At a press event at the GamesCom convention in Germany today, Sony announced that the long-rumored slimmer PS3 will be released September 1 for $299, a $100 price drop from its current PlayStation 3. The console will have a 120 GB hard drive, be 33% smaller and 36% lighter, consuming 34% less power.
Sony needs to increase sales to compete. In the last 3 months, according to sales numbers from the NPD Group, Sony PS3 sold about 200,000 less units than Microsoft's Xbox 360 and almost 500,000 less units than the Wii. Sales of both the PS2 and PSP have helped mitigate the differences, but it is hard to deny that Sony is losing this generation's console war.
Also at the event, Sony showed the new version of the PlayStation's OS and the PlayStation Network. Firmware 3.0 will have animated themes and some interfaces changes. The PSP will get Digital Reader software, including digital comics through a partnership with Marvel. More important to the future of the PSP was the announcement of Minis, smaller downloadable games for the portable that launches October 1--including perennial favorite Tetris. Sony showed a teaser video for the Motion Controllers and more info will be coming at the Tokyo Game Show, September 24.
How will Nintendo and Microsoft respond to this news? In the short term, many expect Nintendo to drop the price of the Wii from $249 to $199, as it hasn't had a price cut since it launched almost three years ago. Microsoft seems to be discontinuing the current Xbox 360 Pro, and lowering the 360 Elite version to the Pro's former price of $299--basically giving gamers more hard drive space for their buck. And if past holidays are any indication, expect a new Xbox SKU bundled with some games.
In the long term though, the next stage of this console war is brewing. Microsoft will launch Project Natal, and most likely a slimmer Xbox 360, later in 2010. And the rumored Wii HD will launch in 2011. Sony will release their motion control solution in 2010.
Will Sony's new PS3 and Motion Controllers be enough for it to surge out of third place? Stay tuned.
Yesterday, along with a slew of new functions in its Xbox 360 system update, Microsoft launched its Games on Demand store with full Xbox 360 titles for download. Is this move a game-changer or just business as usual?
The store launched with 24 titles, a mix of games from several companies. And while Sony has offered a handful of full games for download, Warhawk, Siren, and SOCOM, Microsoft has taken it a step further in launching a full store. Shane Kim, Microsoft's VP of Strategy and Business Development for Interactive Entertainment, said, "It's a natural evolution, not only of the capabilities of the service, but the expansion of the business model that we offer, not only internally, but to our business partners."
All of the games were priced at either $20 or $30, a markdown from the usual $60 due to the lack of packaging or a physical disk. And while those prices seem reasonable, is it really remarkable? Many of the titles are from the first year of the Xbox 360, and few are less than two years old. Those prices may seem low, but used copies of the same games probably run for about the same price or less. Compared to the Xbox Live Arcade games running from $5 to $15, a $30 download is hardly an impulse buy.
While price may not be the differential for the service, the convenience of not having to leave the house may be enough to hook gamers. Downloading Call of Duty 2, a 5.27 GB title, took about two hours and 20 minutes on my cable modem--fortunately, the 360 can download in standby with the power off. By the time I finished watching a Blu-ray film on the PS3, ironically, the download was done--an acceptable alternative to a trip to the game store, even without the retail experience. Jack Tretton, President of Sony Computer Entertainment America, isn't worried about retail, "Digital content is going to have an impact, but it's not going to eliminate the retailer. I still think there's a place where consumers want to go, see packaged media, experience it and really get a feel for the brand and the presentation."
So while the price and convenience competes with retail's used offerings, the true benefits of full downloads are for publishers. Unlike used titles at Gamestop, developers and publishers will earn profit on these sales, rather than retail pocketing the entirety of the wide margin of profit on used games. And since most of the titles are sequels or franchise titles, Games on Demand provides marketing for upcoming releases in their respective franchises: Assassin's Creed and Mass Effect, for instance. Ubisoft's Andy Swanson, Senior Director of Strategic Sales & Partnerships, said, "The long term exposure or the 'long tail' of being in the digital space extends the life of our brands and provides consumers with an additional distribution channel to obtain Ubisoft content."
So what is the real benefit to players? They can access older games that may be hard to find used. They are financially supporting the game makers. And they can do all this from their living room. But until newer titles are sold at prices lower than retail's used games, this digital strategy will not be a revolution. Swanson is hopeful, "If the technology allows for it and there is enough consumer demand, we will determine opportunities to release titles simultaneously via Games on Demand."
