E3 Part I: The Big Three Take Their Positions

THE BRIEF  –  E3 Part I: The Big Three Take Their Positions

This year’s revamped, revitalized E3 could not have come at a better time for the industry. With the global economic meltdown it was serendipity that E3 organizers decided to go back to a bigger, more open show format. The excitement was certainly there this year and the 40,000 attendees seemed to welcome a return to some of E3’s glory days.

This Part I of The Brief will highlight an overview of the big three console companies because they were the epicenter of all things E3 this year. More specifically they each seem to be succinctly rounding out their product offerings into complete gaming ecosystems. Yet each company has a very different vision and strategy for attracting and retaining customers to their individual gaming experience.

Specifically, the press conferences this year seemed to clinch the entire essence of how the big three are strategically positioning themselves. Each company is working to differentiate itself through its living room connection, its content, or its staying power as a family entertainment experience.

 

Microsoft

Microsoft was the first out of the gate with their press conference, and it was spectacular. They had quick appearances from Paul McCartney, Ringo Star, Yoko Ono, Steven Spielberg, and Peter Molyneax – all there to promote the Microsoft “experience”.

After seeing all three press events it is apparent that Microsoft’s strategy is crystallizing differently from Nintendo and Sony. Microsoft is obviously heavily focused on the game space, but even more importantly for them is capturing the consumer’s imagination of what a complete living room entertainment experience will be in the future. From games in the living room, online gaming, the social media connectivity, to an on-demand media solution for music, movies and TV, Microsoft is working to bridge the media and entertainment space with solutions that works in the living room as well as on the go. This would mean there is only one other company in their path – Apple.

Microsoft started by making a point of showcasing a strong line-up of games. They lead off with the Beatles Rock Band, with five people able to play simultaneously.

Other high-profile games included a live demo of Modern Warfare 2, Final Fantasy XIII, and Tom Clancy’s Splinter Cell: Conviction which had a lot of buzz during the show. Of course an Xbox 360 exclusive was the new Halo 3: ODST due out in September. A surprise announcement from Halo creator Bungie is the announcement of another game Halo Reach, the multiplayer option for Xbox Live that is due out in 2010.

In the racing genre Forza Motorsport 3 was described as the “definitive racing game”. The game looked gorgeous with the photo-realistic quality of the cars being comparable to what you would see from high-end automotive designers. There was the surprise announcement that the once exclusive PlayStation game, Metal Gear Solid was coming to Xbox.

Moving to Xbox Live, Microsoft announced fast.fm would be delivering music, reminding us they already a library of over 18,000 movies available and direct video access to Netflix. There is also the new Zune Video Channel, an HD library of full 1080P movies that can be accessed instantly. In addition, they’ve also started a supporting live TV broadcasting in the UK, so does that make the Xbox an Apple TV or HULU competitor?

And for a connected living room social experience, Microsoft announced new channels dedicated to Facebook and Twitter. What is brilliant about this move is that with Facebook people will be able to sit on their sofas, sharing photos with their friends right on their TVs. In one swoop, it opens up Xbox Live to an entire group of secondary consumers who are tech savvy, but have not yet committed to the connected game console. Xbox Live extends the user experience well beyond just gaming, giving consumer a robust selection of options.

Now comes a look at the future vision from a Microsoft experience – a motion controller where “you are the control”, called Project Natal. Microsoft demoed game called Ricochet that had a girl kicking and hitting balls at a target that were flying at her from all directions.

Most notably, Project Natal is unlike Nintendo and Sony offering. Instead Microsoft has chosen to go with a controller-free experience. In theory, Project Natal is evolutionary in terms of how consumers will play games in the future.  Microsoft has been working on their technology for some time and of course recently acquired Israeli company 3DV Systems.

While clearly on cutting-edge of game peripherals, there are several large questions that remain to be answered regarding the more basic implementation of Project Natal. First off is the question that Leigh Alexander, a writer at Gamasutra highlighted, which was how viable is a motion control devise that reads your whole body but does not have a specific shooter (hand-held) function? Secondly, since this is not based on tried-and-try technology there still remain many basic questions like – how stable is it, what additional development and costs will need to be included from a development stand point and finally what the final cost to the consumer would eventually be.

Also on the cutting edge was a demo from Peter Molyneux of Lionhead Studios that showcased an interactive experience with Milo, a boy with true intelligence that a consumer can interact with, communicate with and collaborate with.

 

Nintendo

Nintendo’s presence was completely opposite to Microsoft’s. There were no showy light effects or celebrities. They focused on core areas of their product line with company representatives providing the overview of the Nintendo gaming experience.  Cammie Duncan, Executive VP Sales & Marketing, Reggie Fils-Aime president and CEO, Nintendo of America, and Satoru Iwata global president of Nintendo Co were the primary presenters.

For Nintendo, their press conference reaffirmed their position in the market as the family entertainment solution. Nintendo reminds us all their successes – from their long-lived hit successes of key characters, to breakout new categories like the Wii Fit, and the success of their portable products, and the expanded vision of the Wii itself. Nintendo has something for all members of the family including the hard core gamer.

Nintendo does seem aware they need to add a broader range of products to their library and plan on coming out with edgier games that satisfy advanced and new players. Team Ninja and Nintendo are working on Metroid Other M.

