TWiG 4: Games as Peanuts

With a day delay due to a busy weekend, here's this week's rundown of the important console war news of the week.

Quick Hits

Nintendo finally launched the “News” channel on their Wii console. The news service rounds out a group of Wii channels (including the Weather channel) featured on the system at launch but not yet functional and currently provides headlines and stories via the Associated Press. Both this and the Weather and Internet channels are interesting moves for Nintendo, considering how much more focused on gaming they seem to be compared to Sony and Microsoft. I’ve previously discussed Microsoft and Sony’s obvious attempts to turn their consoles into full-on home entertainment systems that provide every function we could hope for in our interview. Nintendo still doesn’t seem to be going for the same thing right now, but these small additions to the Wii at least hint towards possible future pursuits.

Also from Nintendo this week, we got word of some of Nintendo’s first hard numbers on sales since the Wii’s release. Covering the nine month period ending on December 31st, the results showed net sales for the company rising 72.8% and operating income 102.5%. The net profits for Nintendo have reached a record $1.09 billion. Nintendo’s current success with the Wii and DS comes as no shock, but there’s also some interesting software numbers. During the period covered, nineteen first-party Nintendo titles sold over one million copies. This points to one of Nintendo’s greatest strengths and weaknesses. They make amazing games that everyone wants to play. But in the same note, if so many of Nintendo’s own first-party titles are selling so heavily, third-party developers are discouraged from releasing games on the system. As I’m sure I’ve heard it put by several developers before, the hardest part about developing for a Nintendo system is competing with Nintendo itself. Whether or not the Wii will suffer from the same lack of third-party support that plagued both the Gamecube and N64 is going to be a real factor in the continued strength of the system.

Microsoft released second quarter results for the period ending Dec. 31st, 2006. Microsoft’s Entertainment and Devices division (which includes the Xbox) posted a $289 million loss subtracting from the company’s overall $2.63 billion profit. This nearly matches the $286 million loss from the same division last year, but according to Microsoft (and the generally luke-warm reception of consumers), part of the loss is due to the launch of the Zune, Microsoft’s MP3 player/iPod competitor. Another part of the loss, according to the big M, was their extension of 360’s 90-day warranty, leading to a deluge of new repairs that Microsoft had to fully cover.

Shortly after the release of that information, Microsoft also announced that they were cutting their estimates for number of 360s shipped by June 30th, 2007 from 13-15 million to 12 million. According to Microsoft CFO Chris Liddel, “We are just being cautious about the second half.” This isn’t a bad or extremely telling move on Microsoft’s part, as 360s are readily available on store shelves and aren’t likely to move too quickly until winter 2007 (and a new Christmas season) approaches. In fact, I wouldn’t expect a surge of 360 sales until Halo 3 hits shelves.

Once again, the Japanese sales charts for the week provided some fascinating results. A new volume in Namco’s .Hack series topped the charts, but the real surprise was the Western-developed, 360 exclusive shooter Gears of War reaching number seven on the week of it’s Japanese release. This is only the third 360 game ever to crack the top ten in Japan, and it’s even more shocking because it’s a shooter. Gamasutra’s David Jenkins suggests that it may have been helped by the third-person rather than first-person gameplay, but whatever the reason, it’s another boon to Epic’s game. How many more weeks of great Gears of War news will we have?

As expected, World of Warcraft: The Burning Crusade broke PC sales records in its release two weeks ago. Selling 2.4 million copies in its first 24 hours (1.2 in North America, 1.1 in Europe), making it far and away the best-selling expansion pack in gaming history. Blizzard reported that by the end of the day, 1.7 million players had upgraded their accounts and logged on. Blizzard has reportedly planned on releasing one expansion pack every year for their popular MMORPG; if they can drum up this kind of excitement for each one, World of Warcraft is certain to remain the most-played PC game. Personally, I expect the number of players to continue rising past the recently-achieved 8 million mark throughout 2007.

Casual games developer MumboJumbo acquired Ritual Entertainment. Ritual was one of those few adventurous PC developers dipping their feet into the realm of episodic gaming, their Sin Episodes: Emergence launching just before Valve’s Half-Life 2: Episode 1 with both on the Steam download service. Where Valve’s second episode received numerous delays, Ritual’s completely dropped off the map following somewhat weak reviews. Now with the purchase by MumboJumbo, a second Sin episode seems even more unlikely, especially since the stated reason for the buyout was to “strengthen MumboJumbo’s casual games force”. The Sin Episodes site has pared down the “Episodes” section, which previously showed a bevy of upcoming releases, to a mere one release that is cryptically labeled “Coming Soon”. Now if only we could get a really good developer to do episodic gaming right…

ABI Research put out a study this week stating that gaming consoles are quickly becoming the top market for digital distribution. The report predicted that by 2011, microtransactions would be ringing in $833 million out of gamers’ pockets. Not shockingly at all, Microsoft’s Xbox 360 is the current leader in this new arena of video game profitability. If Xbox Live can continue offering a clean, easy-to-use, and easy-to-implement in games service, they could definitely see the majority of that huge chunk of cash from microtransactions. While both Sony and Nintendo obviously have their own means of digital distribution, neither currently do it close to as well as Microsoft. A perfect examples is EA’s Godfather, where you can pay a small fee on Xbox Live to gain access to the most powerful henchmen in the game. Simply talking to one in the game world pulls open the 360’s Marketplace tab where you can then freely purchase if you so desire. How far gamers are willing to put up with this kind of nickel-and-diming, ABI does not say, but if their predictions are correct, we’ve only just begun.

Surprise Announcement of the Week

Popular JRPG developer Square-Enix announced that they have licensed the Unreal 3 engine from Epic. This move is shocking both because of the way this Japanese company has cut a deal with a Western developer and also because of how much Square has hyped up their new White engine, which was first showcased in a video for Final Fantasy XIII. This is pure speculation on my part, but I suspect this might be another step for Square-Enix in its move away from Sony and the Playstation 3. I would not be at all shocked if Square’s first game utilizing the Unreal 3 engine shows up on the Xbox 360.

Theory Break

Earlier this week, a geology professor explained to me the “roomful of peanuts” model of economy. The theory goes like this: take a small room – say your bed room or dorm room if you’re one of those lucky college students. Now buy enough peanuts to fill that room completely from floor to ceiling. Done? Good. Now, start eating those peanuts one by one. According to the theory, you’ll eventually reach a point where it takes too much effort to dig through the mess of empty shells you’ve created to find a peanut worth chomping on. Thus with peanuts (or natural resources, such as oil, as it were), they never really run out; it just becomes too economically pointless to put forth the energy and effort to get the very last peanut.

I got to thinking about how this idea might apply to gaming. I cannot guess how many people reading this are like me, but if you are, you have a stack of video games sitting somewhere in your house that you’ve never finished. How many of your games do you complete? How many do you get every last drop from, finding every hidden item or extra cutscene?

Now I wouldn’t say I find this the best way to think about games, but I have a feeling that’s how most developers think about them, on purpose or not. When I’m playing the latest action game and find out that it, too, has a ridiculous number of random hidden items in the game world for players to find, I don’t get excited about digging through the peanut shells. I roll my eyes.

I think what I’m trying to get at is: many developers need to start reconsidering the very core of how they design their games. They shouldn’t give us a game full of peanuts to chase down – red herrings that offer no real satisfaction compared to the amount of energy we need to put in. I’m not entirely sure what the solution is, but I’ll be thinking about it more, and I’d love to hear your ideas. Over-extended metaphor? You better believe it!

Alright, folks, that’s all for this week. As always, send comments to kefkataran@gmail.com or post them here.