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Posted November 3, 2012 by Zeth in Features
 
 

Free Thinking Fiends : Do you believe in the System Seller theory?

free thinking
free thinking

What you see on the surface here at GamesFiends is just the exterior polish to our interior dialogues. From time to time we’ll have internal discussions that just about merit publication. This totally irregular feature will hopefully offer some food for thought, start some discussions with you and your friends and maybe shed a little light here and there.
This past week I posed a question to our editorial team to do with an article I was forming. The following is the resultant discussions from that initial premise – please feel free to contribute via our comments section below as we’d love to know your thoughts too.

 

Zeth:   I’m writing a piece on the mythical beast known as the system seller. What are people’s thoughts on the concept of a system seller? For me, I say that tine came and went in the 16 bit era with the exception of wii sports.
Anyone feel they have to pick up a system in the launch windows based on a software product? Or does a sweet spot arrive when the price of the hardware justifies a purchase for a single piece of software or a series?

Amy: I think a real system seller for me, at this point, could only be a universal system. The games almost all come out for all platforms, they all stream netflix, whatever. Why the heck can’t there be a universal console, especially since they’re always moaning about losing money on the hardware?

Justin: I think it has died off a bit over the course of this generation, but I suspect that it will come back strong in the next generation. The only thing is that the days of having a single system seller are gone. The biggest games are all third-party and on every platform. The platform holders will need to have a large stable of quality first-party exclusive software to draw distinctions moving forward.

From that point of view I would give the edge to Sony and Nintendo over Microsoft.

However, I think console price point will be the biggest factor moving forward.

Xbox 720 Durango Image

Jeff:  Do games sell systems? I think so. I would have to disagree with Justin and say Nintendo and Xbox have the edge or have at least had it in the past. Nintendo’s first party stuff still holds a big audience and that’s the only place you will find it. Halo 3 was I think the biggest system seller in this generation. Of course I could be wrong. You can look and see if there was a big sales bump when it came out.

I don’t know of anyone who is buying a ps3 for one game. Although uncharted could really make an argument.

For the next Gen, I do think Microsoft will fall behind in this area. Halo does not carry near the weight that it used to and they have been losing the exclusive battle for the last couple of years. If the rumors are true and Sony is going with a standard architecture, I think they stand to dethrone Xbox for core gamers. The playstation plus thing is going much better than I expected and the do have free online play. Depending on the price point and how easy they are for updates, doc, etc. They will become very attractive to developers. I think that primes the field for a system seller right there.

In short, the system sell is not dead. There will always be the hard core Mario or halo fans but I don’t think they are as prominent as they used to be.

 

Justin: Just comes down to personal preference, but IMO out of the three Microsoft has the weakest first-party line-up both in terms of quality and quantity. Sony actually has built up a decent amount of exclusive IPs over the PS3′s life cycle.

However, Nintendo is and always will be king of the exclusives. They have survived and thrived basically off the strength of their own software for decades.

Can’t remember where I read it but someone wrote up an article that put out the theory that Microsoft’s biggest threat is smart TVs, because they offer for free all the services (minus gaming) that Microsoft charges for Xbox Live. It was an interesting theory that seems to make sense when you consider that Microsoft is right at the edge of not having gaming be the focus of the 360.

Can’t argue with you about PlayStation Plus. It is much better than I ever thought it would be and I don’t feel at all bad about paying for it, unlike Gold.

 

Mike: Monster Hunter has proven to be a system seller in Japan. I think so called ‘system sellers’ are more common in Japan than in the West, but they aren’t generally as big as they were at one point.

With Nintendo having been around for so long, as Justin said, they thrive off their exclusives because people know what they are and they know they’ll be good. By comparison, Sony and Microsoft’s exclusives aren’t at that level of being able to sell a huge number of consoles yet. Sure, there are people who will buy a Microsoft console for Halo, or a Sony console for Uncharted, but not as many who will buy a Nintendo system for Mario, I don’t think.

Playstation 4 Durango Image

Zeth: So we’d all say that system sellers do exist and will continue too in certain niche areas? For me no single piece of software has sold me a system since Tetris on the GB.

 

Troy: I agree, but I also think that the hardware and the functionality behind it will be a big selling point with the new generation.

I can’t imagine that Microsoft won’t do some sort of Windows 8 integration along with new 2nd-gen Kinect functionality that goes beyond gaming. Nintendo has the Wii U tablet controller which offers a unique experience. I’m not sure what Sony will offer, but I imagine that Blu-ray won’t be the enticing factor this time around. I also think that success also relies on how accessible and marketable the new systems will be to the casual market and mainstream gamers.

Of course, we’ll have the exclusives that keep the enthusiasts enticed and bring in mainstream fans.

 

Jeff: Yeah, I agree mostly but let’s say for argument sake that Sony has the best exclusives and the best first party. Yet they just said the playstation is still losing money. That might suggest that system sell games are dead. I know I am arguing against myself here but I just read that new story. Justin might have a better handle on it though. I just skimmed.

