Virtually Physical

Hi,

With the advent of downloadable gaming content (via the PlayStation Network/PlayStation Store, the Xbox Live/Arcade/Marketplace offering, and Nintendo’s WiiWare [née Wii Software]/Virtual Console model) at relatively inexpensive cost are we now seeing the beginning of the end of physical disc-based products?

Unless a video games console was specifically purchased to play just one title unavailable on any other dedicated games machine (for example, a PS3 for “Gran Turismo 5”, a Wii for “Wii Fit”, or an Xbox 360 for “Halo 3”), then it is fair to assume that over the lifespan of the console the amount spent on software titles is far in excess of the original purchase price of the hardware. Even when the hardware fails beyond repair outside of a warranty period, it is the selection (and/or quantity) of game titles already owned that enforce the decision to purchase a replacement machine so that the gaming can continue. In some cases, even when the console is covered by a replacement warranty, but the period to gain a refurbished machine is too long, then a new machine is purchased as soon as practically possible (resulting in many “pre-owned” examples ending up on eBay when the replacements finally arrive).

The existence of custom firmware changes and/or bespoke “Flash Cards” aside, the amount spent on handheld gaming machines (costing around £100) is certainly much lower than the “running costs” of buying a few games (cartridges, or Universal Media Discs, for example) that can be upwards of £25 each for newly released titles, so this after-sales market is really where profits can be made (to offset losses on every console made until a certain quantity have been sold).

Reports this week have relayed that Sony is losing 130 or 260 (US) dollars (depending which of the reports you believe) on every PS3 console sold. This is not new information, though. Sony have publicly announced that they hope to finally turn a profit on the PS3 hardware this coming August (2008), and figures on the actual build costs of each component in the console have always been greater than the combined selling price (so far). Whether this is actually true, or not, and whether this may just be a clever marketing strategy to make the public believe they are buying the latest technology for a considerable discount and getting an increased value for their money, I will leave up to you. I would not be surprised, however, if immediately after the PS3 “eventually makes a profit” then the announcement of a new, slimmer, lighter, PS3 console will be made public (another one of the industry’s not very well kept secrets, but it is not difficult to predict given the past history of the PlayStation brand).

This aside, could the profits reaped from game sales be greater by not seeking a Recommended Retail Price of £35-£50 for disc-based titles that sell very little beyond the first week? It has also been reported recently that if a title does not sell in large enough quantities within the first seven days of release then it is considered a “failure”. This may well go some way to explain why new titles always seem to be “out of stock” the week during, or immediately after, release as the store owners are waiting to see how (quickly) the first allocation into stock sell before they go to the expense of ordering more quantities as a regular influx of new titles means that there is always something to fill the shelves and nobody wishes to be left with 3,000 copies of “Asterix at the Olympic Games”, for example.

With the budgets spent on some titles reaching, if not exceeding that of Hollywood movie “blockbusters” it is becoming increasingly important for physical product sale quantities to reach a high turnover as quickly as possible to settle any debts incurred during the development and to ensure that the maximum number of sales are gained before the next “must have” title is release a week later. Those titles that have not sold as well as expected are discounted in price almost immediately, and certainly within a three to six month period the same title can be purchased at a large reduction in price, primarily via online mail order web sites, but also within in-store promotions at dedicated game-related retailers.

But do games have to cost so much to produce? How much is spent on marketing and advertising? Is this wasted expense? Does word of mouth sell a game alone? Do demonstration video trailers released during development whet the appetites of undecided parties enough that a TV campaign, billboard banners, and/or printed media advertisements are not needed? Does anybody ever read the provided manual, or is a button configuration the only information read before the game is launched?

