Who\'s Winning the Console War? (An article from MSNBC)

This article is huge, and has a ton of little tidbits of info in it.  It is actually a pretty interesting read.  I\'ll post my comments about it a little later, but until then, feel free to pick it apart yourselves.

http://www.msnbc.com/news/697375.asp?0na=x229M3m2-

MSNBC.COM SPOKE WITH executives at all three console manufacturers, several game publishers, retailers, and industry insiders, and this is how the new consoles stack up against each other and the established competition:

A RETAILER’S EYE VIEW
By Steven Kent
SPECIAL TO MSNBC.COM

Jan. 31 — This month will mark the three-month anniversary of the launches of Microsoft’s Xbox and Nintendo’s GameCube. Last year’s war of words is over, and now gamers can finally compare the systems, look at their respective libraries, and decide which console they like for themselves. The last three months have also given industry insiders a chance to see how each company and console behaved. How does GameCube stack up against Xbox? How does Microsoft stack up against Nintendo? And how in the world, having entered the market one year after PlayStation 2, can either company hope to compete with Sony?

Both Xbox and GameCube were virtual sellouts through the holidays; but in the eyes of retailers, Xbox clearly holds the momentum.
“I think Xbox has a lead over GameCube right now,” says Ron Luessen, owner of Famcom Games, a small chain of stores in western Washington that rents, buys, and sells video games. “We’ve been selling a lot more GameCubes when we have them, but I think that might be because of price point.”
(MSNBC is a Microsoft - NBC joint venture.)
Luessen, who has been involved with the game industry since the days of the 8-bit Nintendo Entertainment System, takes a very pragmatic stance as he views the market. As the owner of a small chain, he does not have the space or the money to invest in large inventories.


“Right now PlayStation 2 has the [most] momentum because of software,” says Luessen. “Grand Theft Auto III has been very popular. State of Emergency for PlayStation 2 will be the next big thing. A lot of people are looking forward to that game. To the average person who bought Xbox or GameCube, the question is, “Where are the games?”
But at least one of the bigger retailers has a more positive view.
According to Peter Roithmayr, vice president of merchandising for video games at Electronics Boutique, Xbox is off to a very strong start.
“For us, the Xbox launch went smoother than the launch of PlayStation 2,” says Roithmayr. “We had product flowing to us on a regular basis. We can actually restock stores on a scheduled basis.”
Roithmayr has good reason to sound jubilant. Like the manufacturers themselves, retailers make little or no profit selling video game hardware.
The money is made selling software; and in 2001, software sales were good.

“Electronic Boutique’s software-to-hardware sales ratios are very strong,” says Roithmayr. Their Xbox tie ratio, for instance, is 4 to 1. “Actually, in January, it started at 6.2-to-1,” says Roithmayr. “With titles like NBA Inside Drive, which just shipped last week, and Halo… Halo has been strong from the beginning. Remember, though, Electronic Boutique tends to lead the pack on tie ratios.”
But Xbox is not the only console with strong software-to-hardware tie ratios. According to Electronics Boutique’s January sales data, PlayStation 2 software-to-hardware sales ratios are running at an amazing 12-to-1.
When it comes to tie ratio, much of Sony’s success comes from its one-year head start into the market. Consumers could only begin purchasing Xbox and GameCube software last November. By comparison, PlayStation 2 hardware and software had been on the market for more than one year.
“PlayStation 2 is right up there in momentum with Xbox,” says Roithmayr. “Post Christmas, PlayStation 2 sales have actually been a little ahead of Xbox.”
When it comes to Electronics Boutique, GameCube is lagging in third. “We are still being allocated GameCubes,” Roithmayr points out. “We are a much smaller share of Nintendo’s business than we are of Sony’s or Microsoft’s. We still experience out-of-stocks on GameCube as opposed to PS2 or Xbox.”

Continued...

Hmmmm........looks like ps2 may be getting RE4 after all.

WHAT THE GAME PUBLISHERS SAY
For the most part, game publishers are happy to see three systems competing. According to Peter Moore, president of Sega of America, having access to multiple platforms helps amortize costs. “After you spend $5 million making a game, you can double your audience by porting it to additional platforms for another $500,000.”


