Memo #3: Video Game Wars

Ten years is a long time in the Video game industry. Ten years covers what is considered two potential product cycles, with a potential release of two new iterations of the Playstation, Wii and XBox. Or there could be a new player in the market with one of these three systems vanishing form thought. Ten years ago, one of the major players in the industry was Sega. The company had introduced in the late '80's and 90's such gaming consoles as the Genesis, the portable Game Gear and the Sega Dreamcast, but today the company is a shadow of its former self. Even ten years ago, the prospect of a company like Microsoft being a dominant player in the video game console world was not even considered. The only constant in the video game industry is the inclusion of Nintendo amongst the most important and influential leaders in the development of consoles and content. So what does this mean for the next ten years in the video game industry?
One could be tempted to say that the console, with its proprietary content, production and disks, will vanish in a move towards placing all games on the Internet. I am personally doubtful of this development. Today, two of the three major console systems have become the showcase for a new format war, HD-DVD versus Blu-Ray. The XBox 360 now has a new HD-DVD player that can be attached to the machine to add new functionality to the system a year after it was launched. On the other hand, the Playstation 3 has a Blu-Ray player built right in. Unsurprisingly, Microsoft is a supporter of the HD-DVD format while Sony is the pusher for the Blu-Ray system. Both companies have placed their bets in this new format war and the game consoles are the front line soldiers in the fight. Looking deeper, the two consoles are also advertisements for the cutting edge of the computing industry. The Playstation 3 contains an IBM cell-processor which could later become the basis for high end computing in other industries. The XBox 360 is designed around high-end components that the user could put in his own PC, powered by Windows of course. Both of the systems are pushing the other new standard that is emerging, high definition video. Both claim, with the XBox planning on releasing a HDMI connector in the XBox, that they will push 1080p content to the beautiful plasma television hanging on the wall.
Then there is the third player, the upstart. The Nintendo Wii is based around older, less powerful technology, without a concern for the pushing of 1080p video. The system is also basing its discs on the old DVD standard. This older technology is providing a price advantage for the Wii, allowing it to the market at several hundreds of dollars below the competitors. But the Wii is pushing a new way to play. Immersive gaming, which attempts to pull the player into the game and be a true part of the experience. Intuitive gaming, which allows novices to pick up the controller and join in. Further, Nintendo is continuing to push the hand-held game console which may end being the ultimate goal.
So what does this mean ten years form now. This is the cop-out answer, but I just don't know. Now that the Wii has become a modest success one can assume the larger players will bring immersive, intuitive gaming to the proprietary consoles, while boasting more powerful systems and graphics. And one cannot say whether there will be a new format war which will help drive new systems. One can at least assume that Nintendo will be around in some form, which I believe is the only constant. Ten years is a long time in the video game industry.