{"id":4800,"date":"2013-02-21T12:13:05","date_gmt":"2013-02-21T20:13:05","guid":{"rendered":"http:\/\/www.dfcint.com\/dossier\/?post_type=features&p=4800"},"modified":"2018-06-29T18:05:57","modified_gmt":"2018-06-29T18:05:57","slug":"can-sony-nintendo-recover","status":"publish","type":"post","link":"https:\/\/www.dfcint.com\/dossier\/can-sony-nintendo-recover\/","title":{"rendered":"Can Sony And Nintendo Recover?"},"content":{"rendered":"
\"2012

2012 was a tough year for Nintendo and Sony.<\/p><\/div>\n

FEB. 21, 2013 \u2022\u00a0The year 2012 clearly showed that even in the age of easy digital distribution consumers love their physical products.\u00a0 Among other things, this has included expensive hardware designed mainly to play digital content.\u00a0 Having the coolest hardware device to access the Internet has suddenly become an important status symbol in society.\u00a0 Unfortunately for the game industry, traditional game hardware manufacturers were not able to ride that trend in 2012.\u00a0 The past year saw three very lackluster hardware launches that should have the core game industry worried: 1) the winter 2012 launch of the Sony PlayStation Vita; 2) the August 2012 launch of the Nintendo 3DS XL and 3) last fall’s launch of the Nintendo Wii U. \u00a0\u00a0In 2013, the main question is what does these poor showings in 2012 mean for future new systems such as the PlayStation 4, unveiled on February 20th<\/a>.<\/p>\n

A new game system is supposed to be a product that core adopters flock to and the mass market craves.\u00a0 Unfortunately in a world increasingly controlled by new market entrants, Sony and Nintendo have come up short with their recent offerings.\u00a0 The new competition for Nintendo and Sony is now not just Microsoft but four big new kids looking to capture consumer\u2019s hearts: Amazon, Apple, Google and Samsung.\u00a0 These companies are all now making hardware that is becoming the new face of cool.\u00a0 Meanwhile, Nintendo and Sony are struggling to keep up with this new order.\u00a0 In the case of Sony, financial and reorganization issues with the parent organization have really hurt recent efforts.\u00a0 With Nintendo it is a little more baffling as they have just seemed to ignore all that made them successful in the past\u00a0with some questionable business decisions and a general projection of slothfulness.<\/p>\n

\"No

No game console will ever again ride as high as the PS2 did during 2004 in the hands of former SCE chief Ken Kutaragi.<\/p><\/div>\n

The best analogy for the new order is what happened with the Big 3 broadcast networks with the emergence of cable television.\u00a0 Overall revenue and viewership went up but the broadcast networks lost market share and received much smaller slice of the overall revenue pie.\u00a0 However, the broadcast networks did not go away, they were just forced to adapt.<\/p>\n

The good news for Nintendo and Sony is that they specialize in exciting consumer hardware at a time when consumers seem to clamor for the latest cool gadget. \u00a0In addition they also have a leg up on much of the competition when reaching consumers in front of a big screen television set in the living room.\u00a0 Even in an age of screens everywhere, consumer still love their television sets and this is where game console manufacturers have a key advantage.\u00a0 The issue is they can no longer rely on the business model of selling expensive physical media to drive profits.<\/p>\n

Consumers are finding all kinds of ways to access content but all content requires a hardware device and visual content requires a screen.\u00a0 These screens currently take three basic forms, a television set, a PC monitor or portable devices with an attached screen.\u00a0 In the past, hardware needed a way to play physical media but larger storage space and the ability to connect to the Internet means that devices like smartphones and tablets can do away with physical software.\u00a0 However, the ability to both connect to the Internet AND be able to play physical media is still a big advantage.\u00a0 This is an area where game hardware manufacturers should be in a position to thrive in the new order.<\/p>\n

By far the cheapest way of getting connected to access premium interactive content is via a console game system that attaches to a television set.\u00a0 These devices not only play games but they stream all kinds of video content and of course can act as a centerpiece of a home audio system.\u00a0\u00a0 A few years ago the thinking was that hardware used to play content was becoming a commodity.\u00a0 The major exception to that was video game console systems.\u00a0 The Microsoft Xbox 360, Nintendo Wii and PlayStation 3 were all proprietary hardware systems consumers craved.\u00a0 Now we have a new order where we are seeing all kinds of hardware consumers crave, most notably Apple products.\u00a0 This should be a time where game hardware manufacturers thrive, which is why the launches of 2012 were such a disappointment.<\/p>\n

\"MarketIn the DFC Intelligence series of reports on the battle for the connected living room it is discussed how Microsoft and Sony did a great job at making the Xbox 360 and PlayStation 3 attractive multipurpose devices that do much more than just play games.\u00a0 The one area where they were weak was in mobile devices and specifically bringing mobile devices into the living room.\u00a0 The good news is that the Apple\u2019s and Samsung\u2019s of the world have not yet done a great deal to connect mobile devices to the television set and they are far behind on living room connectivity in general.\u00a0 Of course, on the other hand, theoretically a simple USB or Bluetooth connection is all that is needed to connect portable devices to a television.<\/p>\n