The key to success, according to Moore, is knowing the audiences for each system. “We are spreading ourselves around well as a company. In Xbox’s case, we announced 11 titles, and that roster continues to grow. Like any third-party, we’re trying to find balance without exposing ourselves too greatly on any one platform.”
Like retailers, game publishers noticed the strong launch Xbox had in North America.
“Everybody has been pleasantly surprised by both the quantity and the logistical quality with which Xbox has serviced the marketplace,” says Moore. “Questions we had were can they supply the marketplace week in and week out with consistent supplies. They have exceeded everybody’s expectations. And third-parties are starting to give them more support than they may have prior to the Christmas period. They continue to gain both respect and support from people who may have been on the fence. That does not include us. We never were on the fence.”
At Microsoft, the goal is to cash in on North American success to drive interest in Xbox for the February launch in Japan and the March launch in Europe.

Our strategy has always been built around the belief that the most important key to success on a worldwide basis is a really strong launch in North America,” says John O’Rourke, director of Xbox sales and marketing. “We delivered on that, and the buzz and excitement is flowing over boundaries. People in Japan and Europe are very excited about it. We said 1.5 million was our goal through the holiday season. Instead, we reached it by the end of the year.”
Japan, which generally has the highest software-to-hardware tie ratios, is traditionally the most lucrative market. In recent years, however, the Japanese market has hit a slump. The Japanese economy is slow, and a large portion of the people who make up the conventional gaming demographic are now spending their money on cellular phones instead of games. According to
O’Rourke, Japan still means more than just sales to Microsoft.
“Each region is very important,” says O’Rourke. “You cannot get to the scale you want if you are a one-country wonder. Japan is as important from a pure market perspective as it is the fact that you have a tremendous amount of game developers who do great games for other markets.”
Xbox’s success has touched off new excitement in Japan. A survey given at last year’s Tokyo Game Show revealed that attendees were more curious about Xbox than GameCube or PlayStation 2. And Xbox has a high-profile evangelist in Japan — Tomonobu Itagaki, executive officer of Tecmo’s Team Ninja and lead designer of the Dead or Alive series of fighting games.
While Itagaki has remained somewhat silent about GameCube, he has vociferously attacked PlayStation 2, calling it a “last generation” game console.
Sega of Japan has nine core design groups. Among those nine groups, two groups seem to have adopted systems of choice.



“Amusement Vision has had great success with Super Monkey Ball and they also did Virtua Striker for GameCube,” says Moore. “Mizuguchi [Tetsuya Mizuguchi, president of United Game Artists] is focused on PlayStation 2. We are in a unique position because we have enough talent with our many studios to allow designers to focus on one platform, then discuss porting the games to other platforms later.”
Capcom, one of Japan’s most successful companies, has also got an unofficial evangelist. Shinji Mikami, creator of Resident Evil, Dino Crisis, and Devil May Cry, has become an outspoken supporter of GameCube.
“No one at Capcom has adopted the Xbox cause,” says Capcom Entertainment (of America) president Bill Gardner. “But then, we have not been enamored with the problems of creating games for PlayStation 2.”
Last year, Capcom announced that Mikami’s popular Resident Evil games would only be released for GameCube. That announcement was made a few days before GameCube’s disappointing Japanese launch last September. As an artist, Mikami may like the way his games look on GameCube, but executives at Capcom watch the bottom line.


“If Nintendo cannot get its numbers up, particularly in Japan, we may need to reconsider keeping Resident Evil exclusive to GameCube,” Gardner recently admitted in a recent interview with MSNBC.com.
The good news for both Capcom and Nintendo is that in Japan, GameCube sales have improved.
“As you may recall, we delayed our launch a few weeks [last November],” says outgoing Nintendo executive vice president of sales and marketing, Peter Main. “My hope was to pick up the quantity from 400,000 up to 700,000, which we did. But hidden in that decision was the hope that if there was any softness in the Japanese market, the extra weeks would allow them to divert GameCube production from the Japanese model to the model for our market.”
In an interview with MSNBC.com held two days before his departure from Nintendo, Main admitted that part of the reason Nintendo of America delayed the launch of GameCube was to take advantage of the weak Japanese market.
“Even though their launch was incredibly soft up through October, Mr. Yamauchi [Nintendo Company, Limited (NCL) chairman Hiroshi Yamauchi] made a call to us in October and said that he was going to bet that the release of the games Super Smash Bros. Melee and Pikmin would resuscitate what had been a very, very soft launch. And that, in fact, took place. Between launch in September and early November, they had shipped just about 400,000 units and the sell-through was about 280,000. It exploded in November.”


