Really, this comes as no surprise to me. Halo sold 170 million USD$ in its first 24 hours. That's not including the extra systems that people bought just to play the game. I can't say much more, given I've been playing it since the start of the week when a friend bought the system (Hence the lask of posts this week).
But, 170 million. Thats more than Spiderman 3, the biggest blockbuster yet for movies raked in over a whole opening weekend (151 million). Halo 2 near well toppled the entertainment opening selling record when it initially came out, so having the final installment, one that is hosted on a new Xbox with no Halo game to call its own yet, beat the previous record is almost expected.
Microsoft has been making a big deal over the opening as well. Star-studded promotions, a red carpet style opening in New York, all the glitz of Hollywood. Games are making big splashes now as a medium that has finally grown into its own for potential. Expect a lot more promo and glitz to accompany new blockbuster games. There's big money, and proof that there is future big money, in good games. And given the amount of following some good games are getting, to call it a mass media wouldn't be far off anymore.
Thursday, September 27, 2007
Friday, September 21, 2007
NBC offers Free episodes online
NBC has decided to part ways with Apple Itunes online store and begin to offer their TV episodes free of charge to viewers. Here's the catch, you can't skip the ads, and the file deletes itself a week after its been aired on TV.
NBC apparently wanted to jack the price of each episode to over double the cost currently. Apple said no deal, and NBC took their ball and went home. Now they're going back to the tried and tested way of selling episodes - to the advertisers. Unskippable ads, however, probably have about as much effect as ads on TV to those that really don't want to watch them, except instead of channel clicking, people will just open up a new window.
Apparently NBC's main argument is with the revenues it garners from online sales. It wasn't enough (mind you, somethings still more than nothing, considering torrents etc). So NBC decided to sell advertising shares and forgo the download cost. This brings up a secondary argument, one that hasn't been higlighted in the news so much.
Many of the programs that NBC plans to offer are aimed at the younger audience. These shows also have high viewer rates, but aren't always counted in the same way. Heroes was one of the most watched series last season, but it's viewer numbers were not as high as they actually were. This is because the Nielson ratings don't account for TiVo'ed views that are watched later on than the showings. Advertisers don't benefit from recorded shows, as viewers tend to skip the ads as they feel. But the behaviour shown by viewers matches the age group. Younger people are the On Demand generation of viewers. They watch shows when they have the time and want to, not when Cable TV tells them to. This explains why box sets of series DVDs sell, and why TiVo and ITunes downloads of episodes are popular.
But again, ads are gone from these sources. So what does NBC do? They create a way to capture at least a part of this On Demand market that was getting away ad-revenue free. They'll keep all the ITunes consumers, that's almost guaranteed. Changing the delivery method usually doesn't turn away previous consumers, especially when the cost drops. This means, as long as they get at least an equal amount of advertising revenue from the free download, they break even. Given the fact that its very likely much of the On Demand TiVo market will take this route as well (I know I will) means their viewer numbers will go up from ITunes. If NBC sold ads based on only ITunes subscriptions, they can expect to be able to charge more for revenues as the viewer base grows.
There is one downfall for the moment though. NBC is only offering it to windows users. No Mac, No Ipod. It reeks of spitefulness on the part of NBC, which is probably a poor choice. Yes, Macs arent a big market, but the Ipod video probably is. This is only a temporary issue, of course, but it's just a mean-spirited way of doing business.
NBC apparently wanted to jack the price of each episode to over double the cost currently. Apple said no deal, and NBC took their ball and went home. Now they're going back to the tried and tested way of selling episodes - to the advertisers. Unskippable ads, however, probably have about as much effect as ads on TV to those that really don't want to watch them, except instead of channel clicking, people will just open up a new window.
Apparently NBC's main argument is with the revenues it garners from online sales. It wasn't enough (mind you, somethings still more than nothing, considering torrents etc). So NBC decided to sell advertising shares and forgo the download cost. This brings up a secondary argument, one that hasn't been higlighted in the news so much.