The issue Microsoft and Sony now face is, although their game systems enjoy a solid installed base, the core consumers are begging for new hardware.\u00a0 This means both companies must find a solid second act.\u00a0 In this second act they must not only start from scratch but they must compete not only against each other and Nintendo but also the other major players of the new order including Amazon, Apple, Google and Samsung.<\/p>\n

With their new console systems Sony and Microsoft need to make sure they can compete beyond games with products that appeal to the entire household.\u00a0 Most notably they need to make sure they take on the hottest player Apple.\u00a0 Launching a new console system just because video game sales are slow no longer makes sense.\u00a0 Nintendo got out early with the Wii U but they proved ill-equipped to compete in the new order.\u00a0\u00a0 Meanwhile, in 2012 both Sony and Nintendo were not prepared to compete in a portable market that changed significantly in the past two years.\u00a0 When evaluating the potential for new game hardware it is essential to understand that the rules have changed and there is an entire new level of competition that needs to be addressed.<\/p>\n

\"SONYFor Sony the launch of the PlayStation 4 will be a much more crucial event.\u00a0 It could also give the Vita a second chance on life if Sony can follow through on its promises of providing a complete ecosystem for hardware, software and services.\u00a0 One of the most notable first impressions of the PlayStation 4 is that it embraces a standard x86 PC architecture \u2013 a beefy 8-core processor from AMD that is nothing to be ashamed off in the power department, but a PC architecture nonetheless.\u00a0 This is a big change for Sony, which has always tried to push its own standards, from Betamax, Blu-ray, UMD to the proprietary Cell architecture that powered the PlayStation 3. Clearly times have changed and Sony no longer has the clout to try and push its own standards. However, having a more open and standardized environment could eventually work to Sony\u2019s advantage in the cost department, and in the fewer headaches department of developers. The boffins in Redmond, Wash. should also be enjoying themselves, as the architecture philosophy behind the PS4 closely mirrors that of the original Xbox.<\/p>\n

Clearly the 2012 acquisition of cloud service provider Gaikai will be used to provide many streaming services where users don\u2019t actually need a client copy of the game.\u00a0 But really this is not a big game changer. Cloud gaming will first be used for game demos and possibly for playing older PlayStation games.\u00a0 It is definitely not anything that would drive consumers to flock to the PlayStation 4.<\/p>\n

\"Nintendo

Nintendo needs to rekindle the magic with consumers as when president Satoru Iwata introduced the Revolution (Wii) back in 2005.<\/p><\/div>\n

To capture the consumer imagination and bring back the PlayStation brand to its former luster, Sony needs to show consumers why its new system is both a cutting edge game machine and a well-rounded multipurpose device for the entire family.\u00a0 This is in large part a marketing challenge that Nintendo failed with the Wii U.\u00a0 Now Nintendo\u2019s struggles give Sony a good opportunity.\u00a0 However, Sony faces a major challenge as the rules have changed and they are facing some powerful competitors.\u00a0 The unveiling of the PlayStation 4 was mostly a tease but indicated that Sony is not yet clear of what direction to take.\u00a0 That must change and they need to have a very clear message when they launch, whether in 2013 or beyond.<\/p>\n

Our next article in this series will look at the players in the new order and how they stack up.\u00a0 This is followed by an analysis of why Nintendo did so poorly in 2012 and how future game platform launches can learn from Nintendo\u2019s mistakes.\u00a0 Specifically there is the question of how game companies can directly challenge Apple.\u00a0 Apple is the powerhouse of the new order but they are actually very vulnerable.\u00a0 For the game industry to thrive there needs to be companies more willing to directly challenge Apple.\u00a0 It didn\u2019t happen in 2012 but hopefully important lessons were learned.<\/p>\n","protected":false},"excerpt":{"rendered":"

FEB. 21, 2013 \u2022\u00a0The year 2012 clearly showed that even in the age of easy digital distribution consumers love their physical products.\u00a0 Among other things, this has included expensive hardware designed mainly to play digital content.\u00a0 Having the coolest hardware device to access the Internet has suddenly become an important status symbol in society.\u00a0 Unfortunately […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[49,168,56,74],"tags":[389,6,450,31],"_links":{"self":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts\/4800"}],"collection":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/comments?post=4800"}],"version-history":[{"count":15,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts\/4800\/revisions"}],"predecessor-version":[{"id":16336,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/posts\/4800\/revisions\/16336"}],"wp:attachment":[{"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/media?parent=4800"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/categories?post=4800"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dfcint.com\/dossier\/wp-json\/wp\/v2\/tags?post=4800"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}