By the end of the year, NCL shipped just over 1.3 million GameCube consoles in Japan and had a 90 percent sell-through. Nintendo got off to a slow start with GameCube, then improved sales with the release of two big titles. Even so, Nintendo’s selling of 1.3 million consoles in four months does not qualify GameCube as a great success.
But Nintendo knows how to work patiently and thrive in the Japanese market. Microsoft will need more immediate sales to succeed.
“I think Microsoft is quietly confident about Japan,” says Sega of America’s Peter Moore. “They realize that they need to reach out to the Japanese gaming community as well as the publishing community… and the retail community. I think the unexpected surprise of their success in the U.S. has benefited them. Their success in the U.S. has changed people’s perspective over there. Marketing Xbox is going to be a challenge in Japan; but the thing that makes me feel more confident about it is the fact that they [Microsoft’s Xbox team] do not pretend otherwise.”
The way Moore sees it, it is too early to predict the loser of this three-way race, but he concedes that Sony’s head start into the market has placed PlayStation 2 solidly in the lead.
“Who might get knocked out? I don’t know. Sony has a lead that is probably insurmountable,” says Moore. “Sony has a great head start, content that is flowing through, and great support from the publishing community.”
“Nintendo seems to run hot and cold over in Japan. You can point your finger at some of their platforms that have been very successful and others that have struggled. If you look at GameCube right now, it’s doing okay, but nothing like I might have hoped… and any problems GameCube has had in Japan have been without the challenge of Xbox entering the marketplace,” says Moore.
“As an executive in a Japanese company, I hope three consoles can survive; but I am less optimistic for Japan than I am for here,” he added.
Most people questioned seem to agree, however, that whatever happens to GameCube, Nintendo is not about to drop out of the marketplace.
“Nintendo could become a content publisher and just get out of the hardware business, God forbid. One or two companies have done that lately,” says Moore, who presided over Sega of America as Dreamcast was discontinued and Sega left the hardware business. “That would play to their strength. It would be huge.”
“But there is a certain amount of egotistical swagger in Redmond, and I do not see Microsoft or Nintendo giving in easily, even if they do lag behind,” he added.

Continued...

EDITORS WITH INSIDE VIEWS
Editors for platform-specific gaming magazines get access to upcoming games ahead of the rest of the world. Part mercenary, part fanatic, most of these editors feel enthusiastic about the various platforms they cover.
“Xbox and PlayStation 2 have the same momentum at this point,” says Frank O’Connor, executive editor of the Official Xbox Magazine. “PlayStation 2 has the install base, and their software numbers are larger; but I’m still arguing that the quality [among PlayStation 2 games] is not what it should be.”
“The only one who is trailing in mindshare is Nintendo, and it’s only trailing a little bit. I still think it has time to catch up,” O’Conner added.
But Andy McNamara, editor-in-chief of the non-aligned Game Informer Magazine, says Nintendo is well-positioned already.
“GameCube, when you look at it as a plan, you can actually see Nintendo’s strategy,” says McNamara. “Is the GameCube the best accessory for Game Boy Advance? I can see Nintendo establishing franchises on Game Boy Advance, then moving them to GameCube.”
As to Xbox’s prospects in Japan, McNamara sounds cautious. “You don’t see a lot of Cadillacs around Tokyo. Microsoft needs to establish some Japanese franchises.”
But if Microsoft needs more Japanese franchises to succeed, Nintendo needs to give more options to older players, according to Matt Casamassina, editor-in-chief of IGNCube.
“I would say that GameCube is in third place right now. It depends how you look at it. Considering what Nintendo could have done… Nintendo has a solid brand, they are a major player in the video game industry, and Microsoft came out of nowhere.”
“Nintendo needs to do two things. One, Nintendo must continue to rely on the younger audience and push out those franchises that appeal to the younger gamer. Mario and Zelda are going to be huge, so will Pokemon, when they finally bring it out,” Casamassina said. “But Nintendo has to recognize the older market. I looked at the TRST Data (marketing research published by the NPD Group) for the week after Christmas. It had Max Payne, Grand Theft Auto 3, Max Payne for PlayStation 2, and Agent Under Fire—clearly an adult-targeted lineup. Nintendo still fails to recognize that, and it baffles me.”
Like software publishers and retailers, most editors seem to agree that in sheer console placements, Sony’s lead may be insurmountable.
“I do not think Microsoft or Nintendo can catch up to Sony,” said Casamassina. “Sony seems to do no wrong, even when it is quite obviously very wrong. It has hardware that is widely accepted as inferior from a development standpoint if not from a power standpoint, and still people are snapping it up and going crazy about it.”
“This could be a big year for Nintendo if it plays its cards right. The problem is that neither Microsoft nor Nintendo have anything big planned for the first half of 2002,” he added.

