Who Exactly is the Modern Game Console Consumer?
by NorseGamer, HSM Founder
Now things get interesting.
The current console generation, which is coming to a close, saw Sony and Microsoft competing for more or less exactly the same consumer demographic. And the ways in which they did so — with the divergent results produced from their respective efforts — have led to a far more interesting console generation that’s arriving on our doorstep.
In short, this is the first time I can recall seeing a game console reveal in which the games are not the primary selling point.
And there’s a whole lot of behavioral economics behind this which illustrate how divergent the two companies’ respective strategies are. In Microsoft’s case, the argument is that the XBox One is designed to be an all-in-one entertainment hub for the living room. That it is the one piece of hardware (hence the console name) you absolutely need to have in order to have an easy, convenient and sufficiently comprehensive multimedia experience.
Forget the tech-junkie arguments about how you can hook up this piece of equipment to that piece of equipment and run this program from that site to do everything better and cheaper: we’re talking about the average everyday consumer who’s looking for convenience and simplicity. The guy who’s more interested first and foremost in an all-in-one entertainment box which looks like any other nondescript piece of living room equipment (in order to not look excessively juvenile), and has the added benefit of being able to play games.
There’s a certain amount of logic to Microsoft’s strategy. Targeting this consumer — someone who’s more interested in a broad spectrum of entertainment rather than purely games — means that traditionally cost-heavy or “uncool” issues such as backwards compatibility, always-on connectivity and restrictions on used game content aren’t necessarily deal-breakers, and the concept of paying for a service like XBox Live Gold is far more palatable because of the convenience of having an all-in-one service. Even such gimmickry as voice-activated interface and Minority Report-style gesticulation controls make far more sense in such a context. It’s worth remembering just how big a percentage of XBox Gold users currently monetize via subscription service and use their consoles primarily for non-gaming experiences.
Read between the lines. Microsoft doesn’t want to try to compete against the rising tide of mobile and casual gaming by selling a platform designed primarily for gaming. They’re instead positioning their new product as the centerpiece of the domestic entertainment experience, which happens to have tremendous gaming capability under the bonnet.
It’s an interesting gamble. Microsoft doesn’t want the biggest or most hardcore gaming audience; they just want an audience with the highest monetization percentage by retrenching to their core products and offering as much interconnectivity as possible between them, even if that’s a different audience than what we think of as a traditional video game consumer. It’s basically a concession to mobile gaming, and tacit admission that Microsoft believes the future of console gaming is as a value-added feature to a piece of hardware, not as a primary selling point for the hardware itself.
Is it any wonder, then, that in gaming circles, Microsoft’s unveil was greeted with about as much enthusiasm as typhus, and a certain level of confused, “What are they thinking!?” dismay?
It’s because Microsoft’s marketing so far leads you to believe that gamers, frankly, aren’t the primary target audience for XBox One. Or, more accurately, gaming itself isn’t intended as the primary behavioral usage of the hardware.
Game consoles, in their early days, were sold purely on the strength of their games. In more recent times, there have been additional value-added features included to help boost sales. The PlayStation 2, for instance, was the first DVD player many people ever owned. But this is the first time we’ve ever seen a game console that tried to sell itself primarily on something other than gaming.
Now let’s contrast this against what has been publicly revealed about the PS4. If there’s one thing that Sony has made abundantly clear with its reveals to date, it’s that this console is focused first, foremost and hardcore on being the next-gen gaming console nonpareil. Having Mark Cerny as your console’s lead architect, for instance, is a bit like having Sir Terence Conran as the Concorde’s interior designer: it’s a statement that you’re taking this (expletive) seriously. Everything about how the PS4 has been pitched so far has placed emphasis on two key areas:
- That this will be the ultimate console gaming experience on Planet Earth, designed to be developer-friendly;
- That Sony places tremendous value on the idea of consumer social networking and sharing of gaming experiences.
The stark difference between the two companies’ strategies couldn’t be more glaring. Microsoft is pinning its hopes for long-term games industry survival on the idea of selling a generalized all-in-one device which happens to play games and looks nondescript enough to not make you look like an overgrown child at dinner parties. Sony is pinning its hopes for long-term games industry survival on the idea that consumers who wish to have a console game experience are more interested in purchasing a specialized gaming device which is the absolute last word in superb gaming experiences.
You could argue, from looking at the financials, that Microsoft may be on to something. Sony’s built up a bit of a reputation in recent years for haemorrhaging money and arguably wasn’t the victor in the current console generation, whereas Microsoft has been very successful with its XBox Gold service, sold more consoles, and is only now blatantly targeting with the XBox One what their current consumers have already been doing with the XBox 360.
