run PSOne games thus making the PS2 PSOne compatible.

Re:No, no, no

[Crispin Cowan]

You compare Deep Impact to Armagedon, and claim that Armagedon "destroyed" Deep Impact in box office and rentals. Some data:

• Deep Impact business [imdb.com]
• • Box office: $140M
  • Rentals: $67M
  • Total revenue: $207M
  • Budget: $75M
  • Profit margin: (140+67)/75 = 176%
• Armagedon business [imdb.com]
• • Box office: $201M
  • Rentals: $104M
  • Budget: $140M
  • Total revenue: $305M
  • Profit margin: (201+104)/140 = 118%

Deep Impact did 2/3 of the business, which is hardly "destroyed". It did it on 1/2 the money, which is arguably a better investment.

And IMHO, Deep Impact was a much better movie; the plot was much more believable. IMDB somewhat concurs, in that the viewer rating for Deep Impact is 5.9 and Armagedon is 5.7. I cannot confirm or refute the claim of which film was rushed to market, but the Deep Impact people clearly did a better job.

Back to video games: anyone have data on how much Sony spent developing PS/2 vs. what MS spent developing XBox?

Crispin

Re:This is Microsoft...

[SuiteSisterMary]

You know, I've never seen an Xbox game that looks like crap. I've seen Xbox games that obviously weren't taking advantage of the hardware, like Dead to Rights, Buffy, and so on, but none of them looked like *crap.*

Then, I finally got around to getting a Playstation 2, for the .hack series, the Final Fantasy X series, and so on. And I loaded FF X in, and HOLY SHIT.

The opening animation alone gave me a terrible headache. Hell, the damn models were swimming, like the vertexes were getting rounded to one value this frame, and a different value another frame. Horrible examples of polygons not meshing properly. Argh.

And my personal greatest pet peeve of the moment; clothes as textures. Maybe I've been spoiled by the Dead Or Alive series. But you know what? If somebody's wearing a necklace, model the damn necklace.

And, aye, the DC is still head and shoulders above the PS2.

Console Life

[vasqzr]

I'd guess that the average game console life is probably around three years.

You guessed wrong.

1985 - NES released in the USA
1991 - SNES released in the USA
1996 - N64 released in the USA
2001 - GCN released in the USA

6, 5, and 5 years

1994 - PSX released in the USA
2000 - PS2 released in the USA

6 years

Re:History says this is bad, mmmk.

[shut_up_man]

I agree... the Xbox is just getting up some speed! They have a solid lineup now (Halo, Knights of the Old Republic, Crimson Skies 2, Prince of Persia, Splinter Cell, Ninja Gaiden), with some good new games just coming out (Full Spectrum Warrior, Chronicles of Riddick) and some big ones coming in at the end of the year (Halo 2, Prince of Persia 2, Doom 3, Jade Empire, KOTOR 2). Xbox Live is kicking ass too, bringing the competition and teamplay seen in PC games to the console arena.

The idea that they want to rush in a new system that throws all this hard-fought good stuff out the window... it's mind-buggeringly stupid. This is exactly the same concept as written about in the recent How Microsoft Lost the API War article. Not having compatibility is suicidal.

BETA vs. VHS

[shepd]

If you check the specs, BETA was, at best, 5% - 10% better in the picture quality department than VHS. We're talking about 10 lines of picture quality difference. Overscan on your TV takes more. It's a bit like noticing the difference between 640x480 and 640x400 video modes.

Anyways, VHS won because of many other factors, not the least of which were:

- Pornography on VHS from day one
- Holds an ENTIRE movie
- Don't have to beg Sony for permission to distribute your show on VHS (See the pornography note above)
- Made by many different manufacturers from day one
- It wasn't a Sony product (the "Sony factor" only works for walkmans, at least in the US -- look at any of their other Sony products, such as memory sticks, MDs, glasstrons, DATs, etc)
- It's a freer format
- HQ/Hi-Fi "seals of approval" were easier to get for VHS decks than BETA
- VHS was somewhat cheaper, due to competition, whereas BETA was Sony-only (at first) and being a Sony product, already TOTALLY overpriced

Re:No, no, no

[Anonymous Coward]

Aemagedon was pretty damned bad. Deep Impact was no Godfather either but at least it managed to hang on to a thin thread of reality. The only redeeming feature of Armagedon is that Liv Tyler was in it, granted she cried way too much, but she's still hot.

Re:No, no, no

[ThosLives]

That's not entirely correct:

There actually is an OS on all the "disc based" systems. Xbox actually has a specialized version of Windows NT and runs DirectX. Sony's PSn boxes also have a kind of OS. What do you think manages disc reads, writing to/from hard disks/memory cards, and handles all the I/O scheduling and the like? The fact that you can change an XBox to run [Linux] means that you're changing the OS on the thing.