Many of the programs that NBC plans to offer are aimed at the younger audience. These shows also have high viewer rates, but aren't always counted in the same way. Heroes was one of the most watched series last season, but it's viewer numbers were not as high as they actually were. This is because the Nielson ratings don't account for TiVo'ed views that are watched later on than the showings. Advertisers don't benefit from recorded shows, as viewers tend to skip the ads as they feel. But the behaviour shown by viewers matches the age group. Younger people are the On Demand generation of viewers. They watch shows when they have the time and want to, not when Cable TV tells them to. This explains why box sets of series DVDs sell, and why TiVo and ITunes downloads of episodes are popular.
But again, ads are gone from these sources. So what does NBC do? They create a way to capture at least a part of this On Demand market that was getting away ad-revenue free. They'll keep all the ITunes consumers, that's almost guaranteed. Changing the delivery method usually doesn't turn away previous consumers, especially when the cost drops. This means, as long as they get at least an equal amount of advertising revenue from the free download, they break even. Given the fact that its very likely much of the On Demand TiVo market will take this route as well (I know I will) means their viewer numbers will go up from ITunes. If NBC sold ads based on only ITunes subscriptions, they can expect to be able to charge more for revenues as the viewer base grows.
There is one downfall for the moment though. NBC is only offering it to windows users. No Mac, No Ipod. It reeks of spitefulness on the part of NBC, which is probably a poor choice. Yes, Macs arent a big market, but the Ipod video probably is. This is only a temporary issue, of course, but it's just a mean-spirited way of doing business.
Wednesday, September 19, 2007
Privacy be damned, I want my network!
Following up on yesterdays post about the plausibility of Yahoo's new social networking site to flourish given the possibility that cyber bullies, or for that anyone, has the ability to edit data on your profile wiki-style, is a report stating that most Facebook and Myspace users are OK with the sites selling thier personal information.
Many of the users of both sites seem pretty naive from what seems to be on the report, given that a large majority of overall users list their personal emails along with their real names (This one, for facebook at least, would defeat the purpose of the site if not, and as such makes a moot observation) on the sites, and there is also the ability to post phone numbers on facebook (I know some of my friends have done this....I could never bring myself to publicly post my phone number). Even knowing that the hosting sites sell this data to advertisers, most users are OK with it, so long as it allows them access to the social networking tools.
You can only get something if you end up paying for it in return, and apparently, online marketers have found at least one tool that consumers are willing to use and in return, give up some privacy. MySpace is taking it one step further using data mining tools to customize ads specifically to each of its users. Which makes sense, as if you only have a small window of opportunity to present ads and generate revenue without angering your target audience, you want to make sure you maximize the potential of returns.
So this can presumably be dubbed the good side of profile sharing on network sites in terms of privacy issues, as it may be. Intrusive, yes, but it isn't so intrusive that consumers are avoiding it. The bad side really hasn't reared its ugly head....yet. So long as advertising ads on the sites are the only use for the data mine, I think most users won't mind. It's when spammers, telemarketers, heck even employers can access what was once thought to be semi-private data between you and friends that the proverbial youknowwhat hits the fan.
Many of the users of both sites seem pretty naive from what seems to be on the report, given that a large majority of overall users list their personal emails along with their real names (This one, for facebook at least, would defeat the purpose of the site if not, and as such makes a moot observation) on the sites, and there is also the ability to post phone numbers on facebook (I know some of my friends have done this....I could never bring myself to publicly post my phone number). Even knowing that the hosting sites sell this data to advertisers, most users are OK with it, so long as it allows them access to the social networking tools.
You can only get something if you end up paying for it in return, and apparently, online marketers have found at least one tool that consumers are willing to use and in return, give up some privacy. MySpace is taking it one step further using data mining tools to customize ads specifically to each of its users. Which makes sense, as if you only have a small window of opportunity to present ads and generate revenue without angering your target audience, you want to make sure you maximize the potential of returns.
So this can presumably be dubbed the good side of profile sharing on network sites in terms of privacy issues, as it may be. Intrusive, yes, but it isn't so intrusive that consumers are avoiding it. The bad side really hasn't reared its ugly head....yet. So long as advertising ads on the sites are the only use for the data mine, I think most users won't mind. It's when spammers, telemarketers, heck even employers can access what was once thought to be semi-private data between you and friends that the proverbial youknowwhat hits the fan.