According to Microsoft, that will not happen anytime soon. As Kim said, "When it comes to us saying we want Games on Demand to enable day-and-date release of new titles, then there's certainly a lot of work we would need to go through. We're not anywhere close to that world today. We have great relationships with the retail channel--they're important partners. We sell a lot of hardware and software through retail."
With Microsoft, Sony, and Nintendo beholden to retail to sell hardware, day-and-date digital releases will never become standard. But perhaps the three hardware manufacturers can push an industry standard of providing games as downloads 6 months after release--not unlike the home video market--and gamers can truly experience a digital revolution. Until then, as cool and cutting-edge as Games on Demand is, it is business as usual.
The gaming industry is no longer recession proof. Sony's sales for the quarter are down 37% from the year before, Nintendo's sales are down 40%. Overall, game sales are down 41% compared to June of last year. "The impact of the economy is clearly reflected in the sales numbers," said NPD analyst Anita Frazier. But if game companies are having trouble selling the volume of titles they'd like, then why aren't they adjusting prices to increase sales? Lets take a look at the who, and why.
Who: Sony
What: Sony sold 1.6 million PSPs last quarter, compared to 3.7 million units during that quarter last year. This coming holiday season, Sony is set to release the new PSP Go for $250. That's far more expensive than the original PSP, which cost $170.
Why: So why is Sony releasing such an expensive product in such economic hard times? Despite the downturn, Sony is pricing its products for the long cycle. As Sony Computer Entertainment America's CEO Jack Tretton told me, "You have to look at things over a long-term period. It's extremely difficult to do in our industry, and even more difficult to do in this economy. ... It's a formula that is successful and is one that we shouldn't succumb to the pressure and deviate from."
Who: Music Game Publishers
What: Sony isn't the only one pricing high despite the downward sales trend. Activision has a slew of holiday music games: Guitar Hero 5 ($100 with guitar), Band Hero ($200 with full band, $100 with guitar), and DJ Hero ($130 with turntable controller). Electronic Arts and MTV have an almost-guaranteed hit on their hands with The Beatles: Rock Band, but it will cost a whopping $250 with controllers.
Why: Because they make far more money on the peripherals than on the games themselves. "Publishers like Activision look at the margins on things like the guitar controllers and are applying the same thinking to other (non-music) franchises," says John Davison, founder of gaming site WhatTheyPlay.com. "The new Tony Hawk game will ship with a skateboard controller." Tony Hawk Ride, with its faux board, will cost $120.
Who: Nintendo
What: Nintendo is also hitting up the public with plastic peripherals, pushing Wii Fit Plus ($90 with the Balance Board) and the Wii Motion Plus unit for more accurate controls in certain games--$20 each, which adds up with 4-player games.
Why: The mainstream public, not just gamers, have gone gaga over the Wii and its motion controls--and are willing to pay to keep that love affair going, migrating from the Wii, to Wii Fit, to now the Wii Motion Plus and the coming Wii Fit Plus. Wii Sports Resort, sequel to the original Wii Sports that was packed with the console, was recently released with a single Motion Plus unit included. This package sold over 500,000 copies in the first eight days of release.
Who: Microsoft
What: Gaming-news site Kotaku showed that the average price of Xbox Live Arcade Games had increased 31% since October 2006, from 550 points ($6.87) to 725 points ($9.06).
Why: As Shane Kim, the VP of Strategy for Microsoft's Interactive Entertainment division told me, "Subscriptions from Xbox Live are an important part of our business model. We are also driving a very significant volume of digital transactions." Since digital downloads do not have packaging or physical media, the cost from them is much less, thus increasing profit margins.
Who: Premium Package Publishers
What: Game companies aren't just increasing the cost of gaming with hardware and peripherals, there are also special editions of games.
