Yankee Group, Dissected

Last week, Yankee Group predicted that the PS3 would eventually beat the Xbox 360 (though not by much), and that the Wii would perform quite poorly. I initially disregarded the analysis as thoughtless and resolved to ignore it entirely. That was unfair of me. The analysis is not thoughtless (though I believe it’s mostly incorrect), and dissecting it may prove useful, insofar as it sheds light on common misconceptions that could hurt developers and publishers.

Let’s start with the PS3 vs Xbox:

Goodman told us that Sony’s brand loyalty will ultimately give the company the edge in selling more units of the PS3 in the US market than Microsoft’s Xbox 360. He added, however, that the technology inside the PS3 and its high price point will keep sales below the Xbox 360 until 2011 when the price point will come down enough for a larger audience to pick up the PS3. “They really made a console for 2010 instead of 2006,” he told us.

You already know why I think the PS3 is in trouble. But to address the quote directly:

Console brand loyalty, which Goodman thinks so highly of, has been proven by history to be less than reliable. (Atari, Sega, and Nintendo…?) The thought that Sony could roar into the lead in a few years from now (when prices drop significantly) is an interesting one, but ultimately strikes me as wishful thinking. Nintendo used price drops to salvage the GameCube from total failure, but that was obviously not enough to push it into first place. Console success is driven by positive network externalities… once your competitor has a huge installed base, it is very, very difficult to win from behind. This is truer today than ever before, thanks to the increasing importance of online services. And speaking of, we all know who has the advantage when it comes to offering a mature online service. That’s right: Xbox.

If you’re a developer planning to place a big bet on Sony, make the bet for the right reason. Hope in “brand loyalty” is not the right reason.

So why does Goodman see Nintendo only selling 11 million units of the Wii by 2011? Goodman said there were three main reasons. One of them was, “Causal gamers don’t buy consoles.”

I can imagine Goodman back in 1980: “The personal computer will never take off; only rich, highly educated people buy them!” OK, maybe that’s a cheap shot… but he deserves it.

Things change. Women also haven’t been big buyers of console games in the past, despite evidence showing that they could be if the game industry only tried harder to reach them! Female-friendly marketing (across developers and publishers) would be a great start. It’s no coincidence that, as of late, Nintendo has clearly been thinking about this untapped market as well.

Similarly, “casual gamers” (a potentially misleading term) have not purchased consoles in the past because consoles have not been marketed to them! Nintendo is also working to change that, as is Microsoft, most notably via Xbox Live Arcade. And there is evidence that this can work… just examine the success of the Nintendo DS in Japan. (Relevant articles: 1, 2, 3)

Goodman told us that he and others who have played with the Wii controller for an extended period of time got tired and fatigued. While Goodman feels that the Wii controller is an impressive engineering achievement, he feels that gamers will get frustrated and tired of having to move their arms while, say, swinging a bat while playing Wii sports or throwing a football in the Wii port of Madden.

How many people in this country play sports that require dramatically more physical exertion than Wii games do? Can it really be possible that every baseball, soccer, tennis, hockey, etc player in the world can’t enjoy two hours of occasionally wiggling a controller?

The Wii’s motion-centric functionality is clearly not a magical cure-all for game developers. Yes, if you design a game that requires people to move constantly, without good reason (and/or in unnatural ways), you’re going to tire them out — or worse. That’s a straightforward design problem: give people a good, fun reason to move, and make it an ergonomically-safe movement.

Watch someone enjoying Dance Dance Revolution one of these days. If they can get past the learning curve, the physical activity merely feeds their enjoyment of the game, no matter how out of shape they happen to be! Once coordination problems are out of the way, even the most sedentary person can enjoy DDR… and fortunately for Nintendo, coordination issues are generally going to be much less severe for the average Wii game. Microsoft and Sony both recognize this; they wouldn’t be putting resources into motion-detecting cameras and related games, otherwise.

Bottom line: games for the Wii can be designed to incorporate sufficient rest time, while still benefiting from movement functionality in general.


As I’ve said in the past, I think Microsoft and Nintendo will probably be the winners of this console war. The jury is still out, but if Blu-ray doesn’t turn into a must-have format, Sony is in for an absolute world of hurt.

6 responses to “Yankee Group, Dissected

  1. Fantastic post, David!

  2. Thanks Adrian. Your compliment means a lot. :-)

  3. Interesting analysis, raising several key points of debate. Nintendo\’s also clearly banking on multiple console-buying (i.e., the Wii as a kind of secondary console for hard-core gamers), given its price point.

  4. God, I am so tired of the ‘your arm is going to get tired’ theory. Nice response to it, Dave. Does anyone say “oh, I’d love to play some more Halo, but I can’t because my thumbs are tired?” Maybe once, the first time you ever picked up a gamepad in your life. It’s hard to imagine that any non-fitness-specific device will cause people to be too tired to play.

    Americans are fat and lazy, but they are fat and lazy because they used to work really hard and be made of muscle but then they hurt their back and they really deserve a beer now, OK?

  5. My 2 cents:

    As long as developers have difficulties taking full advantage of the PS3 architecture, it only makes sense that publichers will seek to support both the 360/PS3. With next-gen development budgets being what they are, there is little reason not to.

    IMO, Sony’s strength will lie in _if_ they did indeed create a console for 2010 (or, say, late 2007). IF the cell is really as powerful as we all once thought, and IF a developer (presumably an internal team) can take advantage of that to the point that a port to the 360 is simply not technically possible, we’re 2/3 of the way to a ‘killer app’ scenario (of course, the last remaining 1/3 is the hard part — the game also has to be incredibly fun). Thats when you’ll see a system seller…

    I agree that Sony would seem to be in for a tough year (or so), but I have to assume that they have come to terms with that and are planning more long term.

  6. IF the cell is really as powerful as we all once thought

    Fair point. I’ve been hearing people say the PS3 won’t ultlimately be vastly more powerful than the 360 (even after Sony finally gets its house in order), but I suppose time will tell.

  7. Yes, PS3 will rule, but who knows until when.

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