What Lies Ahead – Software & Strategy

The lack of 3rd party support and interest in the Nintendo Wii will ultimately be the bridge that allows Microsoft and Sony to “catch up”.  I don’t anticipate either of them taking the reigns from Nintendo despite the company’s 3rd party woes but they will close the gap with more impressive 3rd party offerings.  When I take a look at what is on the horizon for the Nintendo Wii, I don’t see a lot of exclusives.  You don’t see a lot of developers itching to develop for the Wii despite their hardware numbers.  Because of this, I often wonder why Microsoft is contemplating their own release of a motion sensitive controller.  I guess if you can’t beat them, you join them?

Wii Fit might be Nintendo’s saving grace this year because without its release, the release lineup is grim for the rest of the year.  “This title absolutely will have a long life and we will be supporting it with marketing initiatives for quite some time,” said Reggie Fils-Aime, President of Nintendo.  You may begin to see different types of attachments/accessories for Wii Fit soon.  Who would’ve thought that gimmicks and gadgets would be a sensation this generation?  But in the end having one or two first party titles will begin to sour sales for the current console leader.

Exclusives and 1st party offerings seem almost limited to some version of Mario which does little in terms of their software attach ratio.  Although Mario Kart continues to do well according to the NPD, that will not be enough to continue outpacing Microsoft and Sony in consoles sold.  A change won’t happen in 2008 but look to 2009 as a critical year for Nintendo’s title lineup.

Nintendo does have the Virtual Store on the Wii that provides thousands of fun hours but where is it headed?

Another saving grace for Nintendo and something they’ve done better than anyone else is realizing what they are.  Having come into this console race as simply wanting to be the second console in your home, they’ve outsmarted Sony and Microsoft.  I can poll thousands of Wii homes and would likely come to the conclusion that there’s also an Xbox 360 or PS3 in that home.  The Wii is a cute little thing that doesn’t do high defintion and doesn’t play movies yet every home needs one.

Sony will gradually increase its sales from the previous year beginning with the release of GTA IV and I expect sales of its exclusive, Metal Gear Solid 4, to push it even higher.  Media Molecule’s Little Big Planet continues to impress and it’s not a stretch to consider it a sleeper hit for Sony later this year.  It could be the answer to Microsoft’s own Banjo Kazooie: Nuts & Bolts and Viva Pinata 2.  Haze hasn’t been what they expected and no one knows if we’ll ever see Killzone 2 so Sony is left to rely on an old veteran (MGS 4) and the little strange thing that could.  They’re hoping Solid Snake has a bit more life in his legs and that he’s not past his prime.

Don’t forget about Blu-ray.  It continues to lead to sales of the PS3 and I predict a significant boost for Sony from Blu-ray enthusiasts this year.

What will we see from the PlayStation Store?  I don’t see much to get excited about beyond the recent changes in design.  And there hasn’t been anything on either console’s download service that makes a significant impact in sales.  I don’t expect that to change.

Kazuo Hirai, President and CEO of Sony Computer Entertainment, said that “Spending more time on the development and on the Closed Beta testing reaffirms our commitment to bringing a quality service, maintaining the PlayStation tradition.” 

A lot has been made about PlayStation Home and Sony has a lot riding on it so I predict that if Home fails to deliver, Sony may see some hard times ahead trying to offer consumers a better choice than Microsoft’s Xbox Live service.  There have been numerious promises, outlooks and endless ambition yet Home continues to be delyaed.  I wonder if it will indeed be ready for public use this year.  Can they really pull off what many feel is MySpace coming to consoles?  I anticipate that we’ll finally see Home delivered and we’ll finally see a proper battle of online networks.

Microsoft will have given a new term to us all before the year ends.  That term is Sequel City.  I don’t know if any year has been more reliant on sequels than 2008.  Most of the heavy hitters are exclusives to Microsoft’s Xbox 360.  Ninja Gaiden 2, Fable 2, Gears of War 2 and Banjo Kazooie: Nuts & Bolts head the list of high profile exclusives coming out of Sequel City.  I predict a strong launch for Gears of War 2 that will place it 3rd amongst the highest grossing entertainment game releases behind Grand Theft Auto IV and Halo 3.  Marc Rein and Cliff Bleszinski, formerly known as ”Cliffy B”, will set the stage for another sequel after a successful release of Gears of War 2.

I don’t anticipate much of a reception for Rare’s two products, Banjo Kazooie: Nuts & Bolts and Viva Pinata 2.  I feel that Fable 2 will also meet the same fate unfortunately.  I also expect a lackluster showing for Silicon Knights’ Too Human.  The often delayed exclusive will finally release this year on August 19 but because of the controversy and mystery I doubt it will perform well.  However, that won’t stop the Xbox 360 from being the software sales king this year.  The big name sequels and exclusives coupled with impressive 3rd party support, are a bit too much for Nintendo or Sony to climb.

The Xbox Live Arcade saw drama with the recent announcement of delisting some titles.  Lost in the announcement was the introduction of a first party studio built to provide quality XBLA titles.  The new focus on the Xbox Live Arcade with new studios and an increase in size as I mentioned will pave the way for a hard drive enabled Arcade sku. 

The digital download arena will continue to be dominated by Microsoft’s Xbox Live Marketplace.  The Xbox 360 is the leader in high definition content as well as leading in digital downloads.  This may, I predict, lead to the often rumored entry of Netflix to the console.  If Netflix and Microsoft do strike a deal, we may see a larger number of high defintion (HD) digital downloads and better transfer options for those downloads.  I think the decision to implement a new DRM tool this Spring is a sign that they’re ready for a full court press on marketing the digital download aspect of the Marketplace.

Throw in the likes of Grand Theft Auto IV’s exclusive episodic content and you can see how important it was for them to address the DRM issue finally.  Nintendo and Sony are a step behind on delivering the kind of content that is currently available on Xbox Live.  It’s no surprise that in the midst of underperforming in hardware, Microsoft emphasizes the successes of Xbox Live and the Marketplace.

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