Curmudgeon Gamer
Curmudgeoning all games equally.
14 May 2007
GameDaily: How Microsoft can win (if by win you mean lose)
I think you can rightly accuse me of being an occasional ivory tower pundit, but even I can see that this tripe from GameDaily is, well, tripe. Apparently Microsoft can take five steps to a definitive lead over Sony and Nintendo, and those steps can be summed up as "Lose money on everything."

The steps are:
  1. Slash the price (i.e. lose money)
  2. Bundle Halo 3 for Holiday '07 (i.e. lose money)
  3. Make Xbox Live free (i.e. lose money)
  4. Acquire more studios, pay for exclusives (i.e. gamble)
  5. Enter the kiddie game market (i.e. go up against Nintendo on its own turf)
Seriously? Look, Microsoft haven't been at the top of their game lately, but why in the name of all that's good and wholesome would they give up the very advantages they have over the competition, the advantages which will make them huge vats of money over the next few years? It just boggles the mind.

They are not going to give up on making a profit -- I just don't think the company or shareholders are prepared to see another year or two of massive losses in the Xbox venture. They're not going to discount the one game that every owner -- or prospective owner -- will happily pay $60+ for this holiday season. They're not going to kill the Xbox Live goose which keeps laying those golden eggs. So far Microsoft hasn't shown the best judgment when it comes to buying studios (although Bungie turned out well), and the age of buying exclusive games has passed for now. More likely is that Microsoft should pay for exclusive bonuses for their version of a cross-platform game -- and that should be a lot cheaper than buying the whole game outright.

I understand the usual argument is that Microsoft can afford to lose money hand over fist, but does anyone really think that this reckless strategy is sound? Other than GameDaily, of course.

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--Matt Matthews at 21:27
Comment [ 9 ]

Comments on this post:

It's called turning the knife.

Those are outrageous ideas, but their main competition is making so many mistakes, it wouldn't be such a bad idea to try something drastic to really make them suffer.

Xbox Live for free is too good to be true. MS has shown how foolish console buyers can be and has turned something that should be free into a way to make money.

Bundling Halo 3 could see a lot of Xbox360 purchases at the expense of PS3 sales this holiday season. And considering a lot of people already own the Xbox360, Halo 3 could still do very well in game sales too.

By Anonymous Mattio, at 15 May, 2007 05:02  

But Mattio, they're cutting themselves mortally by turning the same knife. The article is urging an already bleeding Microsoft to bleed faster, to weaken itself precisely when it should gather strength.

Worse it's suggesting steps that can't be undone after they're done. You can start out charging for Xbox Live and then stop charging, but good luck ever going back the other way. They want that continuous revenue stream that Blizzard enjoys and it isn't clear that they want to try to make up their monthly network bandwidth costs through sales of horse armor and Gear of War maps alone...

By Blogger jvm, at 15 May, 2007 13:15  

The only conclusion one can draw is that the Gamedaily staff either have no familiarity at all with finance, or they're on drugs.

Microsoft already has a product on store shelves which to the average end user provides games that are essentially identical for cross-platform titles with a system that is priced between $120 and $300 more than Microsoft's system.

It has a larger library, due to a one year head start, including a wide variety of de facto exclusive (to console at least) games or actual exclusive games. To date, it is selling at a rate exceeding the original Xbox (as of March NPDs, prior to that, Xbox was selling faster than 360), and Microsoft has not yet brought out most of the franchises anticipated to be top sellers (Forza, Halo, Fable, Banjo Kazooie, all of which should sell multiple millions of copies). These games will be dropping over the next year to 18 months.

They have to date released only a couple of RPGs, but they have three major Japanese RPGs slated for this calendar year alone (Eternal Sonata, Blue Dragon, Lost Odyssey), and Square/Enix has just announced a new JRPG IP in the Lost Odyssey vein (and using the same engine, what a coincidence) which will be on 360 as well as PS3.

Microsoft is already turning the knife, and they're doing it without losing money at an increasing rate.

I've advocated packing in Halo3 this Christmas, but that's because I strongly believe that it will sell upwards of three million copies within about a week of release. Within the first two months, they could be on five million. As long as it ships in September, they could then unleash the hounds with a Halo special edition 360 for Thanksgiving (at a markup of course).

This is a platform that has not yet unleashed the hounds. It's going to be staggering to see what happens this fall, because you're going to see a juggernaut rolling over what appears to be an unarmed opponent (MGS4 slipped to 2008, and is anyone expecting FF13 this year in the US?).

By Blogger Jeremy, at 15 May, 2007 13:59  

Jeremy agreeing with me. Oh my.

Don't cross the streams!

By Blogger jvm, at 15 May, 2007 16:05  

Well, the Xobx 360 has QC issues, their "elite" does nothing but add HDMI and a black shell, and the system is just like its parent system... churning out more FPSes to please the frat and moron crowd. Sony's got game lag, and Nintendo can't keep their box on the shelf... yep... the 360's a juggernaut all right.

Sony's made some mistakes (not nearly as many as the press would like you to believe) but in spite of all those screw-ups, Microsoft has yet to capitalize on them. They have not even picked up a knife, much less "turned" it. They're sitting on their very shaky laurels, losing mindshare with high failure rates (when non-techies know the phrase "red ring of death", you know it's prevalent), and they're allowing Sony to regroup. The exclusives aren't hurting as much as the fanboys would like you to believe either...

