The conferences have finished and among most gamers there is now a clear result to who came out on top. Personally my view on the whole situation isn’t so black and white, yesterday I witnessed a whole lot of sweeping statements regarding how next gen will play out based on very little actual information. With that in mind here is my insight into the events of yesterday (10/06/2013).
Microsoft is pricing their console 100 dollars higher which to most people seems like a bad choice, personally I have a theory on what is going on. Firstly lets think back to 2007 when the Playstation 3 launched in the US at 600 USD, strangely enough people still queued to buy the device which was a whole 200-300 dollars more expensive than its competitor. Why did this happen? Better hardware? Good marketing?. The reasons a lot of people went out and bought the Playstation despite its hefty price tag was in my opinion more to do with loyalty than anything else, there is no question that the Playstation 2 dominated the original Xbox in the generation before and gamers don’t generally like to jump ship so easily. Playstation most likely knew this which is what gave them the confidence to release a console at such a high price, at the end of the day they knew there were loyal gamers out there who were willing to pay a premium for their hardware. They may have even known that the xbox 360 would outsell the Playstation originally which could have pushed them to increase the price (not to mention the fact that the device was so expensive to produce). Think about those groups of people who were put off by the high price point but still chose to go out and purchase the system, those people are the loyalist of fans who were much less likely to jump ship. Everyone takes price into account but if we favour a certain console we aren’t going to be so easily put off by higher pricing. That isn’t to say that sony could have charged 1000 usd and still sold similar amounts, they may have chosen to charge what they did because the trade off between price and initial sales may have not been worth the loss in profit.
This is essentially what I believe Microsoft is doing now, think about their current situation and how gamers have reacted to the recent news. From Microsoft’s perspective it may be clear that the Playstation has won over a majority of gamers this generation and as such will do better numbers initially than the Xbox One. They could try and undercut Sony but as gamers are favouring the Playstation they may be less sensitive to price changes. Regardless they will be aware that there is an audience of dedicated Xbox gamers who are less sensitive to price and as such will mostly buy their hardware regardless of higher pricing. A bit confusing? Let me try explain it with an example.
Say both consoles release at similar times with the price points 399 and 499 on Playstation 4 and Xbox One respectively. A month onward the market share is around 70 / 30 in Sony’s favour.
- Per 100 gamers: [399 * 70 = $27930] [499 * 30 = $14970]
Now lets imagine both consoles release with price point 399 and a market share 60/40.
- Per 100 gamers: [399 * 60 = $23940] [399 * 40 = $15960]
Not lets imagine that both console release with price point 399 and 299 on Playstation and Xbox One respectively and a market share 50/50 as a result.
- Per 100 gamers: [399 * 50 = $19950] [299 * 50 = $14950]
Firstly you can see that decreasing the price initially may result in a higher profit but this is assuming a 10% share increase which may not be realistic. Then imagine the last scenario in which Microsoft predicts a 50/50 market share if they undercut Sony, they have actually made less money as a result of increased market share. So at the end of the day why would they do this, hell they may not be able to afford to produce the device at 299. Following the above logic and assuming that Microsoft thought ahead the higher price point makes a lot of sense. In fact I would go as far to say that they are doing a better job this generation than Playstation did last time round.
Rather that write a whole rip off segment on my opinions about specs here is the video from which my opinions originate.
TLDR; Specs don’t matter, specs have never resulted in higher sales, games sell consoles.
If you watched the above video talking about games next makes sense. If you watched E3 you will be aware that both Microsoft and Sony have a very good line-up for the start of this generation. EA & Ubisoft are stepping up their game and by the looks of things working on many high quality triple A titles which we will be seeing a lot of next year. Honestly If you believe that either Microsoft or Sony was clearly ahead on games you are playing favourites. Obviously there are certain games I want more than others but I can recognise that both console will for at least to some degree have strong exclusive titles backing them up. One things I did however notice is that a fair few titles have gone Xbox exclusive, that and EA are producing an exclusive title for Microsoft. Find a list of EA made titles and see how many exclusives they have made in the past 3 years, EA doesn’t make many exclusive games. I have heard a fair amount about Microsoft putting money into getting things exclusive (Suprise, surprise more bad press) but this isn’t anything new. Microsoft this generation has one clear advantage when it comes to getting exclusive titles, the incentive of effective DRM.
Digital Rights Management:
This is a hot topic at the moment but I feel a lot of people don’t fully understand what DRM means. People view the acronym DRM and automatically attach negativity to it, some of these people don’t even know what it means or stands for. Here is my definition of DRM:
“Digital Rights Management refers to technologies which attempt to control the use of digital content after sale”.
