Monday, May 15, 2006

More E3 Notes

Here's part one of a data dump of the notes I took at E3. As always, I was walking around with Ben Ormand, who is working on his own summary (which is generally far more entertaining than mine).

By the way, I intended to just purchase an exhibits badge and go as a civilian, but given that the price for an exhibits badge more than doubled from last year, it was going to be a real wallet hit to do that. So I need to say thanks to Jetson Pfoutz of Xbox Nerds, who was nice enough to hook me up with a media badge on short notice.

The price increase actually reduced the crowd at the show by about 15%, and as crowded as it was last year, it was a welcome change. I never thought I'd say this, but the management of E3 made huge improvements to the show this year. Last year, it was so loud that it was actually painful in places, particularly near the EA and Microsoft booths. This year, the sound levels were significantly lower, and even the EA area was built in such a way that the highest sound levels were contained in a small, circular area that didn't bleed over to other exhibits. It was a pleasure to walk around yesterday instead of it being punishing--still loud, but totally manageable (and for the EA area, earplugs worked very well).

There was also a significant reduction in the number of companies bringing in loud, stupid entertainment to hide the fact that their games suck. NCsoft won the coveted Assholes of E3 award (which I also refer to as "The Akklaim Award") with some sort of live band thing with a woman who was breathing fire. At least, that's what I think I saw—I was too busy gouging my eyes out to be sure.

One of the running jokes that I have with Ben about E3 (because we've seen the show four times together) is that the company that tries hardest to distract you away from its games is always in financial trouble. It wouldn't surprise me at all if NCsoft closes operations in this country within twenty-four months, especially if Tabula Rasa tanks. Their earnings (announced May 8) showed that U.S. and European revenue declined (versus last year) by HALF. That is a stunning decline.
They had a nice little thing going with City of Heroes, and Guild Wars was a terrific idea, but both of those games seem to have really hit the wall (particularly City of Heroes/Villains), and Auto Assault has had zero buzz from launch day. At E3 they announced four MMO’s that could be downloaded for free, they have a bunch of other products in the pipeline, they already have a bunch of games out there, and it all combines into a strategy that appears to be in total disorder. So I don’t think their future is looking very solid, regardless of how many fire-breathing vixens they can recruit.

There were a ton of things I didn't see. That's the nature of E3. And a few places I didn't stop because I didn't need to--Bethesda, for example. I know that if it's a Bethesda game, it's going to kick ass, and it's an auto-buy for me. I didn't need to spend any time checking out those guys. Same thing with Spore, Gears of War, Bioshock, Mass Effect—those are all guaranteed buys for me (and you, too). I don’t need to know anything more about those games, and if I did, there is coverage everywhere.

Here are a few of the dominant themes I saw, and bear in mind that this was a really funky, difficult to characterize show this year, at least for me.

1) Sony Pukes All Over Itself
I know—I’ve already written about this at length—but it’s still stunning to me. And it’s even more stunning to me that there people out there (not many, but a few) who are buying Sony’s line that the PS3 is a “bargain” at $599 because it has a Blu-Ray player included.

Look, it’s not a bargain if we don’t want it. Period. If I want to buy a car, and the dealer adds $8,000 worth of options that I don’t want and says it’s a “bargain” because he’s only charging me $5,000 for them, I know better.

Same situation here. Blu-Ray is a fledgling format, and Sony’s ability to establish it as the standard is an open question at this point. I said it last week, but Sony’s trying to win a format war with a gaming console, and their strategy is costing us $150 per console (I’m guessing that’s a reasonable price for the inclusion of the Blu-Ray drive).

Something else that I don’t think Sony understands is how slowly high-definition DVD is going to be adopted in the U.S. The format war has absolutely killed our interest. I’m totally into all this stuff, and even I couldn’t care less at this point.

Progressive scan DVD players will go down as one of the greatest pieces of hardware ever. They were utterly brilliant because you didn't have to buy any new software. All the movies you already had on DVD suddenly looked better than you could believe. No re-buying necessary. So there was plenty of software available to support the hardware when it was released.

Not this time, though. Movies are trickling out, and there is a bizarre amount of absolute crap among them, both in HD-DVD and Blu-Ray formats (the Blu-Ray launch titles won't be available until June 20, but they've been announced).

Even worse, there are a ton of people who have no idea that high-definition DVD's even exist. I could walk into my office tomorrow and ask ten people about high-definition DVD and eight would have no idea what I was talking about. So the addition of a Blu-Ray player is something that, right now, none of us care about—but we all notice the gigantic price attached to the console. We’re noticing that.

Sony is positioning the PS3 as a “premium” product, clearly, but they will take the biggest loss in the history of their company if that’s their strategy, because they can’t make their investment in the Cell back by selling to an elite consumer tier. And they can’t be number one, or even number two, in the U.S. or Europe with this strategy.

Just wait. If they launch this year in the U.S. (which I still think is highly unlikely, or if they do, it will be with an incredibly small number of units), they’re going to be #3 in this market. The Wii, in terms of number of units, is going to absolutely kill them. The 360 is going to sell significantly more units in the holiday season than Sony will.

So spring 2007 hits and the 360 has an installed base of 12+ million units worldwide. The Wii has some insane number that is going to have us all smacking our heads, like 5 million. The PS3 is going to have, at most, 2.5 million. At most.

Anyone who thinks that the PS3 post-launch is going to sell faster than the 360 ($200 less) or the Wii ($350 less) is hopelessly stoned. So not only will Sony be third in the U.S., they’ll be third and losing ground. Does anyone think developers are going to flock to the most expensive development platform to sell to the smallest installed base when the PS3 costs FIFTY PERCENT MORE? If so, think again.

Now I don’t want the PS3 to fail, oddly enough. It may sound like I do, but that’s just because Sony’s supreme arrogance is so incredibly stupid. But we need Sony, because they’re competition for Microsoft. Nintendo has cleverly created their own tier, so they’re not really even in direct competition anymore. It will be a disaster for us, as gamers, if the PS3 absolutely fails.

Well, crap, that’s just one dominant theme and this is already so long that I’m stopping for the night. I’ll pick it back up tomorrow.

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