Age of subsidizing is over?

Their best bet is probably a cable provider including the hardware in a set top with some sort of gaming package built into a monthly deal. I'm just having trouble figuring out why the cable company would want to do it.

 

That's hard to determine, but it's quite apparent this gen that if it were a choice between MS's XB360 with 512 MBs RAM sold at cost price, and Sony's XB360 with 2 GBs RAM sold at $100 loss, Sony's consoles visuals would look a hell of a lot better! Something as simple as a significant RAM improvement is all it'd take. Or lets say next gen is one conosle on 100GB/s RAM bus, and the other on 500GB/s, the latter is likely to have significant advantages that become apparent in games.

As other have said, will devs use it? First parties would, making it a choice the fits better with Sony's structure than MS's, although MS can always commission titles. But otherwise will it be a case of hardware for no reason, like XB versus PS2? Quite possibly. But then the point of the loss leading isn't really to provide the better experience as much to get the sales. Even if the better console doesn't have better games than the rival, when people going into the shop see the two boxes for the same price and read the numbers on one box are much bigger, that's going to help sway them. XB wouldn't have got anywhere if it wasn't a loss-leader, because it'd have been priced too high. And if it didn't trump PS2 on specs, what would it have had to compete with PS2? "Same specs, same price, far smaller library and none of your mates has one - get an XBox!" vs. "twice the memory, three times the power, the most powerful gaming platform ever created - get an XBox!"

Yeah, it's not as simple as that. Maybe there's a case to say cut back on the hardware and invest in the marketing instead. It's not an easy choice to make though, to release a knowingly 'inferior' product and hope to fight in other areas. MS at this point can focus on Kinect, but there's a good chance the rivals will match. I'm not seeing room for a Wii-type console this gen. Sony should have sorted out PSN by then. Nintendo will likely have crap online no better than PSN now, so they'll be on the back foot there, but they'll be riding their brand high. In terms of services, content, etc. it all looks like being much of a rub, and only the design, specs and marketing are going to differentiate.

(This is why one company wants to abandon the traditional format and launch a tablet based console with docking bay )

 

For all the special tests and measurements of how bad lag is, how ugly the compression is, the general buzz I've seen so far from people who've tried it is that it's cool. If it works well enough for most people then it will be a serious competitor.

 

Obviously the age of subsidizing is over. No one is willing to do it now to gain competetive edge, no one will be willing to do it 4 years from now. Performance won't be the differetiating factor (it's not now, either), combination of features (online services, accessories) and software libraries will be.

 

There's a pile of cool things with positive buzz down at the landfill. They have huge hurdles to overcome before they can make any money off of it. And one of those hurdles is infrastructure, so unless they have 100 billion dollars lying around, they are pretty much doomed to fail. When you buy a console you know that if it fails you can at least still play the games that you paid for, there's no guarantee of that with onlive. When it fails, you lose everything you bought.

 

There is also another consideration to make (odd I find myself arguing both sides pro and against loss leading hardware). If performance between the two machines in whatever arbitrary metric we choose to use ,despite say a 200 USD difference in cost to manufacture, is fairly close, we may have a repeat situation where multiplatform titles continue to shoot for platform parity while only the exclusives attempt to leverage the more power machine.

As well in this hypothetical situation I'm assuming ease of developement and thus cost of development for games is roughly similar, thus not favoring one console or the other while one has to play catch up with development tools, like this generation.

As well, things may get a bit more complicated if control mechanisms aren't roughly similar.

Regards,
SB

 

that woud be the case after release, but is that something you would be willing to gamble on as a console company? "Let's make a much cheaper system that isn't as good, because chances are developers won't actually make anything of the better rival anyway." There's very good reason to support that view in designing a system but then if you launch alongside your rival and they get all the buzz because they have all the big numbers (most powerful games machine ever made) and start pulling away in sales and developer interest, where does that leave your cheap-and-cheerful platform?

 

Multiplatform games will continue to aim for relative parity. If publishers aren't interested in it today, why would they be tomorrow? They don't have much to gain there - if anything they've got for differences in the past years it was bad press and fanboy rage.

And honestly, what's there to differentiate?
Adding more RAM is useless IMHO, it'll cause longer load times to fill up more space and noone's going to build more detailed assets for the first few years. Even today, 5 years into the current generation, only a few games do stuff like 1/2 res normal maps for the console versions compared to the PC.
CPU and GPU power? There's a sweet spot with transistor counts when you're planning 6 years down the road with multiple die shrinks and expected yields. Not much room to push more performance out of the similar die sizes. And once again, even if there's some advantage, it's either going to be completely unutilized, or most customers won't notice it anyway.

Wifi, optical/flash storage and other stuff are going to be pretty close as well. BR is a safe bet for PS4 and I don't see Microsoft going any other way either, digital distribution will be a more significant option but you need some kind of physical media and there really aren't better alternatives.

The hardware is going to be pretty close and everyone's going to play safe with it. Industrial espionage is advanced enough to have a good idea about the competition and the risks and costs of a significant advantage are just not worth it.
I'll repeat: investing in some other feature, either online or I/O or such, is offering far better returns for the money then more memory or faster processors.

 

I am also leaning towards the notion that having more hardware will not necessarily translate to much better games and stuff, unfortunately. I don't think they will go the Wii direction either, launching 1.2 version of their current consoles but they will have quite realistic specs i believe and not shoot for the stars.