Does a “Limited Collector’s Edition” have to be produced to attract higher sales, or would a game sell as much if it came in a clear plastic sleeve at a reduced cost? In the latter case, I was one of the many who bought the “Assassin’s Creed” Special Edition release with a figurine of the lead character, Altair. It did not add to my enjoyment of the game, in fact it added nothing to my gaming experience. I was actually very disappointed with the game content overall. Why can our hero fall several stories onto concrete, but as soon as he gets his feet wet in 2 inches of water he dies? But I digress. Yes, you can argue that the co-release of a Collector’s Edition is only there to make more profit, instead of catering for the needs of the “collector”, and I suspect you would probably be correct in that thought. Extra in-game content such as a larger roster of playable characters, vehicles, weapons, and so on, or additional production video notes and images supplied in the form of supplemental discs are “collectables” if only available in a truly limited supply (and maybe even deleted from stock catalogues on the day of release). But when these so-called “Special” items are then made available weeks later as downloadable content, or unlocked by the player’s ability to use an Internet search engine, then it diminishes the extra value gained in the higher priced physical product.

If a typical consumer (with, let us assume, limited income) is looking to purchase a console (say, £280 for a PS3, £190 for an Xbox 360, or £180 for a Wii), and they review the prices of the game titles (that are priced comparably across the selection of “next generation” consoles), then it is understandable why the cheapest machine is chosen irrespective of any additional features any other may offer (such as the ability to play Blu-ray movies, or the support of the large online communities, or even the established back-catalogue of family-oriented games).

But do games have to be as expensive as they are? Simple economics says that when the price goes down, and with other factors remaining equal, the demand should go up. Thus, selling 100 units at £50 each may look attractive on paper, but selling 1000 units at £30 each is a much better business model. Of course this thinking is completely irrelevant when a high profile title such as “Grand Theft Auto IV” is released that receives so much hype in the lead-up that people will buy it at almost any cost, and will even queue in the lead-up to midnight to be the “first” to own it too. They then moan when it does not deliver the experience they were hoping for, especially with respect to the current issues with online multi-player games on the PS3 console. So, granted, offering a title of this nature at a reduced selling price in the first week would be financial suicide. In fact, the price will probably not drop until sales reach such a low that it is assumed that anybody who would wish to purchase (at the “any cost” price) has now done so, and the Christmas market needs to be targeted instead.

There are very few titles that attract this media attention (although the imminent release of “Metal Gear Solid 4: Guns of the Patriots” is another exception to this theory) as there are many new titles released on a regular basis that do not reach the same level of expectations but can be just as enjoyable and just as anticipated by the gaming public.

Personally I spend more time playing downloadable content on my PS3 console (“Tekken 5: Dark Resurrection Online”, “PAIN”, and “PixelJunk Monsters”) than I do on any other title. This could be because of convenience in that these games are instantly available when I switch the console on as they are stored on the integral hard drive as reaching for a different game stored in a box & having to get up to put the disc into the Blu-ray drive can be such a chore [?]. Or it could be that they are particular good games that I enjoy playing, and the fact they where a tenth of the price of other games only available in physical disc-based form does not have any bearing on my choice. These titles all have additional and optional downloadable “add-on” in-game content in the same “low cost” pricing model, and so the games can be bought in stages, or when disposable income allows.

So, is it justifiable to charge high prices for “big budget” games when much smaller budget titles are just as playable (and in some cases are enjoyed over a longer period)?

Resources should, arguably, be devoted (or re-routed) into producing downloadable titles for less than, say, £10, that can be repeatedly plugged to the dedicated online store punters, with further downloadable content in the form of game packs, add-ons, & updates each costing similarly low-cost fees (£3-£5 each), in an attempt to revitalise sales of older titles and to re-introduce them if they had been dismissed previously. Certainly the “try before you buy” downloadable & playable demonstration versions of upcoming titles available at no extra cost has saved me a fair few pounds in providing a valuable insight to a game I would have bought but then realised it was not for me after all (“Clive Barker’s Jericho” being a prime example). Conversely, playing demonstration versions of certain titles has also meant that I have made subsequent purchases of the full commercial versions that I would never have considered previously (“Burnout Paradise”, being an example here). So, it sort of balances out over time (unless you are the makers of “Jericho”).

In the case of the Sony PS3 console, continuing their current trend of re-issuing PlayStation [One] titles as downloadable purchases from the “PlayStation Store” at a cost of £3 per time is, in some cases, three to six times the cost that the original CD-based titles are sold pre-owned in bespoke gaming-related high street stores & car boot sales, exchange/trade centres, and so on. Using the same approach, PlayStation 2 titles could also be considered for a future revenue stream at, say, £6 per time. The Wii “Virtual Console” also offers past Nintendo, Sega, and (just recently) Commodore 64 titles amongst others to the same audience who wish to reminisce in days gone by at a fraction of the cost of the initial selling price. The Microsoft platform also offers a similar service by way of the “Xbox Arcade Live” facility.