I think we can all agree that Sony is much better at hardware than anyone else. And Justin might be right about a big draw for Xbox is the apps. But seeing how Sony is losing money and Microsoft might be threatened by smart TVs, I think that might go back to the price issue.

Do you all think Sony has learned its lesson and will come out at a competitive price?

I think this next Gen would be the time to do it. MS has proven that it is not really price wise with the Surface being 500 bucks. Maybe now is when they make a mistake?

 

Hanna: I second Amy’s thoughts. A universal system I would buy in a heartbeat. Totally kills competition BUT I’d be all over that.

I can’t weigh in too much because we’ve always had every system – so it came down to what feature we wanted in what game. Personally I’m an Xbox fan because achievements make me happy and I like to say “Xbox, pause”. I can also play online with my family but I’ll watch Netflix instant watch on the PS3 because it’s easier to navigate, not to mention its Blu-ray capabilities. A dog, two extra kids, single income and a mortgage later and price point is what’s going to knock my socks off. But we’re also not the target audience….or are we? If we’re talking about US buying it for US (re: adults) that’s different than US buying it as a gift for the family. I wouldn’t buy one just for one kid, either – it would have to be a family thing rather than individual – if one gets a handheld then they ALL have to get one. Yes, families do share time but that never, ever ends well. But maybe we’re not trying hard enough, either. But we’re a family of gamers – we’d rather share a new system as a family. Single adults looking for a new system are going to buy it no matter what, right, if they want it?

 

 

 

Justin: One of the biggest things hurting Sony and Nintendo right now (and for the last several years) is the stronger yen. They (and all Japanese exporters) end up losing a lot of money just from selling their products overseas. This is why Nintendo’s 3DS price cut hurt them so much (and why they are having to sell the Wii U at a loss), and why Sony can’t afford to drop the PS3 and Vita price points, even though they really need to. Sony has the added pressure that the entire company is tanking, and they are bleeding money all over the place.

One of Sony’s many internal problems is that they can’t bring themselves to stop producing really cool and really, really, expense tech. It used to work for them, as you felt like you got a lot more quality for that price, but now it just makes them look too expense because there are much cheaper alternatives that are comparable in quality (I’m talking their entire product line not just video games). I thought they might have learned that lesson after the DS kicked the PSP’s tail, but as soon as we saw what the Vita was I realized that they just went right back to their uber-expensive playbook.

I don’t think that they will be stupid enough to put out another $600 console, but the PS4 will almost certainly be too expensive in comparison to MS and Nintendo.

MS can muscle through any mistakes by falling back on profits from their other divisions; although I’ve always wondered and continue to wonder why their shareholders even bother with their game division. Hardly makes any money now (in comparison to their other divisions), and lost a ton of money just to get to this point. I’m also sceptical of their ability to make decent hardware (that doesn’t break). I think this mostly comes from the fact that they are a software company first, and a hardware company second.

Nintendo. Hard to tell how the Wii U will do. The only thing I know is that you can never count them out, they always find a way to turn a profit, and they have the strongest IPs in the business.

Halo limited edition Xbox Console

Jeff: I knew Justin would have the story behind the story.

I’m not sure what the yen was back then but they hit the right price with the ps2. I guess the culture was also different. I miss those days.

If anything makes Xbox money I would assume it would be the games. Like you said, they are not a hardware company.

However, if the rumors of the next Xbox being more of a home server, I think they will be able to rock that.

 

Justin: In those days both Sony and Nintendo actually made money on their foreign exchange transactions, but they were also just flat out making a profit too. Honestly the PS2 came about when consumers were more than happy to upgrade to DVDs. Sony tired the same thing with Blu-ray in the PS3, however, consumers were then ready to move on to streaming movies. The Xbox 360 got Netflix first, and you know the rest…

This is a couple years old, might be worthwhile to do an update at some point, but I wrote a detailed analysis of all this in 2010

The short version of the update would be that Nintendo’s operating income dipped into the negative for the first time ever last year, Sony’s Game division rarely shows a profit, Microsoft’s EDD has continued to show small (in relationship to the company) profits (haven’t checked, but I would be shocked if they have made back their initial investment from the Xbox + Xbox 360).

 

So there we have it. Some differing opinions there and some industry insights that might not always seem so obvious. Please, feel free to join the discussion below and we’ll do our best to provide some responses.

Keep a look out for the article that started all this discussion arriving around mid-day on Sunday (GMT)


Zeth

 
Zeth is our EU ninja and Editor in Chief. He's been writing about video games since 2008 when he started on BrutalGamer. He's pretty old and has been a gamer since he played Space Invaders as a young boy in the 80's. His genre tastes lean towards platformers, point-and-click adventure, action-adventure and shooters but he'll turn his hand to anything.