AND FROM THE MANUFACTURERS...
“I guess we feel that we stand alone,” says Sony Computer Entertainment America senior vice president Jack Tretton, when asked about the closest competition. “I don’t know that we have anybody that I feel will ever be a neck-and-neck competitor with us. The competitor that goes for the closest demographic is Microsoft.”
“Everybody says that this is a marathon and not a sprint and that really is true. We left the starting line a year before they did. If you call it a five-year race, then we were 20 percent into the race before they got out of the blocks.”
If executives at Sony Computer Entertainment America sound smug, they have a right to be. Even with all of the excitement over the launches of Xbox and GameCube last November, PlayStation 2 consistently outsold both systems over the holiday season.
“I think Nintendo and Microsoft have to close the gap at some point, but the reality is that we’re pulling farther ahead. You only get to be new once. You only get to attract those hardcore new consumers once. They’ve had that, and we’ve widened the gap,” Tretton said. “In terms of quantifying that, during the period between Nov. 15 when they launched and Dec. 31, we sold 2.8 million PlayStation 2s. Those were sold through to consumers, not shipped. Compare that to GameCube or Xbox, and you will see that we had a commanding lead before they shipped, and we widened that lead since they shipped.”
Sony may have sold more hardware than Nintendo or Microsoft, but it also had more hardware to sell. More than 90 percent of the Xbox and GameCube inventory that was shipped was sold, making the consoles virtual sellouts. PlayStation 2 consoles, on the other hand, remained readily available.
“Right now retailers are not happy with us or Microsoft,” Nintendo’s Peter Main told MSNBC.com. “They would like more inventory. Anywhere from a low of 20 to a high of 35 percent of stores throughout the country are out-of-stock. The shipments just go in and out. Every week we are selling 15,000 to 18,000 pieces, which is reflecting basically what we shipped. That’s a little calamitous.”
There is little question that Nintendo is lagging behind Microsoft in the U.S. market by most measures. With 1.5 million Xboxes sold, Microsoft has sold 200,000 more consoles than Nintendo. According to the TRST Data, GameCube has a 2.7-to-1 software-to-hardware tie ratio, compared to the 3.3-to-1 ratio for Xbox. Moreover, Microsoft currently has over 40 games available for Xbox, while the GameCube library is only up to 23 titles.
From a gamer’s perspective, the Xbox library has more peaks and valleys. Many gamers see Halo, Dead or Alive 3, and Max Payne as better than any games on GameCube; but Xbox is also the home of Shrek, Azurik, and Kabuki Warriors.
“If you hold up TRST to the light of day,” said Main, “you would say that we are clearly behind Microsoft by a couple of hundred thousand units. We’ll see how they do in Japan in the next month. From a corporate standpoint, we’re thinking about it globally, and we’ve shipped 2.6 million. We rolled all the dice last year in both re-launching Game Boy and launching GameCube in two different markets.”
For Nintendo to succeed, it will need to rely on its established game properties, and one piece of news that will come as a relief to many gamers is that Nintendo is re-thinking the cel-shaded version of The Legend of Zelda that was unveiled last August at its Spaceworld trade show. “You mean that contentious look? What Miyamoto [Shigeru Miyamoto, Nintendo’s top game designer] ends up with will truly reflect all of the words he has heard, but the sentiments that he holds true to make sure that Zelda continues to titillate all the fans that it has attracted over the years,” said Main.
In the meantime, attitudes around Microsoft are ecstatic. The feeling seems to be that the launch went better than expected and the market for Xbox is wider than hoped for.
“We found through post-launch research that we have younger gamers who are very excited about Xbox,” says O’Rourke. “Our stated audience was 16- to 26-year-olds — what most people call ‘hardcore gamers’ but we call ‘passion players.’ We extended beyond that core audience. Not quite half of the people who bought Xbox during the holidays were younger than our target market.”
“The sheer awareness of Xbox has exceeded our goals. I cannot share the specific number publicly, but the amount of awareness that we have for Xbox is significantly higher than it is for GameCube. Even at an unaided level, nine out of ten people who are gamers are aware of Xbox.”