Tuesday, September 18, 2007
Yahoo on the Social Network Bandwagon
Apparently, getting ad placement on Bebo wasn't enough for Yahoo, as now, they are testing the waters on their own social networking site. Apparently, getting thrashed once with Yahoo 360 wasn't enough. This time, they're playing the "me too" game, imitating Facebook. Given that Google and Microsoft already have the two big Social network players tied up for advertising dollars, it's basically all Yahoo can do to get in on the game. I'm not sure it will work though. Critical mass has already been reached on the popular network sites, meaning its intrinsic value to new members is positive and climbing as more people join the site. New networks have negative investment value to the initial joiners, and given the work needed to involve enough people to extract value from the venture, most shy away from it. What Yahoo needs to do with Mash is ensure that there are enough innovative features that will attract early adopters, and hope that enough people see promise to adopt it, such that future consumers have positive benefits. The problem is, Yahoo went tried and true with most of it, copying Facebook.
One new interesting feature though, is the fact that Yahoo's Mash will also implement a wikipedia-style entry. Which should prove interesting from a social aspect, as cyber-bullying already appears regularly on IM and chat rooms. Imagine the ability to change a person's profile entries in the anonymous realm of cyberspace. It's frightening in a way. I can imagine what some of my Exes might say about me, for example. The ability to have complete freedom in cyberspace is something that's usually strived for by companies as an appealing point of their service. Here though, I'm not sure if it's something people will exactly go after, given the negative possibilities.
But again, what choice does Yahoo have but to try?
One new interesting feature though, is the fact that Yahoo's Mash will also implement a wikipedia-style entry. Which should prove interesting from a social aspect, as cyber-bullying already appears regularly on IM and chat rooms. Imagine the ability to change a person's profile entries in the anonymous realm of cyberspace. It's frightening in a way. I can imagine what some of my Exes might say about me, for example. The ability to have complete freedom in cyberspace is something that's usually strived for by companies as an appealing point of their service. Here though, I'm not sure if it's something people will exactly go after, given the negative possibilities.
But again, what choice does Yahoo have but to try?
Friday, September 14, 2007
PS3, meet Gamecube
Delays in the release of the PS3 must of really set some of the marketing team off at Sony. Nintendo had a real lackluster preformance with the Gamecube after being last out of the gates last console war, and promised that they wouldn't fall behind again this time. Well, Nintendo's doing better than that now. Worldwide sales have the Wii outselling the Xbox 360. And the PS3, the latecomer to the party? Barely a third of the sales. The Nintendo and Microsoft have sold nearly 9 million consoles each, and the PS3 has roughly 3.7 million sold worldwide. Thats a sad sales number, considering that Microsoft, Sony's most direct competitor, only sells well in two of the three markets that Sony particiates in (North America, Europe, and Japan).
I remember that, when the next-gen console war began, people clamored to take a stance on who would win between Sony and Microsoft. People weren't willing to bet on Nintendo, given that since Sony entered the market, they haven't had the lead in sales. I think a lot of it has to do with the fact that, unlike Sony and Microsoft, instead of pushing the same thing on a new engine, Nintendo took a step that actually made their system new and more appealing, opening a new market for themselves instead of just relying on previous system owners to buy the new console version. It seems to have worked out well for them.
Nintendo as taken the crown back again, for how long is unsure. Even with the Wii on top, the battle between Sony and Microsoft for sales is still more interesting, as they are essentially drawing from the same pool of consumers. Theres rumors that Sony is dropping the price of the PS3 for christmas this year, and with a repertoire of games coming out this fall that many critics say outdo Microsoft's lineup. Sales of PS3 may experience an upswing that will catch them up to their rival. Given that the Wii did it with a year's lag, PS3 could potentially do it as well, even though their initial sales weren't as strong (Blame that on high entry costs and bland entry games). They've still got time to catch up.
And I place bets on all three ensuring that their release dates for the next generation of consoles will be in a much tighter time frame, given that history seems to be repeating itself here.
I remember that, when the next-gen console war began, people clamored to take a stance on who would win between Sony and Microsoft. People weren't willing to bet on Nintendo, given that since Sony entered the market, they haven't had the lead in sales. I think a lot of it has to do with the fact that, unlike Sony and Microsoft, instead of pushing the same thing on a new engine, Nintendo took a step that actually made their system new and more appealing, opening a new market for themselves instead of just relying on previous system owners to buy the new console version. It seems to have worked out well for them.