Of course they had the next iteration of their controller, the Wii Motion Plus. Again, the difference is that unlike Microsoft or Sony, the Wii remote IS available and successfully working in games. That by itself is a huge factor, especially when showcasing new games like Wii Sports Resort. The Wii Sport Resort has players landing on a resort island by parasailing and from there they are do activities like paddle down river with their arms, do archery challenges, and shoot baskets. On the exhibition floor the lines of grown men and women in suits flapping their arms furiously and in complete concentration was impressive. What was more impressive where the laughs and smiles from everyone – it was sheer enjoyment.

Nintendo CEO, Satoru Iwata explained the company’s view of the market saying there are three types of people – those already actively playing video games, those who say the might play some day, and those who say they will never play video games. Nintendo wants to go after those people who “might some day play” video games.

The company estimates that world wide there are 295 million people already playing video games on consoles and portable game systems and 149 million people who might be interested in playing games. He noted that for every 2 people now playing there is another person who might want to play, those are the ones Nintendo is looking to address. Iwata rounded out his vision by saying that to be successful you need to find the right balance, “If you are always raising the bar more people will not enter the market, but if you lower the bar too significantly you will loose players”.

Finally, in a tech demo Nintendo showcased the Wii Vitality Sensor. “Visualize something that is normally invisible”. Of course the biggest criticism of the Vitality Sensor was that there where no applications to showcase the technology, leaving little idea of how it will be used other than for maintaining “greater relaxation”.

Sony

Going into the E3 and the press conferences, Sony had the most to make up for and really needed to make up some ground. Many doubted that they would be able to pull it off, yet they did.

Jack Tretton, president and CEO of Sony Computer Entertainment of America was the main presenter. He reminded people of Sony’s vast library of games and its superior position as the content developer. Sony has over 364 games available on the PlayStation platforms this year, including an impressive line-up of AAA games.

Games like inFAMOUS, Batman: Arkham Asylum, MAG the new MMOG that lets 256 people play at once, God of War III, and Naughty Dog’s Uncharted 2: Among Thieves as a stand along game and multiplayer option available. Add on a beautiful new fantasy game The Last Guardian, gorgeous Assassin’s Creed II set in renaissance Venice, and Final Fantasy XIV and it is apparent that Sony still has the clout to impress any prior skeptics.

On the portable side, Sony highlighted the strong sales of the PSP, with 15 million units sold in 2008 alone. This brings the PSP total worldwide installed base to 50 million. That, along with the more than 400 PSP titles available in North America, including Rock Band Unplugged highlights the broad portable gaming experience on the PSP.

Of course came the announcement of the PSP Go! that as Kaz Hirai called it, “the worst kept secret of E3”.  With 16G of flash memory, integrated Bluetooth and build in WiFi, the PSP Go! is for the digital consumer. Priced high at $249, the PSP Go! Sony is looking to lure more third party developers to create content by lowering the price of the PSP toolkit by 80%.

On the PlayStation Network side, there are now over 24 million people, in 55 countries using the service, with 150% growth rate in the installed base last year. On top of that, Sony estimates over 475 million pieces of content have been downloaded from the service to date.

Hirai noting that, “Sony has something for everyone, where ever they want to go”.

He highlighting Sony’s strong genre titles were Grand Turismo on the PSP, running at 60 frames per second. There is also a new Metal Gear Solid: Peace Walker for the PSP, with other big titles like: Little Big Planet, Jak and Daxter, Final Fantasy, SOCOM, Monster Hunters, and Tiger Woods.

Of course everyone was waiting to see what Sony was going to present on the motion controller front, and they did not disappoint. They provided a tech demo of a “yet to be named” motion controller. The technology was developed by Richard Marks, the same guy who created the Sony’s EyeToy. By all accounts the motion controller was impressive. With1-to-1 tracking, the precision was accurate enough to use as a stylized pen that switched on the fly to a racket, flash light, Nerf gun, glow whip, and light saber. With 3D pointing technology the player was actually able to be in the game with their peripheral, moving around in a VR-like environment.

2010 and Beyond

Obviously, 2009 is about maintaining, and where possible growing revenue positions. Companies are bringing out planned games that show little risk of failure – the home runs only. Next year, 2010 we’ll see things get a little more interesting when the new motion controllers hit the market. There were no specific games highlighted this year, so developers will have to get creative, breaking more molds on what is game play.

The big three have shown us where they stand and have all firmly planted their stakes in the ground on all fronts: consoles, portable, controllers, and market positioning. Sony is positioning itself as the “ultimate” gaming experience. While they have the hard core gamers and high-end price they need to reach more casual/family users and still keep their balance on the high-end.  Nintendo on the other hand is clearly working the family entertainment angle but also trying to move up with more serious games. Microsoft seems more and more positioned as a connected-living room entertainment platform. This makes one company stand out as a long-term competitor and that is the dark horse – Apple. With the iPhone and all the new game graphic hires Apple has made, they could surprise everyone.

Regardless, analysts estimate the next generation of consoles won’t hit the market until at least 2013. That means we have at least four more years in this current generation, ample time to build deeper content – both developer based and user-generated, extend the level of interaction with controllers, broaden the multiplayer capabilities, expand on digital distribution, and connect it all with multiple platforms.

– WM

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