Why: Wedbush Morgan analyst Michael Pachter said, "Expensive premium editions are intended for the hardcore guys. They bundle $5 of extra stuff and charge $10 to 20 more. It's a profit deal." How about $100 for a Batman: Arkham Asylum edition that comes with a book, a making-of DVD, and a 14-inch Batarang? Or NBA 2K10 Anniversary Edition, $100 for the game along with an anniversary DVD, Kobe Bryant figure, Kobe Bryant poster, and a miniature locker to hold games. And for $150 a player can get Modern Warfare 2 in a metal case and with the additions of an artbook, a code to download the original Call of Duty, and a pair of night-vision goggles. The more stuff a company can sell with it's game, the more profit they can wring from a single title.
And so, perhaps counter intuitively, game companies price high to help them survive the recession, and not to making the dilemma of spending less money on a choice of the many holiday games any easier for the gaming public. "Operating profits in this industry are very thin, with companies like EA eking out a 10% profit on sales. They simply cannot afford to discount drastically in order to drive sales higher, as their profit margin would evaporate," said Pachter. With unemployment expected to hit double digits by the end of the year, further encouraging frugality, we'll have to see if the game companies' use of high prices to offset depressed sales ultimately pays off.
Blizzard has announced that the highly anticipated StarCraft II will be delayed this holiday season, to the first half of 2010. According to Blizzard, the extra time is needed to upgrade the multiplayer network Battle.net, "This extra development time will be critical to help us realize our vision for the service." This is just the latest in a string of announced game delays. But are the game companies delaying to improve game development, or to game the economy?
In the last month, there have been a slew of announcements of high-profile games being delayed from this holiday to 2010: Bioshock 2, Max Payne 3, Red Dead Redemption, Splinter Cell: Conviction, Heavy Rain, and MAG. While game delays are nothing new, that it's happening in such numbers with so many big titles (and others I haven't listed) is unheard of. One may wonder if companies are looking away from the holidays to less crowded release windows to better recoup investments.
Shane Kim, the VP of Strategy for Microsoft's Interactive Entertainment division, doesn't think so, "It has more to do with the development, than it does with trying to time the market and predicting when the recession may not have the same kind of impact that it's had on the overall industry." Wedbush Morgan analyst Michael Pachter agrees with both notions, "The delays are primarily to allow time to getting the games up to snuff, so that they will sell better. Of course, the decision to delay is easier if the release window is crowded, as a game with less competition has a better chance of selling."
One company that delayed several of its titles is Ubisoft. In the press release CEO Yves Guillemot stated, "We are disappointed that we have to postpone the release of several major games but we consider that this choice is the best one in the long-term interests of Ubisoft." This press release also stated sales were down 51% in the first quarter of fiscal year 2009, compared to 2008, and expected a 54% decline in the second quarter. Moving such highly anticipated titles may prevent similar declines in FY 2010. Or maybe Ubisoft and others moved games to help improve revenue during the traditionally quieter months of the year.
Whatever the reason companies state for the delays, their titles will benefit from extra development time--and their bottom line will benefit from the possible improvement in America's economy and the gaming industry's sales. But for now, gamers everywhere will just have to be patient and wait to take on the Zerg.
Killing zombie hordes on your kitchen table. Speaking to a ghost in your bedroom. Such is the promise of augmented reality gaming. AR gaming is here, because the current generation of mobile phones feature cameras good enough to properly capture the world as well as processors powerful enough to handle the graphics overlaid onto the camera's feed. There are many projects underway, and even the ones that are just demos still caught our eye and got us excited for the future.
Kitchen Table of the Living Dead ARhrrr!, developed by the Augmented Environments Lab at the Georgia Institute of Technology, transforms the player's smartphone into a helicopter flying over a zombie-ridden town you have printed out and put on a table. Shoot the zombies and allow civilians time to escape. And don't forget to use Skittles.
Block by Block
Playing with toy cubes has never been so compelling. LevelHead, by Julian Oliver, brings tactile control to a puzzle-platformer. Blocks become rooms that you must hold and tilt to maneuver the character inside. Turn the block as the character enters a door to another room. The goal as a player is to get the character from room to room until he can get to the exit, which lets the character move to the next block, the player physically connecting the two objects.
Location, Location, Location Kweekies is currently being developed by int13, a French company that has already released several traditional mobile games. It features gameplay reminiscent of Pokemon, as your cute pet fights someone else's cute pet. But this time it is on your own table, bed, treehouse, or wherever you like. Unfortunately, it is doubtful the full game be out this summer, int13's original announced release window.