The only downside is that if there is no longer as much of a demand for pre-owned titles in high street stores then these organisations will have to adjust the selling prices of other items to generate the same profits, or move their operations online to reduce overall costs. I believe the internet is quite popular these days, so this may be a worthwhile venture [?]. Retaining a bricks’n’mortar presence will lead to higher shelf prices for disc-based games resulting in fewer console sales as the public choose cheaper (but, not necessarily, better) console options. Also, buying a present for a loved one may well prove less than personal if all you do is go into a shop, hand over your payment, and receive a “download serial key” in a card.

The ability of a small child to cause a fuss, stamp their feet, shout, scream, grab the door frames with all available limbs and show no sign of letting go, and say embarrassing things they should never have overheard until they get a game in their hand when attempting to leave the shopping centre should not be underestimated as a viable sales trend. Look out for the signs of pitching in-store “deals of the week” during school holiday periods, offering demonstration “pods” of upcoming titles or dedicated competitions, and placing “real life” human-sized loveable gaming characters inside shops to attract kids with their reluctant parents bringing up the rear. Then keeping watching when the same parents want to go home & how they have to bribe their little bundles of joy with an over-priced game before they will be “allowed” to leave.

Maybe the absence of physical games in shopping centres may be a good idea for parents? There will still be the sweet selection at the checkout at the supermarket, though, so kids still win. Damn them.

But back to the point… there is obviously a balance to be struck between the prices and availability of downloadable content versus physical product, as well as ensuring further consoles have sufficient on-board hard drive capacities to cope especially given the plans for TV programme content to be remotely streamed & stored locally to video games consoles. Unless you own a Wii console, of course, and welcome the BBC supporting access to their “iPlayer” facility. Or, unless you know where to look for the PS3 iPlayer “hacker project”, and have not discovered “Google” either.

In the future, when the supporting network connection infrastructure bandwidth is in place (subject to significant investment from appropriate Government bodies so that speed restrictions are not imposed on connections no matter how far away a consumer is from a telephone exchange), consoles may well not have hard drives at all, but just larger on-board memory capacities to retain the entire game (or media) content without the need for any other local storage medium.

If the delivery of any media item to a domestic outlet (TV, personal computing device, video games console, mobile telephone handset, fridge, car dashboard, or whatever “multimedia entertainment centre” is deemed appropriate) is relatively instantaneous then the need to own the physical product no longer becomes a necessity.

How many of Earth’s scarce resources go into the manufacture/delivery of plastic cases & metal discs to high street shelving racks that remain unwanted? The products are probably not even made from recyclable materials. If the demand for physical products was not there then supply would need to be lessened.

I have many past purchases for varying games consoles still unopened and unplayed from the day I bought them as the price was “too good” to pass by. If the product was not physically on offer for me to waste my finite income upon, and it was always going to be available online at the same (fixed) cost then I would not feel the need to fill my basket full of top quality, reduced-price titles on the off-chance I will ever have enough time to play them.

As Sony are already underway developing the “PS-Four”, and the other ‘major players’ are also in the design process of their respective next-”next generation” machines, we should really make our thoughts heard now about how we want to see the industry progress into the following decade and beyond.

If past decisions are anything to go by we may well see “SingStar Volume 17″ as a launch title, and executives are probably debating whether 120Gb will be ample storage for the next ten years, if 2 USB ports are all anybody will ever need, or if a DUALSHOCK®3 controller is going to be released in the UK when it is bundled with the next console.

This said, Sony are not going to want to kill the cash-cow that is the home video-ownership market unless they have a suitable alternate delivery (and profit making) mechanism to replace it. As was the case with the vinyl/magnetic audio cassette/Compact Disc “upgrade” path where the same punter was conned into buying the same album multiple times (including the formats that were scrapped along the way such as Digital Audio Tape, and Digital Compact Cassette), the home video progression from ( Betamax to) Video Home System cassettes, though LaserDiscs, Digital Versatile Discs, and now ( again, High-Definition Digital Versatile Discs) to the Blu-ray disc format of today has been a very lucrative market especially if an organisation also has interests in movie production and can release incentives in the form of “never seen before extras” for the general public to re-purchase the same movie again and again when each new format is adopted (or forced upon the consumers).

