Forbes Analyst: "MS Gaming a Disaster"

[Zilla Man]

First off, let me say that this thread isn't intended to take away any enjoyment 360 owners may get from their machine. It's more to back up what I pointed out several months ago: that despite having a 1 year lead this generation, MS's Home Ent./Gaming Division is hemorhaging major $$$ to the point where they're in serious trouble.

The following article is from Financial Analyst Roger Ehrenberg.

When Will Microsoft Own Up to the XBox 360 Bomb?

Yahoo Business Link (with charts):

http://biz.yahoo.com/seekingalpha/070418/32642_id.html?.v=1


and The Original Forbes Link:

http://www.forbes.com/home/personalfinance/2007/04/18/xbox-microsoft-nintendo-pf-ii-in_re_0418soapbox_inl.html

Here are some highlights.

"...to state the obvious for those who know me and/or are regular readers, I am neither a fanboy nor an investor in single stocks, so I have no interest in partisanship one way or the other. I am only interested in truth and understanding, and if a few people get their noses bent out of shape in the process, sorry."

Making money, e.g., the creation of long-term shareholder value, has got to be the ultimate driver of Microsoft's gaming (and H&E) strategy, right? Well, after five years and over $21 billion invested all they've got to show for it is $5.4 billion of cumulative operating losses, and Xbox 360 doesn't appear to be the silver bullet to turn things around. I think it is also interesting to note that Microsoft's actual disclosure shows only Revenues and Operating Losses; I backed into and show EXPENSES below for explanatory purposes.

Why might it be that Microsoft has strayed from the classic Revenues - Expenses = Profits (Losses) disclosure? Perhaps because they don't want investors to focus on the fact that over $21 billion - the market cap of a sizable independent company - has been invested in a business that has performed so poorly, with unclear prospects for improvement. Could this be the reason? Hmmm.

410

Sometimes these cold, stark facts seem to get lost in the shuffle. Xbox 360 (a meaningful part of H&E) might be a fine product, but if so, why is it so financially disastrous to its maker? I understand the concept of selling a console at a loss in order to lay the foundation for recoupment of original investment + operating losses + attractive financial return through gaming, but what is it going to take to turn things around? Nothing short of a tectonic transformation in perception of the Microsoft offering relative to its competitors.

Success in the Japanese market creates a virtuous cycle - sell consoles, which induces developers to create titles, which makes it easier to sell more consoles, more games, more consoles, etc., etc., etc. In the absence of such a cycle, a console maker is fighting an almost impossible uphill battle towards success on the global stage. It is instructive to look at where the last major console releases were 18 weeks after launch in Japan. Basically, if you did well in Japan during this time frame, you had a chance to have a blow-out product. If you didn't, well, you didn't.

[See chart in first link]

See how the Xbox did better than the Xbox 360? Even the PS3 has done better than the Xbox 360. But success in Japan is not a guarantee of a run-away success, as the GameCube proved. Without question, Japan is an important and critical market for building a globally successful gaming platform, and an early read of the tea leaves does not bode well for the Xbox 360.

I only partially agree with him here. I actually think it would be possible for a console to make $ by doing only okay in Japan (I mean better than Xbox/Xbox 360) if it did excellent in the U.S.

It seems to me that there is a disconnect between stated objectives, strategy and execution. Microsoft's vision of the gaming console as the window into the living room is a big, big bet, and one that clearly hasn't paid off thus far. Mr. Moore talks about the need to broaden its audience across both geographies and demographics, yet the emphasis on HDTV as being a key factor driving broad-based console sales kind of misses the point.

Is the Wii successful because of its zippy graphics and technological superiority? No. It is successful because it is fun. And because it appeals to a broad audience. And because it is comparatively cheap. The Microsoft strategy sounds more like a niche strategy for hard-core gamers, in which case its investment in a console strategy should be smaller and more targeted. Would Lamborghini try to sell to everyone? Of course not; it would target those who the company knows value its features and are willing to pay for them. This is basic stuff.

This goes right back to what me, Gaddy, and N'gai Croal ("Redmond, We Have A Problem") were saying about MS not really making an effort to engage the casual gamer; i.e. the crowd who's going to be buying most of the systems over the long haul. Sure they've made minmal efforts like Viva Pinata and Grabbed By The Ghoulies, but those were whispers drowned out by the teststerone-filled din of Halo, Splinter Cell, RB6, Ninja Gaiden and the rest of the hardcore Mountain Dew swag.

