Articles of Interest

Call of Duty 4 has apparently struck such a cord with consumers that retail chains (such as Circuit City) are selling it for $40 (i.e. loss leader) to attract foot traffic. Activision must be pleased.

Warner Bros. is going exclusive with Blu-Ray. As I’ve written previously (well before joining Microsoft, in fact), I see this as big news in the DVD format war, but small news in the console war. The jump from DVD to Blu-Ray is far less significant than VHS to DVD. Back then, DVD offered greater functionality, greater quality (to anyone with a TV+VHS), and greater ease of storage. Blu-Ray only offers greater quality to a select few consumers with HDTVs larger than a certain size. And many of the consumers in that category (with an interest in gaming) already own a PS3 and/or 360. Blu-ray wasn’t and isn’t going to save the Playstation. Whether anything else can… I suppose only time will tell.

The Wii is on the verge of selling 20m units. Gonna see a lot of headlines when they officially crack that ceiling. Happily (for me!) the 360 has sold roughly twice as many units as the PS3.

The Electric Sheep Company laid off about one-third (22) of its employees three weeks ago. It also canceled several projects, including the creation of an ad network within Second Life. The CEO noted, “We felt that large scale advertising to the current Second Life user base by real world companies is not a big opportunity in the short term.”, a simple online RPG that enables players to “duel” asynchronously, has reached one million duels per day. Bear in mind that from what I can tell, an obsessive player could rack up 100+ duels in a single day, so this doesn’t mean anything near a million users. What it does mean is that tens and maybe hundreds of thousands of users are willing to grind for “cool” items in a world almost completely devoid of meaningful plot development, entertaining quests, thoughtful strategy or action, etc… as long as the game is free. That sounds more cynical than I intended… sort of. It’s also fairly obvious, but perhaps that’s a cynical statement, too. 😉

3 responses to “Articles of Interest

  1. Dave,

    I have to disagree with your analysis (if perhaps not your conclusion) about the impact of Blu-Ray winning the format war on machine sales. First, a lot more people have HDTVs than I thought, and the adoption rate is accelerating much faster than I anticipated (not that anyone asked me :-). But, more importantly, I think a lot of people have been fence-sitting waiting for a winner. If this is the ‘end’ of HD-DVD (and if Toshiba is giving up, I think you have to accept that), then people aren’t going to rush out to get Blu-ray, but when they replace that aging DVD player that doesn’t have HDMI or upconversion, they’ll definitely have to consider the marginal cost of the PS3 (effectively $0 right now) in the equation.

    Moreover, as HDTV hits mainstream, the Wii becomes less attractive and although the other consoles more so. Congrats to MS for Live Arcade, it’s a great move, but boo for not including an HDMI cable connection with 98% of them. People are going to look at the field, see the ‘family friendliness’ perception of PS vs Xbox (fair or no) and have to consider it.

    Now, since MS hedged it’s bet from the beginning by not including an internal HiDef reader, I wouldn’t be surprised to see the 360 Blu-Ray player come out soon (depending on contractual agreements that I don’t know) which takes the whole topic back out of the console argument.

    Basically, and I’ve taken far too long to say this, format matters because of two things. Mainstream acceptance of HDTV will be more important than most people realize, and perception is reality in the adoption curve. MS has yet to truly break out of the ‘hardcore’ mkt (a statement I expect you do disagree with) because while they are good at predicting business adoption, they’re terrible at predicting consumer behavior.

    Thanks for the inspiration, as always.

  2. > a lot more people have HDTVs than I thought

    My expectations for immediate HD penetration were diminished by this:

    > I think a lot of people have been fence-sitting waiting for a winner

    I guess my point was “I think a reasonable number of current fence-sitters with HDTVs big enough to care already own a PS3.” But then, my estimate of the number of fence-sitters probably differs significantly from yours. On a personal note: my HDTV is pretty darn big and I couldn’t care less about next gen DVD because I get HD content on demand via cable and/or Marketplace.

    > as HDTV hits mainstream, the Wii becomes less attractive

    I disagree. It’s pretty clear that people aren’t buying the Wii for the graphics, and I haven’t noticed any of my guests’ enthusiasm for “Wii Sports” diminished by the relatively large size of my plasma TV. Quite the opposite, really.

    > boo for not including an HDMI cable connection with 98% of them

    Don’t look at me — I’m portfolio manager, not hardware guy. 🙂

  3. I also tend to think you understate the impact this has on consoles. PS3 essentially won for BR since the vast majority of people are watching BR on PS3. Also it continues to be the best choice for a BR player.

    I’m pretty surprised actually that the studios have allowed BR to pull through here since it seems such a technical mess. I don’t consider their strategies rational. Disregarding Sony (who should just split up already) it really seems they should pursue an any and all format/medium model.

    MSFT probably need to ship a BR player fairly soon (at least by the end of the year) despite public waffling. They should also try to more effectively emulate the feature set of the HD formats in Marketplace. Marketplace HD is not at the quality level of an HD disc, has no extra (which I dont care about) and is not loanable, watchable in multiple places, etc.

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