Cross-platform Fun
The winner of Nokia's Mobile Games Innovation Challenge 2008, Ghostwire is also coming to the Nintendo DSi, the recently released update of Nintendo's handheld that features a camera. The trailer below shows an interesting mix of traditional video game tropes (puzzles, items, conversations) with camera-enabled AR gameplay. The title is still in development at Swedish firm A Different Game.
Like Magic We would be remiss not to recognize the first mainstream AG game, Eye of Judgment,released in October 2007 by Sony. This PlayStation 3 game resembles the classic card game "Magic: The Gathering." As you place the cards below the PlayStation EyeToy camera, the monsters appear on your television screen. They fight it out, and the game keeps track of each player's score. Eye of Judgment provides a good mix of old school (collectible card game) and new tech (camera and augmented reality).
In the June NPD numbers, the industry showed a significant drop year-to-year. Yet, Xbox 360 is the only console with sales up this year. What do you contribute that resiliency to?
It certainly helps to have the most affordable console on the market today, with the Xbox 360 Arcade version at $199. But it's not just price alone, but in the totality of the experiences that we are delivering. Since we launched the New Xbox Experience and Netflix functionality last year, we continue to add more than 500,000 new members to the Xbox Live service every month. We are up to over 20 million members on Xbox Live worldwide. These are people who have logged on to the service in the last six months, not just anybody that's ever signed up. And we just got more in store, in terms of continuing to drive growth. We are the only console that's up for 2009 over 2008, for the first six months of the calendar year. Which I think is pretty impressive given the environment and is a testimony to the value and the pricing we are delivering to customers.
Microsoft is adding social networking support to Xbox Live. What is that strategy behind that decision?
To make Xbox Live the next-generation social and entertainment network. That's been our strategy from the get go, even going back to 2002 when we launched Live. That was considered a fairly risky thing and a big strategic move. Which today, has paid dividends many times over. We are expanding beyond the base that we established with gaming and multiplayer gaming on Live by adding more entertainment options--last.fm, instant-on 1080p HD streaming video, the Netflix partnership, etc.--but we also want to help people connect to their friends. It's important that Xbox Live is not viewed as an island, but something that integrates well with other social networks--so Facebook and Twitter integration is very important--as well as making sure that you can get to the entertainment you care about, either within your own home or through services like last.fm, Netflix, or the Zune video service. It's part of a very deliberate strategy and you'll see us continue to do more in the social and entertainment spaces.
With the new dashboard update comes the Games on Demand store to download full 360 games. Why is Microsoft launching that now?
We're big believers in digital distribution, everything from downloadable content for games, to Xbox Live Arcade games, to the Xbox Originals. Now we are going to be delivering Xbox 360 games. This is a natural next step in the evolution of digital distribution. But we're also big believers in retail distribution as well. Everything we've done in digital distribution spaces has expanded the market, has not been a share-shift between retail and online. And we think the effect will be the same thing here. It's a natural evolution, not only of the capabilities of the service, but the expansion of the business model that we offer, not only internally, but to our business partners.
Many of the titles are games with sequels coming. Is the main strategy behind Games on Demand marketing, or is the strategy to provide a service that is more beneficial to developers and players than buying retail?
It's not about trying to share-shift from retail to direct online distribution. That's not it at all. One of the benefits of what we're doing, that you pointed out, is that it can be a great marketing tool for publishers. And remember, this is not an exclusive to Microsoft Game Studios; it's a service available to all publishers. It can be a great tool to reintroduce their franchises, especially the ones they care about having long-term additions for. It really is about expanding the options and the choices for consumers, and will have great benefits for publishers and the entire ecosystem.
Are there plans in 2010 to offer full downloads with new titles, concurrent with retail?
There are a lot of complex issues to deal with here, especially if you start talking about day-and-date release with retail availability--which is not something that we're talking about at all, today. And publishers have to do some technical work in order to enable this. There will be decisions that publishers have to make from a business standpoint. But when it comes to us saying we want Games on Demand to enable day-and-date release of new titles, then there's certainly a lot of work we would need to go through. We're not anywhere close to that world today. We have great relationships with the retail channel--they're important partners. We sell a lot of hardware and software through retail channels. We have to be smart about how we approach this business.
