BBC Ponders Another Games Industry Crash

weirdguy writes with a link to a BBC article that poses the same question asked by journalists every couple of years: is the games industry headed for another crash? "Yes, gamers are snapping up the new generation of games consoles — Microsoft's Xbox 360, Nintendo's Wii, and Sony's Playstation 3 [PS3], but at huge cost to the industry. Hardware makers are losing hundreds of dollars on every console sold, and games publishers face an "increasingly difficult environment, as rising development costs and small user bases [mean] that return on investment in next generation games development is unlikely to be achieved before 2008," according to media analysts Screen Digest. More importantly, though, the video games publishers are facing a revolution of their business model."

Wii is not a loss leader . . .

[div_2n]

Hardware makers are losing hundreds of dollars on every console sold

Since the Wii allegedly only costs about $158 [younewb.com] to make and is sold for $200, I don't find a compelling reason to take the rest of the article seriously.

Re:Losing Money?

[91degrees]

The XBox 360 is apparently slightly better than break even [techspot.com] now as well.

Re:eh...

[MeanderingMind]

It's not Paper Mario 2. That was Paper Mario and the Thousand Year Door for the Gamecube.

The Paper Mario game on the Wii is either Paper Mario 3, or it's own game (given that it's primarily a Platformer rather than an RPG).

And yes, it is good. Although I've found myself longing for another Paper Mario game in a pure RPG fashion.

Re:Nintendo isn't losing money

[AndersOSU]

Neither does Microsoft apparently. So I guess, "Hardware makers" means Sony...

All you Wii naysayers, your number is up...

[7Prime]

I've had a Wii for a while now, and while I enjoyed it, my personal opinion, alone, hasn't convinced me, one way or another, what the draw of the console will be. Last night, this question was proven to me, once and for all.

I brought it to a BBQ that another friend of mine was hosting. Half of the people there were gamers, and half of the people there were decidedly NOT gamers (Chinese students, a few hippies, some others). At first, all my gamer friends screamed for some "SMASH!" and that went on for about 45minutes in the other room while everyone else went outside and sat around jawing.

Then I pried the GameCube controllers away from the gamers, and stuck in Wii Sports. The other half of the party suddenly rushed inside and grabbed controllers. They'd obviously never played or seen the games before, since they had no idea what to do, but within 5 minutes, everyone had made their own Miis, and were smacking tennis balls around to their hearts content. We alternated Wii Sports and WarioWare for the next few hours. By the end, many of the non-gamers were coming up to me, asking me how much the Wii cost, and where they could get them. I was pretty shocked, myself. I'd heard stories like this before, but hadn't really witnessed it in person, and was pretty amaized at the degree of involvement everyone had. Also, it was a party... none of us were sitting around, alone, brooding over a scummy screen. We were joking with eachother, making cracks all the time--we were interacting with each other even more than if we'd been doing most other normal party activities. In the end, the host came up to me and thanked me profusely, saying that everyone there had had a blast, and bringing the Wii was exactly the thing we needed.

Just the other night, NBC news ran a piece on how retirement communities were getting into games... although the only games they showed were Wii games, there was no mention of PS3 or 360 titles. It's clear, the Wii is a phonominon, like no other we've seen in videogame history. We are entering a period of unknowns, in gaming... this is the LAST time to be making doomsday prophecies for the game industry.

This guy from the BBC needs to get out more, see what exactly is going on in the world. He sounds as closeted as a 15-year-old gamer in his mother's basement.

Re:This isn't new

[Akaihiryuu]

Urban legend. The first console to ever be sold at a loss was the Sega Saturn (it lost around $100 IIRC). The Playstation was profitable from day 1. The Dreamcast followed the Saturn model in an attempt to recapture market share...even though it was successful it lost a ton of money and drove Sega out of the hardware business. The PS2 was profitable from day 1. The Xbox followed the Sega model (only difference is that Microsoft could afford to write off the loss). The 360 lost money at first (not sure how it's doing now). The PS3 is losing more money per console than any manufacturer has ever done before. The Wii is profitable on hardware. Before the Saturn, the concept of "selling hardware at a loss and making it up on the games" was absolutely unheard of. This rumor got started because when Sony announced the launch price of the PS1 in the US, it was quite a bit cheaper than in Japan at the time (but the launch was still months away and costs dropped in the meantime - they were thinking ahead). Atari accused Sony of "dumping", claiming that the PS1 was going to be sold below cost when it actually wasn't...due to costs dropping significantly before the launch. Sega dropped the price of the Saturn to $299 when the PS1 launched, thus they were the first to start losing money.

1 company crashes, the other two thrive?

[kinglink]

Let's be honest here, Sony's lost 1 engine, and in a tail spin, they're likely going to crater or step out of the industry, they have given us no reason to remain and arn't looking like it in the future, but Microsoft is the young up and comer who's going to follow's sony's example (last generation it was Sony who was pulling a Microsoft, mega sales, great games, nothing could go wrong.)

Nintendo has the key to avoiding another 1983 level crash. They sidestep all the problems and go in a new direction. A direction that lowers development cost (most development cost is to get better graphics or bigger games). Instead of a race to climb the next mountain they are going around the mountain.

Essentially the problem with this generation is everyone wants more content, more game, more graphics, and they want them all to look bigger and better. The problem is this costs money. GTA style games are big bucks now but they are even bigger budgets because you have to make a huge world.

I don't see a 1983 crash happening, however I do see Xbox struggling next generation, Sony being driven to a sink or swim level, but Nintendo's the fuzzy factor, if the industry starts working with the Wii, and developing lower budget but more innovative titles then you can see millions saved just from that move and the market is saved, otherwise you're going to see an epic level crash when we get to the question "what's next" after the 360? Better physics, better graphics? We're just killing ourself with every step we take on that path because the gameplay which has always mattered is ignored yet again.

Personally it's getting to that point. What's the difference between command and conquer 3, Company of heroes and Warcraft 3? Different motif, pretty much same game. What's the difference between Halo 2, Half-life 2, and Doom 3? Most JRPGS? Kotor 1 vs Kotor 2 vs fable vs the next western RPG. Most SRPGS based on disgaea typed engines (not even just nippon ichi titles)?

We are getting the same game over and over with slight changes and slight modifications and people are starting to realize that not every game is a completely unique and new experience, and from the sound of it we are getting pissed.

Re:All you Wii naysayers, your number is up...

[cosinezero]

"It's clear, the Wii is a phonominon, like no other we've seen in videogame history." -->Actually, I -vividly- remember family parties when the atari came out. Young and old alike gathered around to play pacman, asteroids, space invaders. The NES kind of became too complex for people to immediately pick up - too many buttons for just anyone to get into a game. The wii is definitely a return to the place that an Atari had in the joe public household; intuitive controls making for a much more accessible game.