Here’s the thing, though: in this current generation, the two consoles were just too close to each other — in terms of performance, features, pricing, target demographic, etc. — to really discern the most important question, which is what the modern console consumer actually wants. With this new generation, however, there is a very clear delineation in the thinking of the two companies.
And this brings up a key question: who exactly is the modern console consumer? Because now — right now, today, with Microsoft’s unveil — a war of ideology has just begun. Is the modern console consumer someone who’s looking for an entertainment hub first and a game rig second, or is the modern console consumer someone who wants an insanely deep, specialized gaming tool which happens to be able to serve as an entertainment hub as well? What actually motivates someone to spend that kind of money for a game console?
Because of this ideological split in how the two companies are marketing their products, I’m now firmly convinced one of them will not survive the next console generation. For either Sony or Microsoft, this upcoming generation will be the end for one of them. I really do believe that. Because there’s a huge pink elephant in the room called mobile gaming, and these two console giants have staked a lot of money on two vastly different strategies to combat it.
In order for Microsoft to win: the XBox One has to be marketed and positioned as an entertainment hub which can seamlessly integrate with other Microsoft electronics for as much of an all-in-one experience as possible. It has to bank on consumer ignorance of alternative entertainment hub devices (including smart TVs), and/or use its gaming capabilities as a value-added benefit to stand out from them.
In order for Sony to win: the PlayStation 4 has to be the ultimate console gaming experience. It has to have a rigorous and vibrant social networking interface. It has to have amazing game experiences that aren’t available elsewhere. And it has to figure out how to monetize a greater percentage of its subscription services in order to offset how much it’s costing them to give away the store.
This is somewhat akin to the classic Porsche versus Ferrari debate. Porsche decided to make more money by creating four-door versions and SUV versions of their marque, selling more utility and convenience under a Porsche badge, even if the vehicle itself didn’t really line up with the Porsche ideology. Meanwhile, Ferrari decided to make more money by simply creating even more insane versions of their existing formula.
So, who do I think will win?
Honestly, I think Sony has the advantage this time.
Here’s why. My gut instinct tells me that Microsoft has made one of the cardinal mistakes of product development: they got so focused on what they wanted to sell that they forgot what people are willing to buy. You get the overwhelming sense that Microsoft made its strategic decisions with the XBox One by staring at spreadsheets and disregarding the behavioral economics behind them. Meanwhile, Sony has gone out of its way with the PS4 to emphasize that it has learned from the mistakes it made with the PS3 and is focused on doing one thing better than anyone else. The one thing which its consumers have more than thirty years of behavioral patterns to reinforce: buying kick-ass gaming experiences.
It’s all about the games.
Let’s not forget, by the way, that if we rewind to the previous console generation, the PlayStation 2 was more than just a dominant game console; it was the stuff of legend. It won because it had a library of games that no one else could touch. And that, ultimately, is what the target consumers who were looking to buy a gaming console were looking for: the tipping point for a PS2 purchase over an XBox purchase was the staggering number of titles the PS2 had. Hardware specs, add-on features and everything else be damned: it was all about the games.
And I honestly believe, even today, it’s still all about the games.
From the marketing and unveiling efforts made so far, you clearly get the idea that the PS4 is built around the concept of delivering this. The XBox One…isn’t.
(What’ll be interesting is E3. Will Microsoft stick to the party line it’s established so far, or — based on the broad-spectrum backlash to today’s unveil — will it alter its course and take a more game-centric marketing approach for E3, and thus risk looking like it’s backpedaling and pandering? Either way, all Sony has to do at this point is stick with its current marketing approach.)
There are two Swiss army knives on the table. One of them is being marketed based on the number of attachments it has. The other is being marketed based on the fact that its knife is actually a carbon-fiber katana created by demigods from the Kalevala. Now we get to see which is truly more valuable to today’s console buyer, and the stakes couldn’t be higher.
Because, this time, it truly is winner-take-all.
May 22nd, 2013 by NorseGamer | 5 comments
NorseGamer is the product manager for LOOT Entertainment at Sony Pictures, as well as the founder and publisher of HomeStation Magazine. Born and raised in Silicon Valley, he holds a B.A. in English/Creative Writing from San Francisco State University and presently lives in Los Angeles. All opinions expressed in HSM are solely his and do not necessarily reflect the views of Sony DADC.
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Very interesting article Norse. When the dust clears I do hope it is Sony left standing. The next year or so should be very interesting where the gaming world is concerned.
