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Why The PS3 Will Ultimately Fail To Win This Generation

In late July our fearless leader wrote a piece on why he believes Sony's PlayStation 3 will eventually take the crown from the Xbox 360 this console generation. If you have not yet read this article, you can read it here. The editorial does make some strong points in Sony's favor, but it also presents some misinformation when it comes to putting the consoles head to head. Microsoft is currently the leader in this generation and I'm not so sure that Sony can change that any time soon.

One of the key things that Microsoft has done right with the Xbox brand is innovation. Sega made the first legitimate attempt at bringing online gaming to home consoles with the Dreamcast and they did a decent job; however, it took a company like Microsoft, with its vast resources, to truly drive the concept home. Xbox LIVE is the premier online gaming service giving gamers more unique features well before the competitors.

Microsoft could have stopped at gaming with Xbox LIVE, but wisely they chose not to. XBL is now a full blown community of gamers that allows friends to do more than just play games together. With the brilliant addition of NetFlix, exclusive to XBL, MS showed that they are pushing the entertainment experience to the next level. This is, again, a first for a home console.

In fact, no company has brought more innovations to console gaming than Microsoft has in this generation. Sure, Nintendo's motion controller may be bringing gaming to new audiences, but while they managed to capture the interest of your grandparents, they've inadvertently alienated many hardcore gamers. These gamers have been choosing the Xbox 360 as their console of choice and it isn't hard to see why. Microsoft's Achievement system gives gamers a reason to play and replay games several times over to get the most out of them. Coupled with the innovative Gamerscore, hardcore gaming enthusiasts have, for the first time, a way to quantify their skills and have a record of all of their gaming accomplishments.

Microsoft also completely revolutionized the home console experience by letting gamers create their own profile and saving game data to the profile. In the past, you had many profiles for many different games, the Xbox 360 data model changed that so you have just one profile to manage. The heavy customizations allowed by the 360 let gamers make a profile that truly represents themselves.

A few other firsts for the home consoles include the Xbox LIVE Marketplace, Xbox LIVE Arcade and Community Games. The Marketplace allows users to buy all kinds of things from themes to movies and XBLA provides a great additional distribution method for developers and has really proven to be a significant advantage for Microsoft this generation. The Community Games feature allows anyone to create and sell their own games on the Xbox 360. Granted, the majority of these games are terrible, but there are some gems to be found and it does show MS opening up to small, independent developers.

Sony on the other hand has brought nothing new to this generation of consoles. Motion Control was first introduced by Nintendo, themes were done on the Xbox 360, the PSN is Sony's version of Xbox LIVE and Trophies are a carbon copy of Achievements. The video game industry is fueled by innovation and Sony has brought the least of it.

If innovation is the industry's fuel, then technology is the wheels. In his article, Kaleb mentioned that the 360 has nearly maxed out its potential performance, but that the PS3 is only getting started. I have my doubts that this is the case. The Xbox 360 is only one year older than the PS3 and the main reason for the delay was Blu-Ray. [Editor's Note: The PS3 is more powerful than the 360 by design and games like the upcoming Uncharted 2 and Metal Gear Solid IV could not be done on the Xbox 360 due to this increased power.] Even if we suppose that the PS3 is the potentially stronger technical machine, it is only as good to developers as the tools and support they get for creating games on it. In this department, Microsoft wins big. Microsoft's experience in the PC realm and software development has made development on the 360 identical to PC development and a breeze for 3rd party developers to use. It is no secret that the PS3 is a nightmare to develop for and this is pushing a lot of developers to the MS camp. [Editor's Note: The same developers are also making PS3 titles as well. The era of exclusives is sadly over.]

Several high profile developers have gone on record stating that the PS3 is simply a pain to work with and it doesn't look like that sentiment is going away. Developers who prefer the Xbox 360 include id software's John Carmack and Gabe Newell, head of Valve. Newell has been particularly outspoken against the PS3 calling it “a disaster on many levels” and saying “even at this late date, they should just cancel it and do a do over. Just say, 'This was a horrible disaster and we're sorry and we're going to stop selling this and stop trying to convince people to develop for it." That doesn't sound like a happy developer. [Editor's Note: Carmack also has gone on record saying that due to Blu-ray and the high cost of printing multiple Xbox 360 Disk games, the PS3 version will look better]

The similar development tools for the 360 and PC offers another advantage for Microsoft; many developers port their PC releases to the console because it is fairly simple to do. This costs Sony many would-be multi-platform games. It also is the reason that most games run better and look prettier on the Xbox 360. Even a game like Burnout: Paradise, which used the PS3 as the lead development platform turned out better on the Xbox 360 earning it a higher metacritic score. Comparing Halo to Uncharted obviously looks better for Sony in terms of sheer graphics, but compare Uncharted to Epic's visual tour de force Gears of War 2 and the difference quickly disappears.

This is not to say that the PlayStation 3 is without quality games; I firmly believe that Sony has created a competent machine and many developers are making great software for it. Insomniac and Naughty Dog stand out as two of the best development houses currently in Sony's camp. Uncharted and Resistance are two phenomenal franchises, but that doesn't necessarily mean Microsoft doesn't have a few heavy hitters of their own. Even if we ignore Halo, which has arguably been gaming's hottest property in the last decade, the Xbox 360 has plenty of big guns. Franchises like Mass Effect, Gears of War, Dead or Alive and Fable all call the 360 home.