One 2010 strategy that has become well publicized is Project Natal. You have said that Natal's release will be handled with the same gravitas as a console launch. Why has that stance been adopted?
Project Natal is something that doesn't come along very often in our industry. It's captured the imagination of people all over the world, in our industry and outside it. We look at it as a game-changer. It's less about competing with Sony and Nintendo, and more about breaking down the barriers to the industry and inviting the hundreds of millions of people who don't participate in what we do to come enjoy what Xbox 360 and Xbox Live have to offer. I've been lucky enough to be here for the launch of Xbox 360, Halo 2, and Halo 3, and this is going to be just as big in terms of consumer excitement, importance to the industry, and certainly importance to Microsoft.
The launch of Natal promises a longer life for the 360--a stance that seems like Microsoft is adopting Sony's outlook on the 10-year console cycle. How much of that strategy comes from the recession making it unwise to launch an expensive console, and how much of that comes from the current success of the 360 not making a new console necessary in a business sense?
It's not about copying Sony's model--perhaps we should've said 11-year life cycle instead. [Laughs] There's no question that Sony's benefited from a long life cycle for PlayStation 1 and PlayStation 2--that's to their credit and that's an enviable business. And it has nothing to do with the recession. It really has much more to do with your latter point: the innovation and longevity that will be created when Project Natal is added to that mix and the value and the entertainment options that we continue to expand on Xbox Live. The "next generation" will be defined by software and services, not hardware.
In the past we would always get this question, "Hey, there's a new console launch every five years and you're coming up on that time for Xbox, right?" That's the old treadmill way of thinking. Before you had things that were very obvious, from a hardware standpoint--pushing more pixels, the move from 2-D to 3-D, 3-D to HD, etc. We got a very powerful piece of hardware in Xbox 360. I am confident that we have more headroom available, in terms of developers and creators figuring out how to get more out of the system. So I worry less about new hardware having to enable us to move to a different level of graphics. It's much more about the experiences that you are going to deliver. That's why I think we're very well-positioned, competitively speaking, because Microsoft is a software and services company.
Speaking of software and services--comparing how Xbox Live started on the original Xbox, to how it was at the 360 launch, to how it is now and with the coming updates, Microsoft is changing the console to fit that label as "center of the living room."
That has been our strategy from the start. We knew we couldn't just say, "Hey, here's the new center for home entertainment!" Being able to build from the base that we have in the gaming business and expanding beyond that, not only with Xbox 360, but with Xbox Live is so important. We are not just trying to launch this nebulous consumer-entertainment thing. Xbox is firmly routed in an important consumer entertainment pillar, which is gaming. But clearly it is going to expand to other realms of home entertainment and social networking. It's not difficult for customers to go, "Hey, this used to be about Halo matchmaking. Now it's really about Halo matchmaking, connecting with my friends on Facebook, and watching movies with my friends on the same couch and across the world."
Activision Blizzard has announced that Sam Raimi will direct a film based on the hugely popular World of Warcraft online role playing video game. Raimi will be directing his fourth Spider-man film first, so don't expect WoW on the big screen until 2012 or 2013. But this announcement is a big deal. Why? All one has to do is looking at the history and numbers behind the online role-playing juggernaut.
* World of Warcraft attracts 11.5 million subscribers per month, each paying a $15 subscription fee (on top of the $50 game).
* On January 16, 2007 the first expansion--a kind of sequel--for WoW was released for $40. The Burning Crusade sold 2.4 million copies by the time it was released, a record for a PC game.
* On November, 13, 2008 the second expansion, Wrath of the Lich King, was released for $40. It sold 2.8 million copies day one, breaking the record of the previous expansion.
* World of Warcraft: ~10 million units sold.
* Subscriptions: ~12 million.
* World of Warcraft: Burning Crusade: ~5 million units sold.
* World of Warcraft: Wrath of the Lich King: ~5 million units sold.
* Revenue: Over $1 billion in 2008.
So what does that mean for the WoW film? Let's assume a budget of over $100 million to make the movie. If 10 million people buy tickets see their favorite game brought to life, the film would gross over $400 million worldwide. Add merchandise, a well-timed expansion, and home video sales, the total global revenue could reach $1 billion.
Of course, no other game-to-movie adaptation has done nearly that well. The closest would be 2001's Tomb Raider--which is the most successful video game adaptation to date--with $274 million in total box office receipts worldwide.