Bottom line, Microsoft needs to take a long, hard look at its gaming strategy - and, in fact, its entire H&E strategy. At what point, regardless of its virtually endless financial resources, does it say "enough is enough." Would we have been better served by returning the extra cash to shareholders rather than investing it in a franchise that seems to have questionable prospects for turning around? These are the kinds of questions Microsoft management should be asking. And hopefully, for shareholders' sakes, they are.

Let me wrap this up by saying that MS is to be lauded for making the Xbox and doing as well as they did with their 1st console. I thought that putting a hard drive into every console was nothing short of ingenious. Besides eliminating the need for memory cards, it freed up game programmers more, and, most importantly gave Sony a kick in the ass right when they needed it. If it weren't for MS I doubt the PS3 would be as powerful/feature laden as it is.

But I feel they dropped the ball in several major areas when it came to the 360.

1) They were so determined to say that they could sell a next gen console for under $300, they made the HD optional. :confused: By doing that, all they guaranteed was that game designers would have to code for the lowest common denominator; i.e. 360's with no HD. (Yes, I'm aware that 95% of 360's have one, but that's besides the point. The programmers can't assume that and it's frustrating for them.)

2) Japanese support. I think it's great that they have Sakaguchi-san aboard with Blue Dragon but I fear that it may be too little too late. Knowing the difficulty it had winning Japanese gamers over with the Xbox, why didn't MS simply make sure they had a Japanese RPG or other J title available at launch? They had plenty of time to prep one. It needn't be as epic as Blue Dragon - just something to show the J gamers "Hey, we get your gaming interests/speak your language." The other problem is that the Halo crowd (most Western Xbox 360 owners) won't even look at Blue Dragon because it represents everything they dislike about Eastern RPG's: anime influence, super deformed characters, "kiddie" content, etc.

Remember the Japanese MMORPG True Fantasy Online? That would have done wonders to MS rep in the J gaming community (plus would have been a great way tothem to Xbox live). Instead, they cancel it 2/3 through development! How hard would it have been to finish it and port it over to the 360? Instead, all they offered was FFXI - a game most J-gamers already had on their Playstation 2.

3) Not putting an HD-DVD drive in Xbox 360. This was another dumb mistake. Yes, it would have cost them more to make. But I think it's stupid for Peter Moore to go on about Hi Def movies and how important they are to the 360, and then not even include a next-gen optical drive in the console! They can ramble on and on about "giving consumers a choice BS." But we all know it was to try and hedge their betsAs a result, BluRay's beating the tar out of HD-DVD. Just think, if MS had included an HD-DVD drive in every 360 console, there'd be 7 million HD-DVD drives out there! :eek: That'd be enough to convince even BluRay only studios like Fox and Disney to give in. More importantly, it'd force Sony to try harder and drop the price on the PS3. Instead, they've got the add on as well as the ridiculously expensive Elite that's pissing off a lot of early 360 buyers (whom I have no sympathy for).

While all companies make mistakes. Sony's main screw ups seem to caused by trying to make up from last generation; i.e. they don't want to be technically on the bottom rung like PS2. As a result they've had supply, initial b/c, and Cell manufacturing debacles out the whazoo. In other words, they were a bit too ambitious. But now that stuff seems to be straightened out.

MS, on the other hand, seems to have learned nothing from last generation and IMHO actually went backwards this generation with the 360 (no next gen drive or built in hard drive). Which is a shame. It seems that every move, from the early launch to the introduction of the Elite, has been a reaction to Sony. And when you're busy reacting you have very little tie for strategic/long-term thought.

I actually think if Bill Gates was more hands on with the gaming division, MS wouldn't be in this deep a hole. If the rest of the company was run like the gaming division, then MS would've gone under/bankrupt years ago.

So, I ask you, with PS3 coming into its own with Home and Little Big Planet and Nintendo wooing the casual gamer, where does that lead MS? Other than Halo 3, what else do they have that'll be a system mover? Even if that does as well as Halo 2, will it be enough (hint: Halo 2 still didn't boost Xbox system sales as much as they predicted). It's only going to get worse as Sony and Nintendo bring out their big guns in late 2007/ early 2008. And how long do you think the investors will allow the gaming division to keep operating at such a huge loss?

My prediction is that if Xbox 360 contnues to underperform this generation, then this may well be MS last gaming console. Uncle Bill and/or the investors want to succeed but they're pockets are not infinitely deep. What do you guys think?

Sorry for the long post.