Sony _and_ Microsoft are being schooled by Nintendo this generation, and no one seems to notice... well, except for the big stacks of money on Nintendo's doorstep. A less-hyper console is digging into the sales of the others (not everyone bloody well buys 2 or 3 consoles... and the Wii is becoming the "1st" console for many people... not the 2nd or 3rd like the gaming press seems to believe...)

My guess is, there is not going to be a clear winner this generation.... or as these things get more and more costly, there isn't going to be a clear winner ever again... with the PS2 still outselling both the PS3 and XBox360 this christmas and having a list of non-shovelware coming this year...

And now that Microsoft has a $479 box in the stores... the average consumer's not going to see the price advantage all that much (irrational, to be sure, the PS3 is still more expensive)...

Halo 3 better be able to solve all the world's problems when it's released, because if it's just another FPS with pretty pictures and a few gimmicky add-ons, there's gonna be hell to pay. (And I don't mean the "Halo Faithful"... you could release Doom and call it "Halo 2.5" and some morons would praise it as the second coming... literally... heh.)

I'm not so sure Microsoft is riding as big a wave as they think they are... and well... it's a good thing... simply because it spurs competition and prevents the "Windows-ization" of gaming consoles.

By Blogger JFTaylor, at 15 May, 2007 22:47  

And now that Microsoft has a $479 box in the stores... the average consumer's not going to see the price advantage all that much (irrational, to be sure, the PS3 is still more expensive)...

That's a novel point. I wonder if consoles play out that way.

Wal-Mart's "price point" strategy would suggest that the highest priced console isn't nearly as important to consumers as the lowest, however. The price point deal says that if you get the consumer to believe that you've got the lowest prices in town -- thanks to the cheap-o item advertised with a giant price on the end of the aisle -- they'll walk in with that impression, be impressed with the additional selection, and pay a bit more than they have to for a higher end model.

This would explain why the stripped-down, hard driveless models make it out, which I've always wondered about. You *can* buy things for $100+ less, but nobody's going to. Still, that price is in your head (and the full version seem better buys).

So I'm going to guess simply adding a high end give those with cash to spend an option to look k3wler, a la black iBooks. It's a win-win for Microsoft.

By Blogger rufbo, at 16 May, 2007 09:31  

Making a system with a working hard drive would be a good start.

A friend has just sent back his second defective *replacement* drive. He's now writing down serial numbers, wondering if Microsoft is simply sending out replacement drives that were previously returned as defective.

Actual customer service wouldn't hurt their image either.

When the first replacement drive was also defective out of the box, Microsoft told him to test it himself in a known working machine. He went to an EB to test both his machine and the drive separately (drive failed, machine was fine with the store's drive,) and the clerk said several customers had been coming in for similar reasons on Microsoft's orders.

When he had a networking problem, he got the solution (which was on the Microsoft side) from Apple customer service instead. When the second replacement drive failed out of the box, customer service's "fix" for the machine not acknowledge the existance of the drive was to reformat it, which requires the machine to first acknowledge the existance of the drive.

Microsoft had their biggest chance this generation, and they've been blowing it almost as much as Sony.

And while everyone points to Nintendo as the success story, I still question the long term success. Right now, the Wii is looking like a healthier Gamecube when it comes to support, but that doesn't necessarily mean it will be a healthy console. A lot of titles just aren't going to see release on the Wii. Titles that will keep interest in the 360 and the PS3, which will eventually get over all those Sony bungles and probably recover its market. And then where will the Wii support be? And what will it be? (I've already heard people questioning where the Wii support already is...)

By Anonymous Baines, at 16 May, 2007 15:10  

Wii is still well behind PS2's sales curve actually.

It's already selling for $250...I'm sure it will do well for most of this year, but the casual market is IMHO going to burn out pretty fast on this thing, because you CAN'T PLAY IT ON THE SUBWAY.

When I look up on the train in the morning, I see half a dozen people in the same car with DS Lites. I see one guy every few days with a PSP. That audience probably isn't buying a Wii anytime soon.

I know I'm not. In both the last two console cycles I've felt like I bought a console that I very rarely played from Nintendo...

By Blogger Jeremy, at 16 May, 2007 19:13  

I'm not altogether sold on the Wii yet myself (mainly because Nintendo did the region-coding _AGAIN_ on their big console... yet they can make region-free portable stuff?)

I'm more of a PSP original DS kind of mobile player... I've really gotten used to the diablo-esque dungeon crawlers for the PSP (like the Untold Legends and Dungeon Siege games)...

As for the "black premium price" idea... that's not a bad analogy.. paying "extra" for a black Macbook (though the black iPod isn't more expensive... go figure) might fit well with MS because of the word "Elite" on the box. Somehow people are going to feel there's something more than just HDMI and a black shell... "and they just know it's _elite_!"

I think the noisy drive/failure rate is going to get worse before it gets better... and for those of us not among the great unwashed, it's going to increasingly look like the console was rushed to beat Sony out of the gates. The general public will just see/hear from others that they're increasingly having to send a $400 investment (nothing to sneeze at even if you're "rich") back to Microsoft... sometimes more than once.

When the 65nm version comes out, here's to hoping the underlying problems are addressed with the failure rates... and since they won't be seen until the fall... here's to hoping MS isn't too late. (I'm not rooting for MS's failure... I own a 360 that so far hasn't given me any trouble, other than a few lockups in dashboard...)

I want competition... heavy, heated, brutal competition. That makes for great games and cheaper prices in the long run... having a clear juggernaut means that the "winner" will be certain to recoup costs of marketing and development from the pockets of the gamers... having the possibility of losing that gamer to another platform makes the behemoths think twice before screwing us over.

By Blogger JFTaylor, at 17 May, 2007 01:30  

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