I always feel more creative in California. I'm not sure if it's the weather, the entrepreneurial buzz, friendlier people or just the warm mythology I've internalized from decades of listening to the Beach Boys. But whenever I touch down in the Golden State, I really do consider more options, think about grander plans and attack challenges in an entirely fresh way. It happened again when I visited Los Angeles last weekend. While my California love originated in the Bay Area and Silicon Valley, I felt the same glow as I sat in a hotel restaurant in West Hollywood.
But my calm and confident mood was somewhat at odds with California's current reality. The state is in full-blown economic crisis: unemployment over 10% in many cities, foreclosures skyrocketing, and, oh yeah, a $24 billion state budget deficit.
But instead of curling up in a ball, California is facing the brink with some of its boldest creativity yet. If a group of activists has its way, California may rewrite its constitution in 2011. The proposed constitutional convention--a potentially seismic political event if they pull it off--would play out online and in front of the cameras, addressing the fundamental questions of our society. Who gets to vote? How much should the rich pay in taxes and how does that get decided? What defines a first-class education and is it a requirement that the state offer it to every child? To make this convention a reality, a number of hurdles will have to be overcome. For starters, they'll need a couple of million signatures to get a pair of issues on the ballot: the convention itself, and a new rule that allows the convention to happen without legislative approval.
But if they succeed, it's hard for me to overstate the convention's potential impact as the world watches this bellwether state publicly debate what a 21st century democracy should look like. California could press the reset button not just on fundamental issues like health care, education, marriage, and taxes, but on even more basic questions about how to run a society--and an economy, in California's case the eighth largest in the world.
A constitutional convention is a big idea, to be sure. Change on that scale is never easy. But after spending just 48 hours with Californians and feeling that creative energy once again, I'm sure that if anyone call pull it off, they can.
WATCH Repair California makes its case for the constitutional convention
The Stimulist is journalist Carlos Watson's original take on the daily news: a tasty mix of rising stars, provocative ideas, and inspiring stories. Enjoy responsively:
Ideas: Provocative daily resolutions to be debated. Kind of a Big Deal: Tomorrow's stars from around the world. C-Note: Carlos Watson's daily take on politics, business, and life.
In his recent address at the Radio and TV Correspondents' Dinner, comedian and proud nerd John Hodgman mused that Barack Obama may be the first nerd president of the modern era. The conventional wisdom during the campaign, of course, was that Obama was more cool than geeky. But there's no debate over the group he's brought with him: the eggheads have returned to Washington. Does the rise of the Orszags and Geithners, teamed with the President's professorial mindset, signal that liberal intellectuals can finally come out of the closet? Will the Democratic Party at long last be able to shed the “elitist” label that doomed so many of its hopefuls, from Michael Dukakis to Al Gore? History suggests otherwise.
Since its founding, the U.S. has vacillated between its geek and jock inclinations. The independent provincial spirit of the frontier has vied with a bookish Eastern inquisitiveness, and, as a result, Americans have revered both strong, folksy leaders they could have a beer with (Teddy Roosevelt, Reagan, George W. Bush) and those whose intellect they admired (Jefferson, Lincoln, and Obama). The real question is which is in vogue at a particular time.
In his Pulitzer Prize-winning book, Anti-Intellectualism in American Life, Richard Hofstadter chronicled the ebb and flow of anti-intellectual feeling in the U.S., including the rise and fall of the “eggheads” in American public life. The term “egghead” denoted one who was out of touch with the common man, a head-in-the-clouds brainiac who lacked common sense. The phrase reached its zenith in the 1950s--Richard Nixon used it particularly successfully against Democratic Presidential nominee Adlai Stevenson, turning the reserved statesman's intellectual demeanor into a political liability.
Writing in 1964, Hofstadter doubted that the Kennedy administration's “whiz kids” would fare much better than their predecessors: he noted how in prior periods in American history, the “common folk” naturally suspicious of urbanity and learning--local evangelical preachers and small town lawyers and businessmen--had always rebelled in response to such leaders. And, as another prize-winning book, David Halberstam's The Best and the Brightest, showed, they had good reason to be suspicious. Many of the Ivy League-educated leaders of academia and industry who served in the Kennedy and Johnson administrations were directly responsible for the boneheaded policies that had such disastrous consequences in Vietnam.