[Ocelot]

I've seen M$'s console jump in popularity ten-fold. They hit it right with 360. But considering how many losses they took with Xbox? I guess it's going to take a hell of lot more. Nintendo is in a fine position to lose in the console war almost everytime....they are always making money. Wii is doing remarkably well. What does that mean? This is a double victory for the big "N" even if it comes in second. Sony could also lose this round but considering how well they did in the last 10 years, this isn't as big a deal as it can seem to be for Microsoft. They are in a real tight spot folks. Good find Zilla!

[ilnadmy]

I think MS has been better this gen at getting games for their system. In fact, they seem to hunt those games with a hunger that seems unprecedented (even Sony last gen wouldn't get the sort of sadistic satisfaction from announcing a new exclusive as Peter Moore et al. seem to get). Most of MS's success can be attributed to the 1 year head start, but they could have done a lot more to make the other consoles practically obsolete (which is what the PS2 did in its first year). As it stands, the PS3 is starting to straighten up and eye that first-place position.

I've also said this many times, but the PlayStation brand is huge. It's powerful. It's a goliath. There are people - both gamers as well as parents (this last one is really big) - that, when looking at consoles, will only consider the PlayStation. My parents, when referring to the Xbox I have, call it the "Gamebox", and I'm sure they're not the only ones. But when they talk about the PS2, you better believe they don't get the name wrong.

[Mochan]

They had plenty of time to prep one. It needn't be as epic as Blue Dragon - just something to show the J gamers "Hey, we get your gaming interests/speak your language."


ER... Enchant Arm.

That said, MS in my opinion *does* have the goods on the games as of the moment. Let's not kid ourselves, right <b>now</b> the gaming goodness on consoles is with the 360.

However, the PS3 is not quite done yet. Amidst the unreliability of the 360's hardware and the "competition" the 360 gets from the PC , I'm sure some of the core gaming community is still holding out on both PS3 and 360 to see who comes out on top. Early adopters are nice and all but there are those who are still waiting to see which console is the best buy, and the more casual demographic (not the new Wii demographic) that will be picking up consoles sooner or later are still more on the Playstation brand.

Like ilnadmy said, and as I have ranted about in the past, the Playstation brand is still stronger worldwide and will still have the name recognition to pull gamers in, especially gamers who are less informed and do not check release schedules and game previews every week. I don't know what's wrong with the US where it seems people only buy Wiis, DSs and 360s, but over here in the Philippines the hot items and topics for purchase are the PS2, the PSP and now the PS3. I know only 1 person who was excited to get a 360 (and who got one) but I know literally 100 people at least who want to get or have either a PSP or a PS3. Heck, I even know someone who has 2 PSPs -- so he can always play with a buddy anytime -- and he is saving up to buy more.

DS on the other hand I know only 4 people who are into it, it's a stronger commodity than the 360 but not on par with Sony's Playstations by a long shot.

Truly a strange phenomenon. I don't quite get why we are so into Sony here, and why the US is so into the DS, Wii and 360. I can understand the 360 but the DS success in the US puzzles me now more than it did when I didn't have a DS, to be honest. When I get a Wii I will be able to get a clearer picture of why the Wii is doing so well, as well. Over here NOBODY talks about the Wii, heck most people don't even know what a Wii is over here, and I'm talking the casual gaming crowd. I am suspecting Nintendo pulled some ultra clever marketing for the Wii in the US, which is why it is doing so well.

[Gadfly2317]

Truly a strange phenomenon. I don't quite get why we are so into Sony here, and why the US is so into the DS, Wii and 360. I can understand the 360 but the DS success in the US puzzles me now more than it did when I didn't have a DS, to be honest. When I get a Wii I will be able to get a clearer picture of why the Wii is doing so well, as well. Over here NOBODY talks about the Wii, heck most people don't even know what a Wii is over here, and I'm talking the casual gaming crowd. I am suspecting Nintendo pulled some ultra clever marketing for the Wii in the US, which is why it is doing so well.

Not to disparage your country, but it's not exactly considered one of the key gold-mines for the gaming companies is it? I mean, you said you were into Ps2 in part because of the ease of getting pirated games for it. Is piracy widespread there in the phillipines, or is that just a personal thing? That might account for part of it.

Marketing doesn't hurt, but no amount of marketing helped the GC. The Wii is a global success in many regions all over the world, japan, north amaerica, europe, australia. A LOT of word of mouth, and a lot of media word of mouth as opposed to paid marketing. If you don't get the DS sucess, you won't understand the Wii success either. They probably just aren't your cup of tea. The sucess of these systems is a sense of newness to much of the gameplay, and there is something for every type of gamer, including people who never gamed before. It's that simple. Nintendogs/Castlevania----Wii Sports/Twilight Princess.