One thing is for sure, is that if Sony does not see the end to the reliance on shiny round discs, certain other manufacturers (still smarting from the loss of support for the HD-DVD format) may well already be forming relationships with telecommunications organisations for their “next generation” console.

And nobody wants to come second… do they? Well, not unless they are a gentleman.

So think on when you buy cheap downloadable titles. Who knows what it will lead to…?

BFN,

fp.
(1upGamers.com Forums Moderator)

Wii wish you a merry Christmas

Hi again,

So, how is your Christmas shopping going to date? What? You have not started yet? You leave all your shopping until after you come out of the pub at 4pm on Christmas Eve to swagger down Oxford Street (or your local main retail metropolis of choice) handing over this year’s bonus to anyone who will gladly separate you from your cash in exchange for any over-priced tat that they have left on the shelves? OK, anything in Oxford Street (in December) is over-priced, but you get the idea. Anyway, 74 (shopping) days to go.

My kids are, as usual, asking for everything gaming related, or Pokémon related, or Pokémon gaming related this year. In favour seems to be a PSP handheld for our eldest (aged 9), and a Wii console for our two youngest (5, & 6). The PSP has been relatively easy to source; given the recent release of the “Slim & Lite” the older, original (’legacy’ or ‘retro’) “Fat & Heavy” (or “Phat & Heavy”) console is readily-available with or without custom firmware. But I would not know about that. So do not ask me

Having missed out on the 39 Wii consoles delivered to the Canary Wharf branch of GAME on Tuesday this week, with only 12 left yesterday at 11:50am, and not being one of the first 22 customers queuing outside the door (who I thought was an over-eager audience for the price reduction of the 60Gb PS3, and the release of the new entry level 40Gb model), I spent a few desperate minutes on the Amazon.co.uk, SoftUK.com, ChoicesUK.com, Gamestation.co.uk, & GAME.co.uk web sites trying to find a Wii in stock. It seems the delivery at GAME had taken the store staff by surprise too, as the Wii boxes on the shelves still had stickers saying “out of stock” on them, or perhaps they were just saving themselves time expecting all the consoles to sell out within 24 hours anyway?

So, having rushed back to my laptop, I finally snagged one, the second Wii Console for our household; the first already in prominent place beneath our (10 year old CRT [”fat” screen not flat screen]) TV that is threatening to give up the ghost[ing] any day now… if only it could hang on until the January sales (as I do not want to be on Oxford Street on Christmas Eve trying to carry a HD-TV through the crowds). Yeah, I know, two Wii consoles for the kids is excessive considering there are so many people in the world without one (Wii consoles, that is, not children), but I did not want to be left in the same situation as I was in 2004 when I thought I would be able to get a PlayStation 2 without any trouble at the end of November/start of December. I even rejected one in stock at Blockbuster mid-November as it was £9 over the Recommended Retail Price.

BIG MISTAKE!

I eventually ended up buying a pre-owned PS2 from GAME two days before Christmas as stocks just dried-up completely. My three kids were happy, thank goodness, but it could have gone so horribly wrong. The name of the white-bearded fat man in the red suit, who rides the night by reindeer in a saintly manner whilst scoffing so many mince pies & drinking so much wine he would be a danger to other airborne courier services, would have been taken in vain for many months to come if he had not delivered that year. The PS2 itself broke a few months later, just out of the three-month warranty period (surprise, surprise), due to over-excessive use, and we had to buy a brand new one (for almost the same price we paid for the pre-owned one, but hey-ho-ho-ho, it is the thought that counts at Christmas, right?).

