This year’s Electronic Entertainment Expo (E3) video game trade show had all the potential for disruption but none of the follow-through.
Always nipping at the edges of the game industry, Apple and Samsung have the means to exterminate the video game console makers. But for some reason, they have held back on pulling the trigger. Apple was rumored to be working on a television that could bring apps to the living room. Faced with free or 99 cent apps, would consumers still plunk down $60 for console games? Maybe not. But Apple didn’t announce its TV this week.
Samsung, meanwhile, announced its plans to become a cloud gaming service provider with the help of Gaikai and Nvidia. But Samsung said almost nothing to reinforce that diabolical plan. Gaikai’s chief executive, David Perry, had to carry that flag. It would have sounded more intimidating coming from Samsung. Instead, the company changed its chief executive.
It’s a little maddening, seeing the potential for disruption so clearly, but having to wait for it to happen in slow motion. So we were left watching the conventional ground war between the console makers:
Nintendo unveiled the first games for its Wii U video game console coming this fall. The company made some fatal mistakes with the Wii U. It put an under-powered processor and graphics chip in the machine, making it barely on par with the existing Xbox 360 and PlayStation 3 consoles. And that system is already going to have a tough time displaying games on a TV. Now it also has to display images on a tablet. This task is so difficult for the under-powered system that Nintendo can’t easily add a second tablet controller — the most basic of game controller necessities — to the Wii U. The Wii U will be affordable, but not revolutionary. It’s a timid plan.
Microsoft and Sony held back on hardware announcements, presumably because they’re doing well enough to postpone the next-generation hardware that they have planned. It was business as usual in the console business.
Sony showed its love for gamers with the launch of alluring new titles such as The Last of Us, The Unfinished Swan, and Beyond: Two Souls. But Sony isn’t in the best of health, as it is losing money and laying off people. Sony didn’t offer much-needed price cuts on the PlayStation 3 and the PlayStation Vita, probably because it couldn’t afford to. That isn’t exactly the best argument for winning the console war.
Microsoft is coasting in a leadership role because it is still getting a payoff from its bold move in 2010, when it launched the Kinect motion-sensing system. It announced a sensible SmartGlass app that takes advantage of second screens, or mobile devices such as tablets and smartphones. It also offered a $99 console with a monthly subscription fee, much like a discounted cell phone plan.
But it didn’t embrace cloud computing in a big way or deal with the threat from low-cost Apple apps. It showed off some games from existing franchises like Halo, but it had almost nothing to say about brand new games that are in the works. And it didn’t embrace free-to-play gaming on the console.
These companies were milking the existing market for profits. But they weren’t investing in getting new users in new markets. These are fine strategies for serving existing gamers. But they aren’t bold new grabs. Companies that aren’t innovating are sitting ducks for disruption by others. Nexon had very little to announce, so it just threw a gigantic party instead.
A few companies did make bold moves. Ubisoft announced an innovative game called Watch Dogs, but didn’t say when it was arriving. The French game publisher is working on eight titles for the Wii U, but its success with those titles will probably be muted because of Nintendo’s timidity.
Of all of the traditional video game companies, Electronic Arts was the most vocal about shifting into digital games. It announced a social version of SimCity, but compared to Zynga’s existing CityVille game, EA’s game might look like a copycat. EA also said it would create seamless experiences as players move from one platform to another. That would be great for consumers, but I would bet that a lot of platform owners will try to throw obstacles in EA’s way rather than encourage cross-platform capability.
Activision’s Treyarch fixed what wasn’t broken by completely changing the setting and weaponry for Call of Duty: Black Ops II, which I nicknamed the Attack of the Drones. Japan’s Gree stormed E3, taking out a huge booth that used to be THQ’s and turning it into a staging ground for its invasion of the U.S. mobile market. Zynga attended the show, hoping to snare developers away from the consoles. But it wasn’t about to create social games that run on the consoles.
I’d like to see more bold moves. This year, each company stayed in its comfort zone rather than crossing over into enemy territory to grab a new audience. Nor did anyone really try to get past the zero-sum game and seek out new users.
The gaming market isn’t for the timid. If you aren’t busy living, you’re dying. If Samsung and Apple wait too long to inflict their disruption, the new generation of game consoles will arrive. And then the console makers will have the high ground again.
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