As to the threads topic, as much as MS has the games they are sucking, relatively speaking. And so is Sony. I want to dig up our old thread here where a couple of us predicted--if not a straight up recession in the industry--then at the very least a huge tipping point economically which would cause the collapse of a lot of smaller developers. Nintendo is the best hope for small developers, and MS and Ps3 are a place for people (including MS and Sony) to lose their shirts. A lot of what we thought might happen is coming to pass.

[ThaMaskedGamer]

When Will Microsoft Own Up to the XBox 360 Bomb?

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If MS gaming is a disaster, what the hell is Sony Gaming right now?

Quitting right now would be stupid, they are on top in terms of next gen machines. This is what all that hard work and losses were for, quitting now would be a stupid business decision.

Plus it is guys like this who do not need to run businesses. MS was smart to try and get into a new consumer space if they want to grow beyond Operating Systems. Families are moving away from the PC and back toward the TV set. Getting into any business will initially mean losses, getting into a billion dollar business will mean billion dollar losses, that's just rules of the game. Sony was making billions now they are losing billions on the PS3, that is what is so stupid, but that is the dynamics of this business. It takes billions in investments to launch a console, and the goal is to recoup that and make profits at some point, sometimes that never happens. It looks like MS has set themselves up to make a decent profit from 360 down the road. Let's hope it happens, even you, because undoubtedly MS has pushed console gaming to levels consumers would have NEVER seen if it was left to Sony and Nintendo. Everybody should realize that. We have these incredible machines, thanks to MS. Nintendo's Wii is nice, but if the gaming market were left to them, I wouldn't be a gamer right now. And if PS3 was just an upgraded PS2, I wouldn't be a gamer.

[folken001]

If MS gaming is a disaster, what the hell is Sony Gaming right now?

Quitting right now would be stupid, they are on top in terms of next gen machines. This is what all that hard work and losses were for, quitting now would be a stupid business decision.

Plus it is guys like this who do not need to run businesses. MS was smart to try and get into a new consumer space if they want to grow beyond Operating Systems. Families are moving away from the PC and back toward the TV set. Getting into any business will initially mean losses, getting into a billion dollar business will mean billion dollar losses, that's just rules of the game. Sony was making billions now they are losing billions on the PS3, that is what is so stupid, but that is the dynamics of this business. It takes billions in investments to launch a console, and the goal is to recoup that and make profits at some point, sometimes that never happens. It looks like MS has set themselves up to make a decent profit from 360 down the road. Let's hope it happens, even you, because undoubtedly MS has pushed console gaming to levels consumers would have NEVER seen if it was left to Sony and Nintendo. Everybody should realize that. We have these incredible machines, thanks to MS. Nintendo's Wii is nice, but if the gaming market were left to them, I wouldn't be a gamer right now. And if PS3 was just an upgraded PS2, I wouldn't be a gamer.
Sony didn't lose 5 billion over PS series. Can't you read?

Sony made billions off PS then now they lose some millions. Damn, Sony is just in the same sh1t hole as M$.

[trebor]

Let's face it, when it comes to console makers, the only true winner here is Nintendo. Hell, even when they lose, they win - I.E. the GC being in 3rd place, yet was profitable enough for Nintendo to continue making consoles.

I think the whole strategy between both M$ and $ony right now is to keep throwing money at the videogame industry and hope for the best.

[ilnadmy]

Except that Sony actually made money off the first two iterations of the PlayStation. MS still has to reach that milestone. Let's see if they ever manage to hit it.

[trebor]

Except that Sony actually made money off the first two iterations of the PlayStation. MS still has to reach that milestone. Let's see if they ever manage to hit it.


I'm sure it's not helping MS that they need to replace so many 360s due to shoddy manufacturing either.

[Mochan]

Not to disparage your country, but it's not exactly considered one of the key gold-mines for the gaming companies is it? I mean, you said you were into Ps2 in part because of the ease of getting pirated games for it. Is piracy widespread there in the phillipines, or is that just a personal thing? That might account for part of it.

Don't worry about it Gaddie, I know exactly how it is, and we can call it that way, I won't be offended. As you said, since the RP is not a gaming goldmine, the powers that be will *not* be putting much effort marketing in this country, what does that imply?


