When it comes to the gaming industry, Sony and Nintendo are two of the Big Three, with Microsoft representing the third arm of the tripod. Sega was one of the forerunners with its Genesis and Dreamcast consoles and the Game Gear handheld. Sega has not been in the console-making business for years but still publishes games.
It is almost inconceivable that these gaming titans could be having problems. After all, these companies are legendary in the gaming industry. When one thinks of classic video game characters, chances are those characters were created by one of these three companies. Sony’s PlayStation 2 is the top-selling console of all-time, and the Wii is not far behind.
What Happened? Read on to find out….
Well in Sony’s case, the problem really isn’t with the company’s gaming division. It’s actually been one of the bright spots for the company. Sony’s problems are due mainly towards a lack of ideas–where’s the next Walkman, for example?–competition in Asia from firms like Samsung, and Japan no longer being the technology leader it once was.
However, Sony has made a few stumbles in the games arena. The PS3 is a wonderful piece of technology, but its expensive early price had a negative impact on sales since the Wii and Xbox 360 were significantly less. Sony also delayed in getting its online service up-and-running, and by the time the PlayStation Network was functioning, Xbox Live had already been well-established for years.
For Sega, the industry has simply passed it by. Sonic is one of the iconic characters in gaming, but he hasn’t had a broad appeal for years. When was the last time a Sonic game was one of the big holiday releases that everyone had to have? Sega has a few good franchises, like Total War, but most of the company’s games simply aren’t in the upper echelon.
For example, Aliens: Colonial Marines is generating some buzz, but no matter how good it ends up being, it’s still not going to challenge Halo 4 or Call of Duty: Black Ops 2. Fact is, Sega is no longer a publisher of AAA titles like Call of Duty and Halo, and that’s where the market is trending.
Nintendo’s problems stem from a few issues. Some of that $530 million certainly comes from research and development costs for the new Wii U console set to debut later this year, but the company also failed to meet its sales estimates. The 3DS also got off to a rocky start, leading to a price drop that boosted sales but lessened revenue.
Nintendo’s big problem, though, is that its strategy has not been effective. Nintendo has gone after the so-called “casual gamer” by adopting a unique, user-friendly approach that appeals to a wide market. Its systems and games are relatively uncomplicated and easy to learn and play. They don’t have the same intimidation factor for new users as say, Modern Warfare 3 on a PS3.
That approach led to massive sales for the Wii, but that is also the problem. Sure, lots of people bought a Wii, but the retention rate for the system was abysmal. It became almost a novelty act because would buy a Wii and play Wii Sports a few times at parties, but that was it. The majority of casual gamers who bought a Wii didn’t keep playing it. Microsoft and Sony sold fewer consoles, but the people who bought those consoles continued to use them.
Another problem is that the Wii has not embraced and is not conducive to mature-rated games. Nintendo prefers a family approach, but the most popular and best-selling games are first-person shooters and Grand Theft Auto.
The most successful entertainment launch in history was Modern Warfare 3. Prior to that, it was Black Ops, which bested Modern Warfare 2’s record.
These games generate millions of dollars in revenue, yet Nintendo sees very little, if any, of that money. Modern Warfare 3 isn’t even available on the Wii. The console lacks the power and graphics of the Xbox 360 and PS3, and its controller doesn’t really work well with Call of Duty.
Even if the game were available, most fans would opt for one of the other versions. Plus, Nintendo doesn’t have a dedicated online service like Xbox Live or PSN. In this day and age, that’s a huge drawback.
Where Do They Go From Here?
Despite all that, Nintendo is still in the best shape of the three. The Wii U will be launched later this year, and the 3DS will no longer be sold below cost. 3DS sales have been strong and will only be helped by the fact that one of Nintendo’s heavyweight franchises, Super Mario Bros., has a new title coming out this August. In fact, Nintendo is forecasting a net profit of $245 million for the next fiscal year.
Sony’s future is murkier. The gaming division has had success, but the company as a whole has not. The larger problems at Sony will have an impact on its gaming branch.
As a result, the gaming division doesn’t control its own fate. Sony will likely have to divest some of its businesses. The company has already sold off its chemical business, and its struggling TV branch could be another candidate. What also hurts is that these companies often don’t turn a profit from their gaming divisions.
They sell consoles at a loss and hope to recoup expenses through software and accessory sales. Microsoft can afford some losses in its gaming division because of the strength of its dominance in the computer industry. Sony doesn’t have that luxury.
If Sony does go under, it is unlikely that the Sony gaming division would cease to exist. The brand is too strong and popular for that. It would likely be spun off into its own company or acquired by another firm.
Rumors have been swirling that Apple is looking to enter the gaming arena, and while the speculation has centered not on a traditional console but rather on an Apple TV with an iTunes-like store for game. However, if Sony were ever forced to sell off its gaming division, one would think Apple would jump all over that. It’s one company that would be able to afford it and is strong enough to take the risk.
Of the three, Sega is in the most trouble and has the bleakest outlook. It simply doesn’t have the top-notch franchises to compete. Its best franchises are developed by studios it acquired. If Sega were to go, those studios would be swooped up by other publishers. Sega hasn’t created a new hit itself in quite some time. Re-releasing old classics on Xbox Live Arcade and PSN isn’t going to cut it; the company needs to come up with the next Sonic–and I don’t mean another Sonic game–if it wants to survive.
These three titans of the gaming industry are going through some rough times right now, and their futures are uncertain. Nintendo should be okay for now while Sony probably has a couple lives remaining, but Sega is staring at a long way to go with no lives or continues left with only half its health bar intact.