For one, it is getting harder and harder to differentiate the generations from each other let alone the consoles within the generation. A bit more RAM and few more transistors will most likely just yield more costs to no obvious benefit to most gamers. Hell, we need to count pixels now to see whether games are subHD or whatever, what is next, counting subpixel polygons?

The other thing is that shrinking the processors is not as easy as it once was, there are more and more problems meaning costs with the whole process now. The once so certain price cuts are no longer as certain and as fast, and when they do happen then maybe it is time to lower the price instead of taking the profit, which just makes it even more unlikely that they will come with an overpriced console and sell at a loss hopping for a fast hardware price reduction...

 

The software side of things has become extremely important to consumers obviously with services like Live being so important. Hardware is still significant, but I don't see why console manufacturers have to follow the loss leader concept anymore, especially when consumers will go for the cheaper console probably, especially if it's software is superior. I don't want Wii cheap, because that really put a dent in what developers could do for that type of control mechanism and in terms of what mainstream consumers wanted from a gaming system and gave Nintendo a bad rap in the eyes of hardcore gamers. $300 needs to be the absolute highest MS and Sony should be selling a console and in one SKU. There is much you can do in that budget, especially in 2 to 3 years. I think $200 is entirely reasonable as well.

MS really isn't selling the console, it's selling Xbox Live.

 

I think you're overestimating how marketable this is today. We're a long way from the bit wars.

 

$200 isn't reasonable at all. It's not going to happen. The current gen hasn't really even reached that price yet.

 

There's definitely going to be a wide selection of SKUs.

HDDs are far too expensive to be included at the $300 price point, especially at the start, and can be easily replaced by 8-16GB flash memory for game saves and even temp game installs. Home never really took off for Sony, so there's no point in pushing HDDs for the PS4 either, when they'll probably need competitive pricing with the Xbox.

I expect the motion controls to remain an extra for the high-end SKUs as well, at least it's unlikely that they could push the price of either Move or Kinect to the $50 level that soon. But if it takes off in the next two years then maybe they'll have to subsidize this cost (to compete with the Wii2 and maybe each other) - which would become one more argument against selling the main system at a loss.

Oh and these SKUs are typically 5% cheaper then buying the extra components separately. At least that's how it is with the new slim Xbox Arcade + hard drive makes all kinds of sense too.

 

The reason why they are releasing the motion controllers now is so they can pay off the R+D and increase the volume of production for the new motion technologies in time for the next generation. I would place a good figure of money that motion will be standard amongst all 3 consoles and things like HDD will be optional extras.

For instance with Kinect, I believe not only will Kinect 2.0 utilise a significantly improved controller, the physical controller will be adjusted to be useable with Kinect as well. Most likely all console companies will also employ a split physical controller.

 

I'm not following the various casual/facebook style games, but from what I see with various social network sites, the market seems to be close to saturated. They certainly get less exposure on facebook, I didn't have to block any new ones for many months now and don't really get any messages from the existing ones either. That's good because it was getting really annoying for a while But websites are still full of ads - all the farmville clones still pop up on youtube and any gaming site I visit so there must be some demand for them.

IMHO, those people who are willing to play such games are already caught up in one of them, which means the games have to take away market share from each other to expand their user base. That's still a very big business and worth investing into, but I get the impression that it might even turn into a shrinking market soon.
Let's face it, these games are very simple and far less satisfying in the longer term, eventually the casuals will want a different experience and will move on to the next big thing. I consider this stuff similar to tamagochis and the protable Tetris games - explosive uptake but a relatively short life and a complete dead end in the long term. Also, Guitar Hero is out, fitness games will get forgotten too - even WoW has to end at one point.

So it is a good idea to make sure that the hardware can accomodate microtransaction-based MMOs and similar games too - but it's even better to aim for a wide general flexibility. People will get bored of these type of games as well and something completely new will rise that we can't even imagine at this point.
Kinect is actually looking like an interesting development for this, having audio/video playback and recording, background storage and internet acces through the Xbox, so basically almost every possible component that anything new could utilize. The wiimote/move controllers are far more limited in their possible uses and less adaptable in the 5-10 year timescale. Then again this also means Nintendo and Sony could always make extra income with every new wave of casual games by selling the appropriate accessories with great profit margins...

 

One thing to consider is the mass market price they want to achieve for the product. It might be more relevant than the launch price. I'm not sure Sony and MS are happy with the actual price of their systems. They're doing money but the devices are still "pretty" expansive they can't address (five years after launch for the 360) a part of the intended market without cutting their manging or loosing money.
5 years after launch they may want to sell the pro 360 model @150€/$. I also think that price going down more aggressively may have helped to maintain the "launch momemtum" (not that they are doing bad but still).

So how much they win or loose at launch is "less important" than the mass market price they want to achieve and how fast they want to achieve it.

 

I think it's shifted, because the market has. The core market still is influenced I'm sure, in the same way people look at PCs and CE devices with "more=better" attitudes, faiing to recognise how they use of the hardware and how non-numerical features like build quality and the wider range of LCD response times rather than cherry-picked best cases advertised change the offering resulting in devices with lower numbers being better choices.

Having the higher specs will give one marketing advantage over not. Whether that's enough to justify the cost, I don't know, but I'd say it's non-obvious and at the moment I dont expect non-subsidized hardware as a given, especially with the option of long-term service based revenue (like Live! subscriptions) offering a nice way to offset the costs of hardware. If MS gets 50% gold subscriptions, worth some $200+ over the life of each console, that's $100 subsidy they could afford up front to get an edge.