Console Business Model at Risk of EU Disruption?

The current console business model has been established for long enough that most of us take it for granted. Develop great hardware, sell it near or below cost, then generate profit by taking a cut of the revenue from all future game sales. If nothing else, this gets consoles into more homes, which benefits everyone in the long-term. But what would happen if the model were somehow disrupted?

I started thinking about this when I found out that the EU had voted to ban printer manufacturers from forcing consumers to buy their own-brand refills. The business model for printers is very similar to consoles: sell the printers cheaply, then profit from ink sales. (The major difference is that console makers don’t completely lock out third parties; they just exercise quality control and take a big cut of profits.)

The EU justified the vote in part by claiming that it would reduce “electroscrap”, but lawmakers must have realized that they were putting a giant industry’s business model in some jeopardy. (I suppose they didn’t lose much sleep over this, since none of the major printer manufacturers are based in Europe. Uh oh — neither are the console companies!)

This isn’t an isolated occurrence. Europe has, in general, always been less friendly to corporate acts of protectionism. For example, French lawmakers recently approved a bill that would require Apple to open the iTunes music format, breaking the exclusive connection between iTunes and iPod. Apple immediately announced that it would abandon the French market rather than comply. But if this were an EU law, it’s less clear that Apple could react so forcefully.

And, of course, we’re all familiar with the way the EU has hounded Microsoft to share information about Windows protocols and code. The EU has justified its efforts by citing Microsoft’s dominance of the OS market. So what might happen if one console maker ever managed to resoundingly defeat the others? Especially if that maker were Microsoft?

This is all wild speculation, of course. I’ve never heard or read anything that suggests imminent EU action, or even preliminary investigation. But as consoles become ever more central to digital life, it’s worth thinking about how European agencies might react. Could they force console makers to accept any third party game onto the platform? Force alterations of the revenue model? Unlikely, but perhaps…

4 Responses to Console Business Model at Risk of EU Disruption?

  1. “Could they force console makers to accept any third party game onto the platform?”
    Theoretically, yes. Practically, they prolly wouldn’t bother unless it was shown to cause significant harm to the EU consumer, or to the general well being of the EU.

    “So what might happen if one console maker ever managed to resoundingly defeat the others? Especially if that maker were Microsoft?”
    It would prolly depend on how much PCs were able to take up the slack, and directly compete with the dominant console.

  2. “Could they force console makers to accept any third party game onto the platform?”

    Thats would be a dark day and probably no…Its like feeding your competition – no need to build a console, just focus on game development. No business sense just plain politics

  3. Personally what about choco buissness tycoon. you make chocolate, and candy,
    invest mechanics, researchers, machine operating staff. 5 different ereas, the
    factory, inside the shop, outside the shop you can have gardeners there,
    restocking erea(where all the stock comes in and gets bought and or sold and the shipment
    people work there) new candy selling shops and upgrades, and sell junk food, kids
    would get education by learning the junk food they eat is made and they\’ll have
    the joy of getting customers. you have the well done screen, the bank rupt(when out of mioney only)
    think about you could do the same except with a restraunt tycoon game the
    possibilities r endless people will enjoy them and see what goes on in the
    inside of the places that you might place down in roller coaster tycoon or
    something but then with roller coaster tycoon you can\’t see what goes on in
    those places, you have no control over the staff that operate that type of place
    but now with these tycoon games i came up with people can see around thousands
    of things that go on inside and the mechanics basicly just fix broken machines
    and the operators push buttons and turn nobs and etc you get the idea and stuff
    happens food is then created and people take it and pay for it. as a plus how
    about the ability to set the prices in both games and it should be interesting
    oh!… and send the games 2 azzgenius@hotmail.com and make sure they work on
    windows xp please it\’d be a great favour if not possible then send some
    software to make tycoon games with 2 azzgenius@hotmail.com and i might let you
    sell some copies of the tycoon games you how ever can not then declare them as
    your own in any way possible under the fullest rights 2 the maximum of the law
    or a $20.00 fine will be in order and don\’t forget 2 send the full version of the software and so i can sell the tycoon games i create with it and make a console tycoon so you can sell virtual consoles for virtual console gaming.

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