Just because hardware doesn't change doesn't mean it doesn't have an operating system. You'd be surprised at how many things have an "operating system" - like cell phones for example. Even your automobile engine controller probably has an operating system...

Re:Console Life

[lukewarmfusion]

I was trying to include the not-so-successful consoles in my estimate.

1995 Sega Saturn
1998 Dreamcast

There are an awful lot [wikipedia.org] that didn't last even three years.

Playstation came out in 94, but by the time 1999 rolled around the popularity was waning; if PS2 didn't come out in 2000 they might have lost a lot of customers.

Re:No, no, no

[boosman]

You do not realize that this $60 Billion is paper-money only, there is hardly any cash. All this money is

stuck in other people's projects. It will probably take them 10 - 20 years to be able to cash all their assets if they can at all.

Please check your figures before you post. According to Microsoft's 8-K filed 23 April 2004, as of 31 March 2004, they had $9.348 billion in cash and cash equivalents, and an additional $47.059 billion in short-term investments. (See FreeEdgar [freeedgar.com] for the 8-K and other reports.)

Re:Well...

[The Lynxpro]

"I think it has a lot to do with the fact that there was a major 'break' between the 2600 days and the Nintendo days. For a couple years, no one did much in the game industry, atari killed it with a glut of bad games."

Atari didn't kill the industry. Atari didn't have a licensing program for third party developers since it was the courts that allowed Activision (the world's first video game third-party company) to make Atari 2600 compatible games which ushered in the era of uncontrolled numbers of poorly produced games like "Custer's Revenge." Atari certainly didn't help matters with their version of Pac-Man, E.T., and Raiders of the Lost Ark. The market was also cluttered with too many consoles (Atari 2600, Atari 5200, Intellivision, Intellivision II, ColecoVision, Odyssey II, etc.) to sustain it, plus add the original home computer goldrush with the Commodore 64. Atari couldn't even police the third party developers because it would've triggered antitrust issues since they had roughly a 90% market share, home video game market and arcades.

Once the Atari era was over (when Warner sold Atari to Jack Tramiel to stop their stock slide which launched a hostile takeover attempt by future Fox owner Rupert Murdoch), Nintendo rebuilt the home console market in its own image. Their contract for Atari to own what became the NES worldwide (outside of Japan) wasn't signed (because Atari was sold off and received a change of management, which also allowed Amiga to cancel Atari's acquisition of it) and Nintendo was free. They instituted their restrictive third party program that prevented licensees in America from releasing the same titles on any other console (which is why the Atari 7800, the Sega Master System, and the NEC TurboGrafx16 all failed to get decent third party titles). Once the Tramiels came to their senses in 1986 and released the 7800 (which was ready for an '84 release), they couldn't get any titles on the system. Since they had not had any interest in purchasing the Atari arcade division (which would've been just $10 million more at the time), they didn't even have any of the home rights to any Atari (Games) arcade titles post-1984. Atari Games created the Tengen subsidiary and marketed their titles on the NES. I won't cover the mayhem that ensued after that because that's a totally different story.

However, the point is, you don't know your videogame history. Atari didn't cause the videogame collapse of 1982, no matter what G4's *Icons* show claims.

Re:No, no, no

[Schmucky The Cat]

If an Xbox 2 can be converted to an Xbox 2.1 with a CD that flash-upgrades the OS

Already true. The majority of the OS is on the game disc. Any updated - or replaced - library that the game developer needs or wants they simply put on their disc. That gives console developers what they want - complete, unchanging and exact control over the environment their game runs in. It gaurantees that the experience of running their game is the same on every single platform. If the XBOX SDK upgrades some library, they take what they want for their disc. Console gamers don't know, and don't care, and don't care to know, about DLL version tracking.

This means Microsoft can continue to churn their code. Xbox game developers snapshot their environment at any specific point, and their game always runs in that version.

Re:No, no, no

[The Lynxpro]

"In fact, many times rumors have speculated about EA not really liking any of the console holders, and have patiently been sitting back and waiting for their chance to pull a Sony (enter the market and take it over)."

That rumor is long dead. That was pre-3D0, meaning, pre 1993. Trip Hawkins, the founder of EA, left the company and took programmers with him. They set about to create the 3D0 game system. Hawkins promised to dazzle everyone, and the $700 machine got shown up by the cartridge based $250 Atari Jaguar. The only thing the machine ushered in was the Naughty Dog company which later helped Sony (and is owned by them now).