| NEXT BOX 2005-03-07, 5:44 pm |
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Wall Street Journal: Xbox 2 code-named ''Xenon'' ; Sony to promote Cell this
week #1
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Source: Wall Street Journal article ''Console makers woo creators of video
games'' :
Originally Posted by WSJ:
By NICK WINGFIELD and ROBERT A. GUTH
Staff Reporters of THE WALL STREET JOURNAL
March 7, 2005; Page B1
The next battle for the hearts and minds of videogame creators has
begun.
When thousands of game developers descend this week on a convention
center in San Francisco for an annual conference, they'll face a full-scale
charm offensive by three companies: Sony Corp., Microsoft Corp. and Nintendo
Co. All three are expected to introduce new game-machine consoles within the
next two years, beginning with a new version of the Microsoft Xbox that
could come out as early as this holiday season.
Hot software titles will be critical to selling the new game machines,
which, in the case of Sony and Microsoft, are pivotal parts of wider plans
to control how entertainment is consumed in living rooms.
The introduction of a new generation of game hardware is always a huge
event in the industry, occurring roughly every five years. "It's like El
Nino," says Frank Gibeau, senior vice president of North American marketing
for Electronic Arts Inc. of Redwood City, Calif., the largest independent
game publisher.
The prospect of new, more powerful machines is stirring the creative
juices of developers, who will be able to create games with increasingly
eye-popping graphics and new features for playing over the Internet. But the
transition is also causing a measure of dread because the new players are
expected to significantly increase the costs of making many games, which
could squeeze profits at big and small companies. "We're seeing budgets go
up dramatically," says Philip Holt, senior vice president of product
development at THQ Inc., a large game publisher. "It's a fact we're all
facing."
This week, Microsoft Vice President J. Allard in a keynote speech will
address these anxieties by promoting Microsoft software "tools" designed to
help developers create games more efficiently. Mr. Allard is expected to
demonstrate features of the successor to the Xbox -- code-named Xenon -- for
the first time in an attempt to entice developers to build games for the
console. The company will likely emphasize new features, including support
for high-definition television, that developers can take advantage of, say
people familiar with the matter.
"I think we've wooed developers," says Chris Satchell, a general
manager in Microsoft's videogame group. "We are backing them up with the
software, the services and the hardware that's going to make them
effective."
When it first entered the videogames business in 2001 with the Xbox,
Microsoft was regarded warily by developers as something of an interloper.
But the company has erased lingering doubts about its seriousness in the
market over the past several years. A key part of its strategy is to release
its new machine to the public ahead of Sony so it can get a jump on the key
competitor. (Sony's coming player is expected within the next two years.)
Microsoft's quest for developers extends to Japan, where it recently
announced that it had signed up several legends of that nation's videogame
industry to develop exclusive games for Xenon. In each case the game makers
had left their positions as top creative talent at Capcom Co., Square Enix
Co. and Sega Sammy Holdings Inc. to work independently. Under the exclusive
deals, Microsoft hopes to field better games for the Japanese market, a
major Microsoft weak spot.
It will be tough, though, to dislodge Sony from its top position in
the console market, where it enjoys a huge lead. Sony has sold more than 74
million PlayStation 2 machines compared to 20 million for Microsoft's Xbox
and more than 10 million of Nintendo's GameCube.
Sony this week is expected to promote the capabilities of a powerful
new chip it is developing in conjunction with International Business
Machines Corp. and Toshiba Corp., called the Cell processor, that will be at
the heart of its new console, according to conference organizers. A Sony
spokeswoman didn't return calls for comment.
Nintendo President Satoru Iwata, meanwhile, this week plans to share
details with developers about Revolution, the code-name for the company's
next console. Microsoft's determination in the games market and vast
financial resources have led some industry executives to question whether
Nintendo may be marginalized in the living room as developers invest their
resources in rival console games.
"There have never been three platforms that have been successful" at
one time in the videogames business, says Bernard Stolar, a game industry
veteran who has worked for Sega and Sony.
Perrin Kaplan, a vice president at Nintendo of America, says it's too
soon to predict what the competitive landscape will look like since none of
the new machines are on sale. Ms. Kaplan said Nintendo intends to stay more
focused on appealing to diehard gamers than its rivals, which also see their
consoles as hubs for movies, music and access to the Internet.
"Microsoft and Sony are definitely in competition against each other"
in way, says Ms. Kaplan, "that's not similar to Nintendo. I think they've
made it clear, from a corporate point of view, that even going into gaming
is more about control of the living room."
To be sure, the game industry is growing beyond the living room, as
developers up their investment in software for mobile players like Sony's
new PSP hand-held machine and Nintendo's DS. Game-playing on cellphones is
also soaring, leading to an explosion of mobile publishers like Jamdat
Mobile Inc. and Mforma Group Inc.
Still, living-room consoles will likely remain the biggest -- and
riskiest -- opportunities for game developers. According to developers who
have begun creating titles to run on the new machines, the next generation
of consoles from Sony and Microsoft will have enough computing horsepower to
allow for near-photorealistic graphics and other dazzling effects in games.
But all this power will only increase costs by requiring bigger
development teams. The budget on top games for current consoles can run
upwards of $10 million and may be as much as double that on the new
machines, developers predict. "If you needed one artist to work on a PS2
game, you may need three" for games that run on next-generation consoles,
says David Zucker, CEO of Midway Games Inc., a game publisher in Chicago.
The rising costs are making it prohibitively expensive for most game
developers to take the risk of developing unproven games. That means the
move to the next generation will increasingly favor large game publishers
that already own top-selling games. Many smaller developers, meanwhile, will
either be bought up by the big guys or just fade way.
For small developers, "the ability to have the pie-in-the-sky dream of
making a megahit is gone," says Jason Rubin, co-founder of Naughty Dog, a
game developer acquired by Sony in 2001.
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