Console Innovation Is Past Due

The AP posted this story today outlining the state of the video game industry - and from looking at the list things aren't going so well. Company after company, from EA to Microsoft to Nintendo to Sony, are showing decreased revenues and/or losses from core video game products and services.

I'm far from a financial or industry expert, but it seems to me that the industry (particularly the console gaming industry) has been milking the cash cows of the current platforms for far too long and it's starting to catch up with them. The Wii, PS3 and XBOX 360 are very old by video game standards and the games themselves are starting be hamstrung by their aging technology. And most people who were ever going to buy one of these consoles has probably already done so - new products like the XBOX 360 Kinect notwithstanding.

But the software companies can't lay all the blame on the consoles either. I've gone on at length about my disappointments with EA, but they aren't the only company dropping the ball. Take-Two Interactive pushed back the release of BioShock Infinite from October 2012 to the end of February 2013 and took a 6% hit in stock price. And Activision Blizzard Inc. is showing lower revenue for their games as well - which isn't surprising considering their yearly Call of Duty releases are practically indistinguishable from each other.

Add all of this to the fact that games on platforms like the new iPad are increasingly more beautiful and engaging, and the console/traditional video game industry looks like it's in trouble. I understand why in a down-economy companies like Microsoft, Sony and Nintendo decided to stick with the current consoles and only make iterative improvements. But if they want to succeed in the future, the time to come up with some real innovation is now.

$1.74 Billion Spent On Video Game Content? That's a Lot of Microsoft Points.

Image via DICE Designer @ChristinaCoffin

Someone once said that the guy that invented money was smart, but the guy that invented the poker chip was a genius. I suppose the same could be said for Microsoft Points, Facebook Credits, Wii Points and all the rest because according to a recent report, in Q2 2011 consumers spent more on video game content than they did buying physical video and PC game software. "Content" seems to be defined as anything except physical games, including in-game content, game downloads (including mobile games like on on your iPhone), game rentals and everything else.

To me it's a staggering number, and indicative of where the industry is headed. A few years ago I don't even think I'd heard of the term "DLC," but now if I love a game I won't think twice about spending 1,200 Microsoft Points on new maps. And iPhone and iPad games? What's a couple of bucks if I can get a few good hours out of it (or, more importantly, if it will distract my kids for 15 minutes).

"It adds up" is apparently an understatement.

Consumers spent additional $1.74 billion on video game content in Q2 [BGR.com]

Netflix Is Going To Offer Video Games. But Why Now?

(Yes you did Netflix. Yes you did.)

I got an email on Sunday from Netflix. It was an apology email, telling me they were sorry for the way they screwed up the splitting of the online and the mail-in DVD service. It was appreciated on my part, because as a customer since the unlimited DVD plan was called the "Marquee Club," I was pissed off about getting my rates unceremoniously jacked up.

But that's not what was interesting about the email. The interesting thing was the announcement that their new disc mailing service (called "Qwikster") was going to include Wii, PS3 and XBOX 360 video games. It will be an additional fee to your monthly bill - much like getting Blu-Ray discs costs extra.

It always seemed to me that they could have incorporated video games into their existing service a long time ago. It could have been done with relative ease and taken advantage of their already huge user base in the process. Whatever the reason was for not renting games, they've now changed their minds and I think I have a pretty good theory as to why.

Qwikster is going to have to make money for Netflix, and fast judging by the blunder in the pricing restructure and the mass exodus of many of their users. So Netflix has to hold onto the business, even though discs are dying and are slowly being replaced in every form of media (video, music) that relied on them. All except the console video game.

If you're going to sell a service that mails old fashioned pieces of plastic back and forth to people, it makes sense to include the one thing that will still probably be shipped on a disc for a long time to come. Digital delivery is quickly on its way to being the dominant way people rent movies and TV shows, but the day I can buy a digital download of Gears of War 3 on my console (and be as satisfied that I have ownership of a copy of the game) seems a long way off. These games take massive amounts of data (gigabytes), and the next generation of consoles will likely garner games that require even more. A console isn't a PC with ever expanding hard drives - and honestly even PC gaming is really in many ways just beginning to figure out digital delivery with services like Steam.

I have no idea if Qwikster will be successful or not. Looking around at the number of Red Box kiosks I see every day I'm not too optimistic. But including games as an option does seem like a good idea, and they'll probably pick up a lot of customers who never tried a service like GameFly but might get a Wii game or two for their kids. And from Neflix's perspective it might be better late than never.