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VRC: Diversify and Conquer

Business Home Internet Disclaimer: The proceeding article is editorial content. The views expressed are those of the author and do not neccessarily reflect the official position of the Advanced Media Network.

It is easy to miss when comparing the polar opposite ideologies of Microsofts HD-Generation and Nintendos Heart of a Gamer that both of their strategies hinge on the same factor: diversifying and expanding the market. It is how both companies intend to carry out this plan where they diverge drastically. But the question remains, whose strategy in theory is more effective, and can either of them hope to succeed?
Nintendo and Microsoft, the oldest and youngest hardware companies respectively, have both come to the same conclusion: they cannot overtake Sonys enormous lead in the 18-24 demograph. Microsoft attempted to last generation, and no matter how you slice it they utterly failed to make any dent in Sonys momentum with that segment of the population. Sales of the Playstation 2 soared leaving them with a tiny sliver of that market in comparison, and a few billion dollars lost for their efforts. Nintendo, on the other hand, chose to target family-friendly content but found themselves in a similar dilemma despite not openly challenging Sony- children want to be like their big brother and he owned a PS2. With those hard lessons in mind both companies chose the path of expansion, if you cant win under the current rules then change the rules or in this case the target audience. At E3 they laid out their battle plans, and made clear their intention to push the video game markets mainstream acceptance even further.

In Microsofts press conference a few days before E3 J. Allard noted the companys goal of reaching a billion consumers with Xbox 360, that number becomes even more enormous when you consider thats one out of every six people on the planet. Microsofts strategy relies heavily on the Xbox Live, now that the foundation has been laid they intend to use Live to usher in new content and make the service a key part of the Xbox 360.

Although in theory this is an exciting idea, the fact of the matter is a large portion of the United States still does not have access to broadband internet; if Microsoft intends to make Live a major selling point of the 360, they will be alienating a nontrivial portion of the market. In addition, the majority of examples that were used to show how consumers could appreciate the Live enhancements were major draws only to young men, such as customizing your car by purchasing different paint jobs. It is also difficult to see how the 360s software lineup will entice those who have never had previous interest in gaming to pick up the console. With the exception of Kameo, all of the consoles most prolific launch titles are shooters, racers, or fighting games. These are hardly the genres that get women or the elderly (the two groups least represented in gaming) to pick up the controller.

In addition to that, the 360 has been heavily promoted as HD-ready, and Microsoft has gone as far as to proclaim this the HD-Generation. Although this may have techies salivating at the prospect, even the insinuation that consumers must invest an entire paycheck (or two) into an HDTV to get the most out of their 360 is hardly the way to get those previously trigger-shy about gaming to suddenly make the plunge. It would seem that Microsoft is simply relying on its current Xbox Live userbase to make the 360 a success, this is foolhardy. The 18-24 demograph is only so large, and even with the additional market you get from projecting that image (such as in my earlier example of children emulating teens) you can only expand so much. Microsoft does not seem to be making a serious effort to lure in those that have not previously bought a game console, and have instead decided that adding more to their already laser-like focus on the 18-24 demograph will conjure up interest from groups that are being ignored.

Nintendos problems on the other hand certainly have nothing to do with focusing too much on young adults, their childish image has done the most to keep them from mainstream acceptance thus far. Nintendo has made clear their intention to bring game players back to the point where a novice or a veteran could both pick up a controller and immediately get enjoyment from the game. Ironically, the way to this involves challenging everything gaming has been founded upon, including the controller itself. Nintendo has promised a revolution in the way a player interacts with games, pointing to the Nintendo DS as a valid example of how innovative software targeting previously ignored markets can be a success story. Obviously, we cannot hope to analyze the effectiveness of this strategy completely without knowledge of the control device being used for Revolution, but we can take a closer look at whether Nintendos claims of innovative software pushing hardware sales hold any weight.

If the success the DS has had thus far in Japan is any indication, then yes, Nintendos strategy has a strong possibility of succeeding. Nintendogs and the Adult Training games for DS, which have been targeted at women and the elderly especially, have proven to be major selling points for the device, pushing it well ahead of the rival PSP in that region. If Nintendo can deliver software like that to the Revolution, with a complement of traditional titles, then it could see similar success.

The wildcard here is Nintendo of America. NoA has thus far been reluctant to aggressively market the outright odd DS titles that have proven such a success in the East, fearing that such a move would jeopardize its mainstream appeal. By doing this they have allowed the DS to falter and the PSP to get a much stronger hold on the American market then has been allowed in Japan. By ignoring the major selling point, and arguably the major point of the device's existence at all, NoA has hurt the chances of exploiting the population of non-gamers.

If a similar situation occurs with Revolution, with innovative titles not appearing on American shores or being delayed into obscurity, then Revolution will rightfully be placed head-to-head against 360 and PS3 in a battle of traditional software when that is obviously not the systems expertise. This would prove catastrophic, because although Nintendos familiar franchises have proven to be golden from a gameplay perspective, their appeal to the young adult market is limited to Nintendo fans at best. Nintendo must commit to pushing innovation, and aggressively show the consumer they have a viable alternative to the run and shoot games that will flood their competitors consoles. If they fail to do this, they will be lost in the shuffle and they will have only themselves to blame.

There is no way to insure success with this strategy, but in fairness, the ship has sailed off on Nintendo being able to effectively portray a mature vibe long ago, the expert marketing of Sega and Sony saw to that. At this point Nintendos most realistic chance of regaining their lost marketshare is simply to change the market itself, a high risk-high reward venture to be sure.

It is always interesting to me that magazines and other publications show Nintendo as a conservative company and Microsoft as a risk-taker. From what I have seen thus far in this coming generation, although both of them talk the same, Nintendo is taking a bigger risk while Microsoft seems content to nurture their current audience and hope Sony missteps. It is difficult to say with any degree of certainty which of these strategies holds the highest possibility of success, but at least we are finally hearing hardware manufacturers talk about targeting those that have been ignored for so long. I think its a risk worth taking.

Josh Valone is an editorial columnist for GCA. His future writings can be found at his new individual column, [Virtual] Reality Check with Josh Valone on the first and third Wednesdays of the month. Mr. Valone is also a writer for the Cherryville Eagle, a newspaper based in Cherryville, NC.

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