Consider : the Wii and DS is selling well in the US and Japan, where the marketing machines *are* in full swing, yet elsewhere in the world like in the Philippines where the marketing machines of MS and Nintendo are weak, it is the Playstation brand that is selling. It implies the main reason the DS, the Wii and 360 are selling so well is due to marketing rather than any other actual merits. While that is a gross oversimplification (and you know as well as I do that the gaming library does make a difference even with more casual gamers) it's something to consider.

This may also be a targetted market segment phenomenon rather than a general market segment thing, with the key market segments in mind being "non gamers" (for the Wii), "hardcore gamers" (for the 360) and "informed gamers" (people like us on these boards who discuss videogame politics left and right).

While I won't deny that there are some good games (but not that terribly many) for the more seasoned gamer on both Wii and DS systems, you'll note that the Wii was heavily marketed in Europe and Australia as well -- events like National Wii Play in Australia were aggressively marketed.

The nice thing about the Wii (and DS) is that it is so easy to market innovation (or innovative gimmicks if you will) because novelty is just that -- a feeling of euphoric proportions while it is new. It will be much harder to market this in the future but right now Nintendo must, and is, striking while the iron is hot and it is paying dividends. It shows that Nintendo knows this business right now and they are showing MS and Sony a thing or two.

That said, I wouldn't quite call it a global success just yet, one of the key indicators for whether his has come to pass is when it becomes a household name not just in the key target market nations but also in grassroots nations like mine. Sony hit it big over here 10 years ago and they had no advertising whatsoever here outside of magazines we imported from the US. Same thing with Nintendo 20 years ago. That is real word-of-mouth advertising (and we didn't have the Internet back then) in the truest sense of the word.


As for the gaming recession, it is still possible and it would be a dang shame for console gaming to undergo upheaval and revert back to Wii-level production as opposed to the level MS brought it up to. It would be a shame but perhaps it would be for the best; people just aren't seeing the kind of numbers in this high-stakes nextgen gaming as they would like to see, instead we are seeing something mroe along the lines of PC gaming. This is ironic since only now we have begun seeing documentaries on Discovery Channel about the video gaming phenomenon and how it has overtaken the movie industry. If it were to happen, it would be funny to see the filmmakers in Discovery Channel put the money where there mouth is.

[Gamer From '78]

My prediction is that if Xbox 360 contnues to underperform this generation, then this may well be MS last gaming console. Uncle Bill and/or the investors want to succeed but they're pockets are not infinitely deep. What do you guys think?

Sorry for the long post.

Thanks for the good read Zilla. I agree that Microsoft needs to be profitable in their Games division or the Xbox brand may go away at the end of this generation. HOWEVER (like you didn't know THIS was coming!), Sony faces the same problems.

The PS3 has continually been outsold by the Xbox 360 in the US since launch-five months running now. Japan is indifferent to the system. Europe? Who knows yet? So Sony faces the same problems that Microsoft is facing. Only to me, it's worse for Sony since they were the industry leader for two generations in a row.

Something that the article fails to point out however, is that the Xbox 360 DOES have more support from developers. Specifically, Japanese developers who pretty much shunned the original Xbox like a red-headed stepchild. Sony former stranglehold on exclusives is over. They are pretty much all going multiplatform or to the 360 exclusively.

The only system that is selling to the mass-market is the Wii. The underdog for two generations running is making a bid for worldwide domination. And so far, they are succeeding.

[joquito]

It was only a few months ago, that someone posted an gamespot interview with a MS suit(The one where an analyst says MS is making profits off of each 360 sold today) stating that MS first option was to buy an existing console maker (Nintendo?). So the money they've lost on the Xbox and current 360 is possible equal to what they would have paid to buy that company.

[Mochan]

I wonder why they didn't?

[ilnadmy]

You think Nintendo and Sony's gaming division are going to sell themselves to MS? They make waaay too much money for that to happen.

[ThaMaskedGamer]

Sony didn't lose 5 billion over PS series. Can't you read?

Sony made billions off PS then now they lose some millions. Damn, Sony is just in the same sh1t hole as M$.

Yep and you can look at MS' losses as the investment it took to breach this market. Now that they have done that and look to be in a dominant position, you don't quit, you start making money.

Sony is in the sh*tter because, despite the recent turn around in their TV division, they are not in the position MS is in. MS overall is a much healthier company. Sony had profitable consoles and forced themselves into a situation where they are going to basically duplicate the losses MS had with the XBOX. The problem is, they cannot afford to do this, plus, MS did that to gain favor with gamers, Sony is losing money and losing mindshare at the sametime.

Trebor is actually wrong about GC. Overall it was a money loser, however the company, Nintendo overall was profitable.