So yesterday… there I was working my way down the list of bundles on the GAME site, and every time I added one to my basket & progressed in the checkout pages to pay I would find stock levels had run out in the few seconds it had taken. Luckily one of the bundles, a Wii Console (including Wii Sports) & “Resident Evil 4 (Wii Edition)”, proved fruitful, probably due to the fact that the title is not particularly child-friendly. The other available bundle included “Super Paper Mario”… I am sure the recent news that this title may cause the player to have to re-boot their console & restart the game had no bearing on availability here

(If you are interested, a spokesperson for Nintendo claims the issue is avoidable, stating that, “At the start of Chapter 2-2, you will come across a character called Mimi. She will tell you to go to the farthest room on the first floor to meet a character called Merlee. Enter that room and press the green switch. A trap will be triggered, and a spiked ceiling will descend upon Mario. Before the ceiling reaches him, flip into 3D and jump on it to find a key. If you pick up the key, you won’t run into any problems. Use it to open the locked door to Mimi’s right. However, if you talk to Mimi without picking up the key, the game will freeze. You will then have to turn off your Wii console and start again from your last save point”. Nintendo has been quick to assure users the problem will not damage their Wii console or the game disc, but has promised to replace the disc for anyone who feels concerned)

I purposely did not attempt to buy from Amazon (UK) or, rather, I would have done at a very last resort, as they always seem to botch my orders. They either do not arrive at all, take an absolute age to be despatched even if all the items in my order are in stock (last week I even had to contact them to ask why it would take 4-6 weeks for four items to be delivered when each item was in stock on their site at the time!), or are just plain tiresome with cancelling orders because they have listed an item with an incorrect price & make it sound like it was my fault for not noticing their mistake! But I refreshed the Amazon web page I had open in my browser anyway, and found they too had also sold out within minutes of my initial search, and were only offering “marketplace seller” listings that were so vastly over-priced I would not have bothered anyway… no wait… remember the PS2 fiasco of 2004… OK, I may have bought one, but only because it was not really Amazon, it was somebody who has learned that selling on eBay costs way too much & have decided to pay less fees to Amazon instead).

Annoyingly I already have the “Resident Evil” title for the Wii; it is, in fact, one of the only titles I enjoy playing on the console as I find Nintendo’s offerings a little too child-centric for my gaming tastes. I will, therefore, probably be trading-in or selling this title as soon as it arrives. Hopefully this should be quite soon as we seem to be between Royal Mail strikes in the UK at present).

So anyway, the reason for my post, if you are in the market for a Wii for your darlings (large, or small) this festive season, and do not wish to risk waiting to see if a new version is released in time for the over-hyped big day at the end of December; be it a Red console, a Black one, or a console bundled with the “Wii Zapper”, then may I advise you set the home page of your browser of choice [Mozilla Firefox, of course], to one of the following URLs:

[ http://www.wii-consoles.co.uk/wii_console_realtime.asp ]

or

[ http://www.wiipreorder.co.uk/Wii-Stock.aspx ]

Both these pages refresh every few minutes & list online e-tailers that have Wii consoles in stock. It may just save your, or rather Mr Christmas’, neck this year. The turkey or goose, on the other hand, may not be quite as lucky. Yes, some people are suggesting that Nintendo are deliberately making their new console difficult to buy (again, for the second year) by restricting availability as this gives them free press in the media, and makes the consoles themselves sound in such a high demand. The real hold-up seems to be with the production of the silicon jackets for the Wiimote devices as Nintendo have finally bowed to public pressure (or is that legal pressure?) with respect to legal action resulting from over-excited activity & broken objects in the same environment whilst using the motion-based Remote devices. A £25-£30 Wiimote does not seem to be favoured embedded within a £1000-£2000 HD/Plasma TV, it seems. Personally I think it is an interesting feature that offers a central point of conversation during coffee mornings & after dinner parties. But each to their own, I guess.

Although Nintendo-branded and third-party silicon jackets are already available for additional cost, all future Wii console packs should include a jacket for free.

(Existing owners can apply to Nintendo using the UK online form, or the US online form, offering up to four jackets for free once the site is supplied with the serial number of the associated Wii console).

UK production of the silicon jackets was initially slow, but this is now being resolved, and delivery channels to the high street stores & online sites should now improve.

Hmmm… Silicon jacket? That sounds like a good idea for slipping through the crowds on Christmas Eve.

Good luck everyone…

BFN,

fp.
(1upGamers.com Forums Moderator)