Competition is usually great for consumers, especially in the gadget world. Competition among phone makers is the most obvious example, but even digital cameras, laptops and netbooks, and HDTVs are all part of a highly competitive electronics landscape. Buyers can now find these products at lower prices with more features than ever before. It's tough, perhaps even un-American, to argue against competition, but in the video games industry, a little less competition would do gamers a lot of good.
The console gaming industry used to be a much less competitive field. There was Atari and everybody else. There was Nintendo and Sega, but Sega never really dominated the field or provided much competition, even when its hardware and games library were just as good. Sony changed the face of the industry with its original PlayStation. For the first time, a full-fledged consumer electronics company entered a market dominated by companies with roots in playing cards and pachinko machines.
How competitive is Sony? On the day the Sega Dreamcast was released, Sony announced the PlayStation 2, which didn't hit retail until much later. Now, Sega makes software.
The biggest problem with the gaming industry is that production costs for games have skyrocketed in recent years as gamers expect more technically advanced games with realistic graphics and physics. Games regularly cost tens of millions of dollars to make, the same as a major Hollywood film, but without the same level of advertising, distribution or even artistic respect that a movie assumes.
For the major software houses, making an exclusive game for a single platform makes little sense, but the differences between the platforms are large enough that titles have to be dumbed-down to fit the lowest common denominator. For some platforms, like the Wii, this is fatal to the most hardcore games, which is why the Wii is saddled with casual titles and a casual reputation. Certainly games for the Wii could be much more intense and engaging, but the audience for those hardcore games flocked to the Xbox 360 and PlayStation 3, instead. Electronic Arts wasn't even supporting the Wii at launch, but once it's popularity grew exponentially, EA climbed aboard.
Competition in the gaming industry has done consumers little good. You might expect competition would offer better pricing, more selection and more features. This is simply not the case. Consoles are already sold at a loss for most manufacturers, at least in the early days of a console's life span. The PlayStation 3 is still costing Sony money for every unit sold, though that money is recouped on licensing.
Consoles already have competition from outside the field. If a gaming console was too expensive, more than $600, for instance, buyers would choose a PC, instead. Consoles are also competing with casual Internet games, cell phones and Apple's iPhone OS, and plenty other forms of entertainment. There is already a ceiling on console pricing, and competition doesn't seem to have any effect on the high end. At the low end, competition admittedly drives pricing down so that Microsoft is trying to compete with Nintendo by selling consoles at less than $150. But with enough volume, prices could drop that low on their own.
Competition doesn't offer gamers more selection. There used to be more exclusives to choose from, especially from third-party developers. Now, there are first party games that are exclusive, and there are third party titles that show up on every single console, for better or for worse. You're more likely to find an exclusive launch window, where Sony will get a game for the first three months or so, than a truly exclusive game. But even these exclusive deals cost the manufacturers money, and in a market with such tight margins, the extra expense isn't helping anyone.
Gaming features are not helped by competition. Sure, Nintendo caught the industry by surprise with its popular motion gaming, but now Sony and Microsoft are releasing competing systems. They all work slightly differently, with different controllers and accessories needed. This won't help the industry, because third-party developers will have trouble porting titles from the Wii, with its nunchuk accessory, to the Playstation Move, with it's dual controllers, to the Xbox Kinect, which uses no controller at all. On the front end, the action seems the same, as all three rely on the user's flailing arms and twisting body. But on the back end, it will be very difficult to develop for all three. This means the new systems will rely mostly on first party developer support, which can strain the manufacturer and produces relatively fewer titles.
It's time to consolidate. It would be better for consumers if there was only one console. The three major gaming manufacturers should band together to create a super-system for the next generation gaming machine.
Sony should build the hardware. Microsoft should build the interface. Nintendo should become a software company, like Sega.
Sony Computer Entertainment, the gaming arm, already has hardware expertise and a huge manufacturing company behind it. The Xbox 360 is a hardware disaster. It's a nice looking machine, but it was plagued by hardware defects from early on. Microsoft has never released official numbers about how many consoles were killed by the 'red ring of death' issue, but some estimates place the number above 50%. In other words, most Xbox 360 units failed.
Microsoft also neglected some important technology with the Xbox 360. There was the original choice of HD DVD over Blu-Ray, which made sense for Microsoft, but now that the war is over, the company's reluctance to sell a Blu-Ray peripheral is only hurting the market, not helping. The Xbox 360 also neglects Wi-Fi, and Microsoft requires its own first-party Wi-Fi adapter, which costs many times what a similar, unbranded accessory would cost. High-end video and audio outputs were an afterthought on the Xbox 360, but Sony, with its experience in HDTVs and stereo equipment, saw the value in HDMI from the start.
Nintendo has proven that it's much less interested in hardware, at least in the current generation. The Nintendo Wii isn't much more powerful than the Nintendo Gamecube. It lacks high-definition gaming and can't handle the advanced visuals that would transition its games from the realm of casual gamers to the realm of the hardcore. Why can't titles be both? Why do casual gamers have to suffer through horrible, blocky graphics to play tennis or go bowling? This is a limitation of the hardware, not the games themselves.
Microsoft knows operating systems. The company is on a roll with its current OS lineup. Windows 7 is a hit, and the company also demonstrates solid design in its Zune interface and even the upcoming Windows 7 designs (ignoring the design hiccup that is the Kin). The Xbox 360 interface has always been one of its best features, and gamers took to achievements, gamer scores and the range of Xbox Live capabilities like crazy. Sony has yet to catch up, and Nintendo has effectively stopped trying.
Microsoft also has experience making an OS for another company's hardware. I would never suggest licensing this gaming OS to all manufacturers, that sort of fragmentation would just return us to our current state, with developers confused and dividing resources unnecessarily.
Finally, Nintendo should do what Nintendo does best: make fun games. Nintendo has never made an inspiring piece of hardware. The controller designs have been completely unfocused until the Wii, but even the Wii controllers suffer from confusing pricing barriers. Do I need a Nunchuk? Motion Plus? Probably, and every player added means a $75 expense just for the additional controllers. Nintendo isn't known for stellar hardware, it's known for great games.
Console gaming is already facing tough competition from without. The gaming industry has seen some its worst sales drops in recent months. That's not individual consoles, that's the industry as a whole in decline. It's time to think about how to fix the industry. The competition is no longer between manufacturers, it's between the console industry and the rest of the entertainment world that's vying for your dollars. With a single console to get behind, the industry would become a much stronger force to attract gamers of all types.