I'm sure if MS had it to do all over again they wouldn't or they would do it differently, which they have with 360, but the bottomline is they have invested too much money and it looks like they have turned a corner so quitting now would be stupid. This guy is an investor who wants that money, in the form of dividends, I don't hear too many gamers calling for MS to give it up.

[Gadfly2317]

Trebor is actually wrong about GC. Overall it was a money loser, however the company, Nintendo overall was profitable.

I need to see a link to back this up. While the GC was not likely a cash cow, Nintendo posted profits all but 1 quarter of the GC's life, and I don't think if the GC were LOSING money that the GBA advance alone would have made up if it were bleeding the kind of red ink MS did.

The GC, again, was no cash cow, BUT it was not sold at a loss, Nintendo still collected what meager third party royalties there were, AND there were a good number of multi-million selling first party titles, and THAT is where the money is at. Nintendo made money with GC software, I have zero doubt of that.

But now that Nintendo is REALLY raking it in, I hope they invest that cash into paying someone to make some God of War calibur games for the system and cut back on the ultra-safe zero-budget "Brain Training" stuff. Trauma Center and Wii Sports are neat and all, but it's like a system that's all icing and no cake right now. I mean, "let them eat cake" sounds pretty good next to "let them eat icing." We need a meat cake!

[folken001]

Yep and you can look at MS' losses as the investment it took to breach this market. Now that they have done that and look to be in a dominant position, you don't quit, you start making money.

Sony is in the sh*tter because, despite the recent turn around in their TV division, they are not in the position MS is in. MS overall is a much healthier company. Sony had profitable consoles and forced themselves into a situation where they are going to basically duplicate the losses MS had with the XBOX. The problem is, they cannot afford to do this, plus, MS did that to gain favor with gamers, Sony is losing money and losing mindshare at the sametime.

Trebor is actually wrong about GC. Overall it was a money loser, however the company, Nintendo overall was profitable.

I'm sure if MS had it to do all over again they wouldn't or they would do it differently, which they have with 360, but the bottomline is they have invested too much money and it looks like they have turned a corner so quitting now would be stupid. This guy is an investor who wants that money, in the form of dividends, I don't hear too many gamers calling for MS to give it up.
I wonder if that's how the argument should work. As long as M$ is dominant in the OS market and getting billions from there, let's just ignore its failures in any other department. We have gone through this so many times. 5 billion dollars is still 5 billions. You can't always use the same strategy and try to say M$ shouldn't and doesn't care because it just has that much money. Well, in that sense, M$ might never give up console no matter how much they lose over it, as long as it doesn't lose them over 100 billions or so? If you are talking about videogame, then maybe we should confine our debate within that realm. Unless Sony is at the blink of bankruptcy, let's just stay away from how healthy each company is OVERALL.

360 might be making money for M$ now, but 360 also is now labeled as an unreliable hardware. If those cheap parts that M$ has been cheating with is producing that much of a problem now, wouldn't that mean higher quality parts are now needed. Hence, the overall cost of 360 might go up once again? Now, here is a tough question to answer. Should any consumer buy a 360 now, a machine that has proven to be unreliable with a recommendation of additional warranty or 600 dollars for a more reliable and more powerful machine? Yeah, PS3 might not have enough games now but it will in the future. However, is there anything you can do to make your "bought" xbox360 more reliable? Not really.

Btw, I think Trebor was right. I also read something about Nintendo Gamecube actually made Nintendo $$$. It didn't sell that many but Nintendo didn't give theirs away free like M$ did either.

[ilnadmy]

Btw, I think Trebor was right. I also read something about Nintendo Gamecube actually made Nintendo $$$. It didn't sell that many but Nintendo didn't give theirs away free like M$ did either.

Which would be interesting given that the GC was almost on par with the Xbox in terms of graphics capabilities.

[ThaMaskedGamer]

I wonder if that's how the argument should work. As long as M$ is dominant in the OS market and getting billions from there, let's just ignore its failures in any other department. We have gone through this so many times. 5 billion dollars is still 5 billions. You can't always use the same strategy and try to say M$ shouldn't and doesn't care because it just has that much money. Well, in that sense, M$ might never give up console no matter how much they lose over it, as long as it doesn't lose them over 100 billions or so? If you are talking about videogame, then maybe we should confine our debate within that realm. Unless Sony is at the blink of bankruptcy, let's just stay away from how healthy each company is OVERALL.

