POST OF THE DAY
Gorilla Game
The Video Game Game

Format for Printing

Format for printing

Request Reprints

Reuse/Reprint

By swapusa
May 23, 2001

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

Having been in the video game retail industry for seven years now, I will jump in and give my take on the video game contenders.

The video game business is a boom or bust business. It is cyclical, depending on the life of a platform. Every four or five years an upgrade cycle starts and sales slow down in anticipation of the new platforms. Video game business is not hardware driven, it is software driven. You can design and sell the most powerful game system on the planet and fail if the good games are not there to support it.

That was the case with the 3DO system that stormed to the video game scene back in 1995. Trip Hawkins who was the ex-CEO of Electronic Arts started 3DO in what promised to be the best-ever gaming system. And no doubt, it was the best. But it failed miserably because the major game developers did not support it. 3DO is still as powerful as the PlayStation1 system, but the industry as a whole killed it in its infancy.

One thing to keep in mind is that up to now, all successful video game businesses have been Japanese. The American companies have tried several times and they have all failed. You need the backing of the Japanese game developers to succeed and that is not easy to do. Maybe the Japanese companies want to keep the game industry winners in their own country and if that's what they want to do, they can do it. Look at the American game companies of the past who have failed.

There was Atari, who started it all. They were very successful in the beginning, but then they made the mistake of making their system an open platform, allowing anyone to make games at any price point. The result was that so many games were release in so little time that prices crashed. Atari did not have any quality control on the games and most games were junk. Atari lost total control of the market and games became so cheap that they were not even worth selling. So Atari ended up closing shop and burying millions of unsold video games and systems in the New Mexico desert, as the story goes.

Commodore and Amiga computer tried it out, but the didn't last long. The open platform killed them, too. No control over the market.

Atari gave it another try in 1995 with their so-called 64-bit Atari Jaguar. Learning from their previous mistakes, they kept the new machine a closed platform, controlling the games and quality, but this time they couldn't get any support from any third party game maker. The Japanese companies just refused to support an American company, especially when they were relying on Nintendo and Sega for their livelihood.

3DO came in and died quickly as explained above. Ask any true gamer today and they will still tell you that 3DO could have made it big had the Japanese game companies supported it.

Apple tried it around 1996 or 1997, and they even teamed up with the Japanese game and toy company Bandai, but they wanted to make everything out of their game machine. They wanted it to be a game machine, a word processor, a computer, and everything else. Again, the game developers did not support it and it never left the drawing board.

Now, Microsoft is giving it a go. Frankly, I don't know what to make of their system. They have been able to at least get the initial support of the third party developers, including Japanese companies. Bill Gates made several trips to Japan to make sure he could count on the Japanese. But I think they are making the mistake that Apple and Commodore made. They are designing a machine to be everything to everybody. It is a game machine. It is a DVD player. It is and Internet terminal. It is running on Windows, so they probably want to also make it a family word processor. That strategy has failure written all over it.

The other problem they have run into is that too many developers are making too many games for it at the same time, so there goes game quality down the drain. Microsoft actually had to ask the 3rd party developers to slow down and not plan on releasing too many games at the same time. With too many games on the market, not only quality goes down, but prices crash also, and no game company wants to see that.

Sony has definitely made it big in the game industry. It has the highest number of installed bases with its PlayStation and PlayStation2 systems. But it is starting to lose its grip on the game quality. Sony used to have some of the best sports games on PlayStation that could compete head to head with EA Sports games, but look at them now. Sony Sports games were turned over to a company called 989 Sports and now they are all junk. 989 Sports games just do not sell when compared to EA. EA is the undisputed king of the Sports games and they are doing very well in other genres.

Nintendo has the most control over its platform. It gives out fewer games than any body else, but their games sell. Nintendo's Game Boy is the all-time best selling machine and they are coming up with the next one, Game Boy Advance, next month. Nintendo is a master marketer to kids. They know how to milk the same cow 100 times. Just look at how many times Nintendo has made money selling games based on the Mario, Zelda and Donkey Kong characters. And every time they release a new one, parents and kids alike rush to buy them. Nintendo may not have the largest market share of the game industry, but they are the ones making the most money. Their games are more expensive, but due to their exclusivity, they sell big. Nintendo is the smartest of all the game industry contenders. Their next machine, Game Cube, is not nearly as powerful as PlayStation2 or the Xbox, but they are putting the emphasis on where the money is. Their emphasis is on the games. And who can argue with Nintendo.

And Nokia! I don't think anyone is going to take Nokia seriously. Nokia is a non-issue. As far as the game industry is concerned, Nokia does not even exist.

So, if I were to place a bet on Sony, Nintendo, or Microsoft, my money is on Nintendo. Sony can easily screw it up if they lose quality control. Microsoft is untried and unproven in the game business, plus the Japanese support is a big question.

But I don't think the game business can become a Gorilla Game. It is too dependent on third party game makers and too cyclical. What's hot today can be cold tomorrow. The only thing certain is that kids will always be kids and that is where Nintendo is strongest.

cheers,

Mehran,

SwapUSA