If history is any guide, the Obama administration will not succeed at permanently removing anti-intellectualism from the national mindset. Sure, Obama's got a cool factor, and he's hired what has to be the best pickup hoops squad in White House history. But, ultimately, this group is a bunch of braniacs. The jocks will almost certainly rise again. Obama's whiz kids should focus their brain power on creating lasting reforms to health care, education, the economy, and energy, and do their best to emulate some of America's more distinguished eggheads. After all, as Hodgman noted in his address, the most famous nerds in American history were its own founding fathers.
WATCH John Hodgman's send-up at the Radio and TV Correspondents' Dinner
The Stimulist is journalist Carlos Watson's original take on the daily news: a tasty mix of rising stars, provocative ideas, and inspiring stories. Enjoy responsively:
Ideas: Provocative daily resolutions to be debated. Kind of a Big Deal: Tomorrow's stars from around the world. C-Note: Carlos Watson's daily take on politics, business, and life.
How do you measure the effectiveness of a game, beyond the monetary value alone?
We tend to look at things in 10-year increments when a lot of people tend to look at in five, and then they boil it down to three as the make-or-break time. And I think if you have that narrow of a view you take much less risk. We want the platform to be successful, we want to be profitable. But it is getting harder to measure that. And when you get down to a game like The Last Guardian, you can't just look at the number of units it sold versus it's development cost; it's what did you do to drive our message of diversity.
You have to look at things over a long-term period. It's extremely difficult to do in our industry, and even more difficult to do in this economy. In our industry it's all about now, "When are you going to drop you price? When's the new system coming out? What's the new game?" You have to take a step back and not get caught up in that. But it gets more and more difficult in this economy because people don't have the patience to say, "You're not profitable today, or that game didn't make money today, but it's kind of setting up for three or five years down the road." In this economy people go, "There may not be any tomorrow, so it's all about today." So I think that attitude is being tested now more than it ever has.
Out of E3 came criticism of the and disappointment that there was no PS3 price drop. What do you think about this fixation on price?
It's somewhat natural, especially in this economy. But people are always wanting you to lower your price on hardware. We could've come out with a PlayStation 2.5 for $299 or less, and in the first two or three years it would sell extremely well. But there would be a point where people would be going, "I am not really seeing the incremental leap." We feel that we're sacrificing the short term to pay dividends in the long term. People are having short-term thinking--the platform is not even three years old. It was $599; it's now $399. The focus on pricing is something we appreciate, but you have to have the conviction and the confidence that you are on the right path for the long term and ultimately you'll get all the consumers you want. You won't get them all day one, but we're looking to get them over a 10-year period. It's going to take different things to get different consumers.
You talked again about the 10-year cycle and the future, but recently you said we focus too much on tomorrow and not enough on today.
I said that in the context of, "We want a price drop; when's a new system coming out?" I am saying to enjoy the technology that you have, explore the technology that you have, maximize the technology that you have, instead of trying to hasten the demise. People are just coming up to speed with the technology. Today's platform and tomorrow's platform is the PlayStation 3. But there's somebody that wants to talk about when PlayStation 4 is coming out and what kind of technology is it going to have.
If you were one of the first consumers to get a PS3, I hope that you would say, "I might have paid $499 or $599 for it, but it does so much more today." There are a lot of technologies where people say, "I don't even bother pulling it out anymore. I was excited when I first got it, but I have kind of moved on." And that's sad. It costs a lot to invest in rolling out new technology, and if the consumer walks away before the lifecycle's over--you can talk about the install base of hardware, but how many of those machines are still active, how many people are still playing them?
The flipside of the 10-year cycle is that the economy tanks and you have to stick with the 10-year program. So how do you weather the storm when things outside of your control don't go your way?
Hopefully last year is as bad as it gets. I think all indicators are that 2009 is going better than 2008. In 2008, we had a 38% increase in sales and we hit our 10-million-units-worldwide goal for PS3 sales. We had $6.4 billion in revenue in U.S. alone on the PlayStation brand, and a 116% increase in software sales. At the worst possible time, if you're hitting numbers and delivering success... my hope is that as our production efficiencies improve and more great games come to market, the horizon has got to be better for 2009 and 2010.