If you have bought PC games in the past 10 years you will be more aware of what exactly DRM entails, serial codes being the most obvious example. You buy a game and you put in a serial number, you now have a working version of the game. Then you give the game to a friend and get annoyed when it transpires that both of you cannot install the game and use it at the same time. People have found ways around this and overtime DRM is getting more complex to prevent them doing so, DRM wasn’t as evident on consoles until last generation for a few reasons. The most obvious of these reasons being that until now controlling second hand sales has pretty much been impossible, technology is getting to the point where people can be restricted from simply borrowing games. You may as a consumer think this is a bad thing but we don’t often think about the effects borrowing and second hand sales have on the gaming industry. When you purchase a game second hand you are giving money to someone who had nothing to do with the development or publishing of that game for that game. From the industries point of view there is little to distinguish this from piracy, despite the fact that we have always done things this way it isn’t good for game development. Imagine that a triple A title comes out and 1 person buys it, then imagine that copy is circulated to the entire games audience through trading or second hand sale, in this event a game which has been played and enjoyed by a wide audience would see a reflection of this in first hand sales. That’s the anti-piracy and anti-second hand sales argument which makes a lot of sense, we as consumers are spoilt in regards to how we attain digital entertainment (be that music, video or gaming). The pro-piracy argument directed at the games and movie industries is a selfish one, music is another story completely but I wont go into that. Anyway with that all in mind lets look at what Sony has said regarding DRM and resale.
Ok so here we have a relatively outright statement saying that Playstation 4 will allow you to buy used games. Playstation 3 allows you to buy used games but as I am sure you are all aware of there is this thing called a ‘Network Pass’ which prevents you taking a game online if you purchased it second hand. I am not saying this Network pass is a bad thing, in fact it is exactly what should exist for used games by which I mean a way to get money back to the developers from used game sales. Sony has said that they put DRM in the hands of developers and that is exactly what a network pass does, not all games require it currently but many do. We may even see some developers locking down games completely behind a pass of similar type, I personally approve of this as long as the cost is low enough. The way that my local second hand store has responded to the network pass gives me hope that this kind of system could work as games all dropped at least 5-7 quid when consumers started realising that the game was actually its used price + 10.
Microsoft’s choice to force players online periodically is a bit odd and the above statements are a direct attack on this. They don’t say anything positive for the Playstation’s DRM besides that it will work offline which to be honest we all knew already. Dont take the above slides as any indication that Sony is in some way the good guy, the above slides where in fact a blatantly direct attack on Microsoft that only serve to add to all the DRM bad press. Seriously I support the Playstation 4 but when they did this I was not amused at all, it reminds me of how apple used to market themselves. So here is what Microsoft to my knowledge have said about their DRM (These quotes can be found here and to my knowledge originate from a series of Xbox Wire posts).
“While a persistent connection is not required, Xbox One is designed to verify if system, application or game updates are needed and to see if you have acquired new games, or resold, traded in, or given your game to a friend. Games that are designed to take advantage of the cloud may require a connection”
“With Xbox One you can game offline for up to 24 hours on your primary console, or one hour if you are logged on to a separate console accessing your library. Offline gaming is not possible after these prescribed times until you re-establish a connection, but you can still watch live TV and enjoy Blu-ray and DVD movies.”
This is clear evidence that Microsoft is taking action to increase DRM on their console, their choice to keep you online is a bit strange but giving the library of games coming for next generation consoles an internet connection is pretty much required even for single player experiences. Normal gamers shouldn’t find themselves effected by this much considering how in the western world if you lose the internet it will most likely be for a relatively short amount of time. In saying that people affected by natural disasters can find themselves without a connection for much longer which is something Microsoft needs to think about, it isn’t fair that people who may lose their connection unexpectedly for a prolonged period after purchase are subject to this.
“In our role as a game publisher, Microsoft Studios will enable you to give your games to friends or trade in your Xbox One games at participating retailers. Third party publishers may opt in or out of supporting game resale and may set up business terms or transfer fees with retailers,”
“Microsoft does not receive any compensation as part of this. In addition, third party publishers can enable you to give games to friends. Loaning or renting games won’t be available at launch, but we are exploring the possibilities with our partners.”
This is essentially what I have talked about sony doing above, developers can put fees and restrictions behind their games if they so choose. One thing to note is that the above confirms Microsoft is in fact looking into a solid way to allow trading and sharing which positively effects developers, whether or not this counts for digital resale or not is unclear. Trade in at participating retailers does suggest that you wont have much trouble trading in if you are living in a developed country such as the UK or USA, it also suggests that they are trying to shift the selling of second-hand games to help profit the developers instead of the stores.
“Xbox One is designed so game publishers can enable you to give your disc-based games to your friends. There are no fees charged as part of these transfers. There are two requirements: you can only give them to people who have been on your friends list for at least 30 days and each game can only be given once.”
This quote interests me because as with the above it suggests progress towards a reasonable solution to game trading. It also gives me hope that they may also be looking into digital trading and resale. Watch the below video to gain some insight in the prospects of digital resale and digital rights management in general.
Let me start this off by saying that I buy used games and I have never owned an Xbox nor do I play many games on PC. Regardless of this I feel that its important that we as gamers put more effort into understanding the industry and getting more out of E3 than just who won or what games were cool. I am not saying in this article that you should just go out and buy an Xbox, I am also not suggesting that Sony is the bad guy in this. If you take anything away from reading this it should be that the news surrounding the current console war is not always what it seems, there is no inherently good side in this and DRM is a good thing.