The End.

Note to Mods -- get rid of that character limit.

[Bobs_Hardware]

interesting read...but it doesnt take a scientist (or msnbc for that matter) to figure out who is winning...

who is selling the most consoles
who has sold the most consoles
who is getting the most games
who has the most developers
who is selling the most software
who is the most trusted
who has the biggest library etc. etc.

Xbox and PS2 with the same momentum??  hardly...yeesh, it never ceases to amaze me just how bigga fanboys the eidtors and such of Xbox magazines/websites and such are...much bigger than nintendo, even bigger than PS2...always trying to get their point across and always being more biased.. IMO

pfft, that whole article is practically one big advertisement for XBox.. and it spends more time comparing XBox and GameCube due to the fact that comparing it to PS2 would be a waste of time as any un-biased writer/reviewer/gamer can see, it is far from in the same league due to its recent release..

[Bobs_Hardware]

Originally posted by rastalant
Hmmmm........looks like ps2 may be getting RE4 after all.

yeah, way to be constructive...twit :rolleyes:

I think it\'s quite amazing that Xbox is being touted as having the same "momentum" as PS2 (whatever context you put this in).  PS2 is the sequel to a widely successful console, had huge developer support from the get go because of its\' previous generation, and a year start.  Xbox is the brand new console to the market and it\'s already being recognized as a solid contender...that is impressive IMO.

Japan will be the deciding factor though...*crosses fingers*

perhaps it was the $9328521398 hype machine in advertising, no?

[Bobs_Hardware]

Originally posted by Ginko
I think it\'s quite amazing that Xbox is being touted as having the same "momentum" as PS2 (whatever context you put this in).  PS2 is the sequel to a widely successful console, had huge developer support from the get go because of its\' previous generation, and a year start.  Xbox is the brand new console to the market and it\'s already being recognized as a solid contender...that is impressive IMO.

i disagree

the Xbox does not have the same momentum as the PS2, that is obvious and if you think otherwise you are obviously jaded/bias/il-iunformed

comparing them at launch you would say XBox is doing well and would have had the same momentum, but saying it currently has the same momentum of the PS2 is ludicrous.. especially with PS2 selling worldwide and Xbox still only in US..

you must know what i mean Ginko?

I see what you mean...but I think it was meant to say Xbox is off to a hardy start and is moving in somewhat the same pace...

key word is "somewhat"

[Bobs_Hardware]

Originally posted by Ginko
I see what you mean...but I think it was meant to say Xbox is off to a hardy start and is moving in somewhat the same pace...

heheh, but it ISNT!  thats the thing... PS2 right now is some sort of unstoppable thing... (a juggernaut if you will) and Xbox doesnt have the software sales, nor does it have the hardware sales, or the user base and the librarry of games to be moving in even a relatively close pace to the pace PS2 is currently..

Originally posted by mm
key word is "somewhat"

That\'s why it\'s in italics...

heheh, but it ISNT! thats the thing... PS2 right now is some sort of unstoppable thing... (a juggernaut if you will) and Xbox doesnt have the software sales, nor does it have the hardware sales, or the user base and the librarry of games to be moving in even a relatively close pace to the pace PS2 is currently..

Right, that it is currently in...you have to bring to mind that PS2 is almost 2 years old hence it has a library of games,  huge success and a recogized name from a previous generation.

Xbox is not even 3 months old...hasn\'t had the time given to build a big user base or library of games and is brand new to the console arena...

Currently both systems are selling very well in relative terms...

[Bobs_Hardware]

well d\'uh    which is why PS2 is so far ahead

it\'d be interesting to see who would have sold more had they both been launched at the same time with machines of the same approximate power    hmm, close race

i was just trying to generate some convo Ginko, you dun\' good boy  

:fro: toot on

Originally posted by Bobs_Hardware
well d\'uh    which is why PS2 is so far ahead

it\'d be interesting to see who would have sold more had they both been launched at the same time with machines of the same approximate power    hmm, close race

i was just trying to generate some convo Ginko, you dun\' good boy  

:fro: toot on

that would be interesting, my bets on PS2;)
( I will not get into why, the reasons are obvious.  NO flames please)