It's like being out there in a storm--it does cause you to question your conviction, and tie yourself to the mast and weather the storm. We have hit a very challenging period of trying to sell future technology, a high-end device, but is on the high-end retail pricing spectrum, at a time when people's disposable income is limited. But I think the fact we were successful in that says people are getting the message, that you get tremendous value when you buy a PlayStation product. Yes there are cheaper machines out there, but not ones that deliver the degree of value for the money that ours does.
Another long-term strategy for you seems to be downloadable games. You had Siren, and now with PSP Go you are going to have all the PSP titles for download. Any there plans to extend that strategy to more PS3 games?
The PSP Go is the first digital-only gaming device to come to market. Digital has always been part of our strategy. If you go back to PS2, there was no fee for the online service; not only broadband connectivity, but dial-up connectivity. As we sit here in 2009, and it's like, "Who is interested in dial-up?" I think we brought in a lot of consumers with a free service and a dial-up connection.
You move to today, I feel like the PS3 is perfectly positioned. You like playing DVDs, but you're not ready for Blu-ray? Fine, our machine plays them. "I'm not even interested in movies; I'm interested in game content." Are you interested in disc-based content, or digital content? Because we can play both. And we can stream digital downloads of TV shows and movies in standard definition or high definition. So whatever the argument is, I feel like the PS3 is perfectly positioned to be the toll booth that everybody runs through.
We still have a significant portion of our business, and always will, in disc-based media, but we offered fully-downloadable games before anybody else did. When you bought SOCOM or you bought Gran Turismo 5 Prologue, that was available day and date in either digital format or disc format. Now we're moving towards, with PSP Go and PSN, where the consumer will always have a choice, to say, "I want to download it my living room, if I want it digitally," or "I'll buy it at the local retail store, if I want it disc-based." Nobody is cut out of this equation. The consumer has ultimate flexibility, brick-and-mortar retail is still embraced. But, I think the retailer understands that digital is here to stay and that they are not going to stem that tide.
At a press event at the GamesCom convention in Germany today, Sony announced that the long-rumored slimmer PS3 will be released September 1 for $299, a $100 price drop from its current PlayStation 3. The console will have a 120 GB hard drive, be 33% smaller and 36% lighter, consuming 34% less power.
The store launched with 24 titles, a mix of games from several companies. And while Sony has offered a handful of full games for download, Warhawk, Siren, and SOCOM, Microsoft has taken it a step further in launching a full store. 
While price may not be the differential for the service, the convenience of not having to leave the house may be enough to hook gamers. Downloading Call of Duty 2, a 5.27 GB title, took about two hours and 20 minutes on my cable modem--fortunately, the 360 can download in standby with the power off. By the time I finished watching a Blu-ray film on the PS3, ironically, the download was done--an acceptable alternative to a trip to the game store, even without the retail experience. 
So while the price and convenience competes with retail's used offerings, the true benefits of full downloads are for publishers. Unlike used titles at 
Who: Sony
Who: Music Game Publishers
Who: Premium Package Publishers
Blizzard has announced that the highly anticipated StarCraft II will be delayed this holiday season, to the first half of 2010. According to Blizzard, the extra time is needed to upgrade the multiplayer network Battle.net, "This extra development time will be critical to help us realize our vision for the service." This is just the latest in a string of announced game delays. But are the game companies delaying to improve game development, or to game the economy?
In the June NPD numbers, the industry showed a significant drop year-to-year. Yet, Xbox 360 is the only console with sales up this year. What do you contribute that resiliency to? 
With the new dashboard update comes the Games on Demand store to download full 360 games. Why is Microsoft launching that now? 
One 2010 strategy that has become well publicized is 
Speaking of software and services--comparing how Xbox Live started on the original Xbox, to how it was at the 360 launch, to how it is now and with the coming updates, Microsoft is changing the console to fit that label as "center of the living room." 
In his recent address at the Radio and TV Correspondents' Dinner, comedian and proud nerd John Hodgman mused that Barack Obama may be the first nerd president of the modern era. The conventional wisdom during the campaign, of course, was that Obama was 
How do you measure the effectiveness of a game, beyond the monetary value alone?
You talked again about the 10-year cycle and the future, but recently you said we focus too much on tomorrow and not enough on today. 