One of the biggest problems I see for MS here is that right now, it’sentire strategy is based on no one else but American consumers. The whole presentation and leaks of info across the net have pointed to this. And hey, if you’re into sports, ordering pizzas while watchin’ movies and what-not then great! But the rest of the world is kinda looking on in bemusement right now; where’s the TV integration for our native channels? And lol, voice control is all fantastic n’ stuff but (and this is just one example) have you ever heard an actual Scottish person talk? I cant see it working very well when Jock McStrap goes
“Oi Exss boax, geez us a wee baggy a fush n chups fray the chippy doon the road ken, an mak share its tonne’d wi broon sauws”
But then, the same can be expected from an awful lot of accents, it’ll be interesting to see how this’ll pan out. I understand they’re positioning themselves to make the machine versatile, I use my PS3 for basically everything in my livingroom as it stands right now. Yes, even TV. I’ve had PlayTV hooked up to my PS3 for years now, which is why I’m not too impressed with MS making a song and dance about thus aspect of their new tech -- most people dont even know of PlayTV’s existence!
The biggest worry for me regarding all this however is the way MS are treating not only the secondhand market, but small developers too. They’ve already said without flinching that they have no interest in small, unsigned developers -- they’re just not welcome on their system. The other is this Gold sub malarkey, they’re still charging people just for access to their online community!? And the “always watching and listening” MANDATORY camera is just creepy…
I’m trying to not focus on the negative with Microsoft here but… There’s just so many things wrong here! Sony have shoved their foot in their mouths a few times, but have always learned from it, Microsoft, they seem to revel in being abrasive and non-consumer friendly. I just find the whole thing bizarre. It’s as if they’ve built the machine from looking at graphs of company income, and forgotten to even ASK what the people want.
Im sure it’ll sell a few in the US when it hits shelves, but this is the first time in my life as a gamer that I’m convinced of a console’s demise outside its native country.
Ultimately the consoles wont be too far apart in what they can do, Sony lost the faith of several big game developers while releasing the ps3 causing its users to miss out on stuff that was released on the xbox a year before it was released on the ps3. i dont think they will get away with that mistake again. Im a pc gamer as well so didnt miss out on elder scrolls oblivion dlc but ps3 users did miss out on several that the xbox didnt and it seems even now the ps3 is the last to get dlc from that franchaise. If you release the ultimate game machine you need the ultimate game developers to back you over your rivals which is where microsoft have a big advantage because if your game is released on pc it has to be microsoft windows compatible, so if im friendly to microsoft i have several routes to market my product. with sony I have less routes to market. So I hope Sony works harder than microsoft with big developers to become they prefered route to the consumer.
Unfortunately, I feel Microsoft has made the same mistake as Netflix…you remember Netflix: the online MOVIE streaming service that decided to switch focus to TV streaming and has lost a significant chunk of its film assets? I got netflix because I don’t watch tv and don’t want cable. The same can be said for gaming consoles…we get them for GAMES, not auxiliary fluff that costs extra.
The gaming generation is older, and understands the myriad of new technologies offering different multimedia experiences. Consoles continue to exist because consumers of games want something simple…something bred to do one thing well: play games. The Xbox is not the only device that streams cable, television and internet: computers, and smart televisions already do that (and do that well)…
So why would someone buy an Xbox mainly for other activities besides gaming? That would be similar to someone who hates video games buying a PlayStation just for the blu-ray player.
It would seem that Microsoft and Sony sort of swapped strategies from the last generation of consoles to the upcoming one. Didn’t Sony market the PS3 as the home entertainment hub in the same fashion that MS is labeling the XBox One? The PS3 “only does everything” was the ubiquitous tag line. Similarly, the XBox 360 became the gaming centered machine, at least partly because it lacked Blu-ray playback like the PS3.
The PS3 never really lived up to the reputation of its predecessor as a gaming machine. Sony just seems to be going back to their strategy from the game-focused PS2. Meanwhile, MS will try to succeed where Sony did not in marketing a gaming console that “only does everything” this time around. Maybe the PS3 was simply ahead of its time and MS will be the one to cash in on the concept.
The next couple years could be a real make-or-break era for gaming consoles in general. Are consumers still interested enough in gaming consoles to make either of them profitable? Does the next generation of consoles offer enough improvements to entice people to reinvest or will they suffer from diminishing returns? Are today’s teenagers satisfied with tweeting on their smartphones instead of playing console-based games?
Personally, I see no reason to even consider a new console. Certainly not as long as my current PS3 keeps functioning.