360 might be making money for M$ now, but 360 also is now labeled as an unreliable hardware. If those cheap parts that M$ has been cheating with is producing that much of a problem now, wouldn't that mean higher quality parts are now needed. Hence, the overall cost of 360 might go up once again? Now, here is a tough question to answer. Should any consumer buy a 360 now, a machine that has proven to be unreliable with a recommendation of additional warranty or 600 dollars for a more reliable and more powerful machine? Yeah, PS3 might not have enough games now but it will in the future. However, is there anything you can do to make your "bought" xbox360 more reliable? Not really.

Btw, I think Trebor was right. I also read something about Nintendo Gamecube actually made Nintendo $$$. It didn't sell that many but Nintendo didn't give theirs away free like M$ did either.


Yeah it was a money loser, it was in their financials. The company itself was profitable every quarter and correct the GC started out profitable but overall it was money loser. You gotta remember, Nintendo at one point basically gave up on the GC and dropped the price in desperation. That was the only thing that someone saved it. At one point, it went 6 months without having a game in the top 20 sales.

Anyway as far as MS giving up because they wasted $5 billion dollars and it being stupid to say just because we make billions on OS' we can afford to lose billions in gaming. No that is not what MS is doing. First they didn't plan on losing $5 billion, but they had invested so much they could not just give up. I'm sure they knew they'd lose a lot, but probably not that much.

As far as losing billions not being important because they make much more in OS'. MS position is they feel OS' have flatlined and that business while a cash cow is not going to grow much more. However they feel and everybody feels the gaming business IS growing and morphing into more than gaming, but the centerpiece of the living room. However they saw that even though Sony was the market leader, there was too much growth LEFT IN THE MARKET to just give away the living room to Sony. And i'm sure they feel that for the next 20-30 years this will be a prized JEWEL to be the leader in.

They feel the same way about digital music. Who is stupid enough to challenge Apple? Well a lot of companies. Why? Because digital music market penetration is so low and the room for growth or further penetration is so high, that in the long run it doesn't matter that Apple got off to a good lead.

Plus the billions is important. Why? Because MS feels they can just bankrupt anybody! And they are half-way there to bankrupting Sony out of the business. Unfortunately Sony took the bait. MS released a helluva system in the XBOX, it was such a sweet deal for $300. Now Sony has tried to counter and swung the pendulum a bit too far, they have bite off more than they or the gamer can swallow. So Sony can't back up a failing $600 console, like MS can back up a failing console. In the end gamers win and MS will probably win.

You ask should any consumer buy a 360 because it is buggy? Well the PS2 was buggy also and it overcame it. I think any consumer who wants a 360 should buy one because MS is giving you a 1 year warranty, plus many people always bought extended warranties. So if a company is gonna stand-by the system for a year yeah, plus unfortunately gamers have been through this, we all know the deal. Personally, I've never had a faulty console, ever, but everytime I buy one, especially at launch, I know that's a risk I take. But I never had a 1 year warranty, I'd feel no pain about that. Currently I have no warranty.

[PapaSmurf]

Last gen I primarily games on my PS2. This gen I've converted back to PC. PC is what I primarily used when PS1 was around. As I think about this whole company thing and next-gen issue, am I the only one who just thinks it's not worth it to buy any console right now? I know we here on these boards are dedicated to the cause but I mean damn. Nothing looks all that great imo. I played Gears at my cousins apartment, and it's fun, really fun, but as I told my cousin, I'll take CS any day of the week.

My theory on this has always been the same. I need a computer for just basic needs like printing, internet, homework, other various activities. I don't know if most of you have notebooks or not, but when a PC is such a basic need, might as well go all out so then you can get the best gaming experience and basic needs taken care of with one swoop. Also with HDTV usually comping with DVI input, I can hook up my PC to the fatty 42 inch (that I don't have...but still) TV and just crouch on the couch. Hell I can already download movies onto my PC which I can watch on that same TV. BlueRay Optical disk drives are already out as well. So seriously what's the effin point? I've got the force feedback wheel for GT4 and it works with my PC too. Got the joystick and throttle for Ace Combat which also works with my PC. I just don't understand it. I see people getting excited for games like Fear and Oblivion, and I'm thinking to myself I've had these games for a while. Not to mention I've been able to download trailers and demos for games for years.

I know we've had these discussions before, but now more than ever I firmly believe that the PS2/PC was the greatest complement to eachother ever. Especially now. Hell I haven't even picked God of War II yet. Ya'll should go and pick up a Radeon X1650 for like 150-200$ and some nice ram for about 100-150$ and start enjoying the greatness. I haven't upgraded my PC in two years and Company of Heroes runs at max settings. Ya'll need to give the PC a chance, I think some of you would be impressed. It's not that at all that expensive to set-up a budget PC that'll make games look better (and if you're into FPS and RTS, play better) than 360/PS3 titles.