Some of the arguments made against the 360 in Kaleb's article, I believe are actually a benefit, especially when it comes to paying for Xbox LIVE. Lets put this in the proper perspective: MS charges $50 a year to use the service; that breaks down to about $4.16 a month, less than a value meal at McDonalds. An MMO like World of Warcraft typically charges players $15 a month to play, I did the math for you; that's $180 a year to play that one, single game. [Editor's Note: And Sony charges $0.00 a month to play. So eat your McDonalds and play.]

The big upshot to the XBL fee is that it frees developers from online expenses. Sony's PSN is free to the consumer, but not to developers who pay Sony for bandwidth usage and often times lose money on downloadable content. According to an MTV report “a demo that is sized at exactly 1GB and is downloaded one million times, that would add an extra $160,000 that Sony is now charging and that, according to publishing sources, Microsoft isn't.” If you're a developer and you could put your content on Xbox LIVE for free or on the PSN for $160,000, which would you choose? Smart business decisions like this have allowed Microsoft to dominate the online arena. [Editor's Note: For free content, Sony only charges for first 60 days according to reports.]

When it comes to business, few companies can match Microsoft; they just know how to play the game. Although many people may find the Microsoft Points system slightly annoying, it is evidently not annoying enough to stop tens of millions of people from buying them. The tactic of having players buy points in specific increments means that players will be spending those points on downloadable items. Usually, when you do buy something the points left over aren't quite enough to get something else so this encourages users to spend more. Questionable perhaps, but it has proven to be extremely profitable for Microsoft and that's what business is all about.

With Xbox LIVE, Microsoft has shown that gamers are perfectly willing to pay for a great service and have managed to create a business model that produces close to a billion dollars every year. That doesn't even take into account money spent on items in the Marketplace. With that kind of revenue stream, Microsoft won't be bowing out any time soon.

While Microsoft and the Xbox 360 may be here to stay, Sony's Blu-Ray format may not. I believe Sony made a poor choice by pushing Blu-ray on consumers; 1080p is 1080p and 360 users can get the same resolution from downloadable movies without having to spend $30+ on a Blu-Ray disc. Blu-Ray is still a struggling format and it is not performing as well as many think it is. Nielson Ratings tracks weekly sales numbers for Blu-Ray discs and DVD's and as of August 9, 2009 DVD's accounted for 91% of total movie sales leaving Blu-Ray a meager 9% of the market. Sales for Blu-Ray are up from a year ago netting an extra $9.22 million, but DVD sales have grown by more than 4 times that amount raking in an additional $30 million over the Blu-Ray sales putting the DVD sales growth at almost $40 million.

To make matters worse for Sony, Toshiba has licensed the HD-DVD technology to a Chinese technology group that has relaunched the format as China Blue Hi-definition Disc (CBHD) and it is already outselling Blu-Ray at a margin of 3 to 1 [in China]. Some analysts are predicting the HD-DVD based format to surpass global Blu-Ray sales by the end of the year [in the Chinese market].

Another area worth talking about is the infamous Red Ring of Death problem that has plagued the 360 since launch. Yes, it is a problem. Some estimates say that as many as 50% of 360's have fallen prey. The gaming media has largely blown the severity of this issue out of proportion; in reality it is an inconvenience at worst. Microsoft covers 100% of the cost for repairs. I have had it happen to two different 360's, both times MS covered the entire cost and it took less than two weeks to get the consoles back. One of them was even a used console and MS still footed the bill. [Editor's Note: I am on Xbox 360 number 6, PlayStation 3 number 1, and Wii number 2.]

It is also worth mentioning that the PS3 has had problems of its own. Though these haven't been publicized nearly as much as the 360's, estimates report that between 10-12% of PS3's are failing, mostly due to faulty drives or lasers. Yes, that's a much better rate than the Xbox 360, but it's still pretty poor and unlike Microsoft, Sony isn't so willing to pay for the repairs and costs to the consumer can top $100.

Since the platform's launch, Sony enthusiasts have been claiming every year as the 'Year of the PlayStation 3' and yet it has failed each time to surpass the Xbox 360. Granted, if you claim every year for the next decade or two to be Sony's year you're bound to get it right at least once, but it doesn't look good for 2009. Nielson Ratings most recent surveys show the Xbox 360 as the most used console and PS3 sales are down year over year according to Sony's most recent quarterly report. Released on July 30, 2009 the report shows that PS3 sales fell from 1.6 million units last year to 1.1 million units this year. The company also reported financial losses of $346 million.

The PlayStation 3 hasn't been the success Sony undoubtedly hoped it would be, but with the recent price drop announcement, Sony has shown that they are willing to go toe-to-toe with Microsoft and eventually we may see PlayStation 3 sales out-pace the Xbox 360, but it is far from a guarantee. Microsoft is the current generation leader and it's a position they won't give up lightly.

By Ryan Schaefer - 08/25/09

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