[Mochan]

Papa Smurf, you gotta get into Stalker, that thing plays like Counterstrike meets Oblivion.

I too am waiting out on buying a next gen console, but that's how it always is for me. I have never adopted a console on day 1, or even year 1, usually I wait until the 2nd or sometimes even 3rd year before picking up a console. Why? To make it worth it. At launch and a year from then, there just aren't enough games to make the purchase worthwhile.

On the other hand I can always game on my PC, which has always been at least on par in the tech arms race with the consoles at launch, often far ahead. Indeed, PC is still my primary gaming platform, it just does everything and it does it all very well, later on once the console identities have formed, I get the consoles to play the "exclusives" that I can't get on my PC.

[trebor]

TMG - please explain to me how the GC lost Nintendo money when it was sold for a (small) profit nearly it's entire lifespan. Don't forget that Nintendo made money on the front and backend, since it was a delivery system for Nintendo's true money maker - software.

It certainly wasn't a money printer like the DS or Wii is, but the hardware paid for itself overall.

[Gadfly2317]

As I think about this whole company thing and next-gen issue, am I the only one who just thinks it's not worth it to buy any console right now?

I mostly feel that way. . .the Ps2 has just hit its peak of greatness.

I feel like I'm getting my money's worth out of Wii, even though I gripe about the lack of truly deep titles. There are a ton of little things I enjoy about the console. The Ps3 is WAY far away from offering enough to justify $600, but if the 360 had a price drop or even a hardware redesign that addressed the high failure rate, it would be worth it right now to me. There is currently enough enticing software on the 360, finally, to make it a viable console to me.

[ilnadmy]

*coughcough*PC*coughcough*

[Zilla Man]

Nintendo is the best hope for small developers, and MS and Ps3 are a place for people (including MS and Sony) to lose their shirts. A lot of what we thought might happen is coming to pass.

Gaddy, your forgetting about Little Big Planet, a game making app so simple even I could make my own game. :D

That's why I'm so excited about the PSN/Home. Imagine being able to try people's games for free (even as they're developing them). That's something neither MS nor Nintendo has.

And if things work out for Home, I'll be able to invite guys like you and Trebor into my Avatar's apartment to watch the trailer for my movie. Now that's what I call a "Killer App"! :cool:

[Zilla Man]

TMG - please explain to me how the GC lost Nintendo money when it was sold for a (small) profit nearly it's entire lifespan. Don't forget that Nintendo made money on the front and backend, since it was a delivery system for Nintendo's true money maker - software.

It certainly wasn't a money printer like the DS or Wii is, but the hardware paid for itself overall.

He's right, TMG. The GC console was profitable -- from day one.

Yes, Nintendo's lost more and more marketshare with each generation console (ever since N64) but that doesn't dispute the fact that they never lost money on the Cube itself.

[Zilla Man]

I'm sure if MS had it to do all over again they wouldn't or they would do it differently, which they have with 360, but the bottomline is they have invested too much money and it looks like they have turned a corner so quitting now would be stupid. This guy is an investor who wants that money, in the form of dividends, I don't hear too many gamers calling for MS to give it up.

How has MS "turned a corner"? Maybe creatively because they're getting a bit nore 3rd party action this time (which is a result of rising costs in game development, not MS ingenuity).

Did you even read the article at the link I posted. They're billions of dollars in the hole and their new machine is performing worse than their last one. How is that "turning the corner"? I think you're confusing your love of the 360 with cold hard business facts.

[DrunkenThumbmaster]

How has MS "turned a corner"? Maybe creatively because they're getting a bit nore 3rd party action this time (which is a result of rising costs in game development, not MS ingenuity).

Did you even read the article at the link I posted. They're billions of dollars in the hole and their new machine is performing worse than their last one. How is that "turning the corner"? I think you're confusing your love of the 360 with cold hard business facts.

Your article is so out of context it's really not worth the effort,

First you make the point about MS not branching out. When a few months ago you made a post about Xbox gamers not picking up certain titles. Go back and look at the release list. On the Xbox MS has publish majoirity T rated games besides 4 series.

As for the 360 not doing better. It is the market leader it's the default platform and hasn't receieved a price drop like the original Xbox did less than six months out. And has several multimillion sellers.

Sure they are in the whole and there are some issues. But your points are mostly B.S.