Nintendo as taken the crown back again, for how long is unsure. Even with the Wii on top, the battle between Sony and Microsoft for sales is still more interesting, as they are essentially drawing from the same pool of consumers. Theres rumors that Sony is dropping the price of the PS3 for christmas this year, and with a repertoire of games coming out this fall that many critics say outdo Microsoft's lineup. Sales of PS3 may experience an upswing that will catch them up to their rival. Given that the Wii did it with a year's lag, PS3 could potentially do it as well, even though their initial sales weren't as strong (Blame that on high entry costs and bland entry games). They've still got time to catch up.
And I place bets on all three ensuring that their release dates for the next generation of consoles will be in a much tighter time frame, given that history seems to be repeating itself here.
Thursday, September 13, 2007
TV going to the Web
It's not entirely a new occurrence on video sites, but Quaterlife has been announced to be shown on Myspace. While it may not be the first series shown entirely on the internet, it's probably the most high profiled. Between co-producers Edward Zwick and Marshall Herskovitz, there's enough big-name products they have made that you would think that their show would make it on prime time. But it didn't, and was cut in 2005 and didn't make the lineup. So instead of trying TV again, they're showing it on MySpace.
It's a nice coincidence, as I just mused yesterday what other media moguls must think of gaming starting to take a lead in revenues. Advertising agencies must be starting to realize younger people are spending a lot more time on the web than at a TV, whether it be on social network sites like MySpace, or gaming online. And why wouldn't they? The television is a one-way interaction, viewers have no real input on the outcome of what's going on. The internet is more two-way interaction, allowing input from the user. Gaming is another step ahead of surfing the web in that interaction, but both allow for the user to feel like they're doing something besides watching the screen.
Yes, Quarterlife isn't interactive on it's own, it still relies on user compliance to sit and just watch, but the medium through which it is presented is far more dynamic and interactive on it's own. And MySpace is a great place to start for a digital series. YouTube would be another good start, but between the theme present on Quarterlife (which mimics a lot of MySpace users in a way) and the fact that MySpace has more social networking involved, the site is a better place to host it. Success of the show will actually hinge on viewers drawing in their friends from the site as well, much like the mechanism in which the networking site itself relies on for success. Recent successes from Will Ferrell's Funny or Die in attracting star power for shorts and SNL's Digital Shorts give a more solid building block that allows for high-production style shows like this to build from as well.
CNN, on the link above, has a analyst (Josh Bernoff) saying that while online TV shows have a potential market, that cable is still the big show, and that it'll take decades still for it to change status. I have a feeling it'll make its way before that. It all depends on delivery of content. For the most part, viewing audiences of cable television are older people. The younger demographics tend to either watch movies or... get this - surf the internet! So of course, in a few decades, those currently watching webisodes will be cable TV's target demographic, and if nothing changes between now and then, they would have to switch their way of thinking. Saying that webisodes will dominate by then is a safe, albeit obvious bet.
To say that webisodes will soon be a strong contender for advertising dollars is more risky to say, but also a very potential reality. All the producers have to realize is; their audience is younger than that of TV. Producing the same bland repeats of a genre they do for cable networks won't garner success. If it does become successful though, the young 19-24 crowd is a very profitable demographic for advertising, and look for revenue to shift towards the new media a lot faster than some are predicting.
It's a nice coincidence, as I just mused yesterday what other media moguls must think of gaming starting to take a lead in revenues. Advertising agencies must be starting to realize younger people are spending a lot more time on the web than at a TV, whether it be on social network sites like MySpace, or gaming online. And why wouldn't they? The television is a one-way interaction, viewers have no real input on the outcome of what's going on. The internet is more two-way interaction, allowing input from the user. Gaming is another step ahead of surfing the web in that interaction, but both allow for the user to feel like they're doing something besides watching the screen.
Yes, Quarterlife isn't interactive on it's own, it still relies on user compliance to sit and just watch, but the medium through which it is presented is far more dynamic and interactive on it's own. And MySpace is a great place to start for a digital series. YouTube would be another good start, but between the theme present on Quarterlife (which mimics a lot of MySpace users in a way) and the fact that MySpace has more social networking involved, the site is a better place to host it. Success of the show will actually hinge on viewers drawing in their friends from the site as well, much like the mechanism in which the networking site itself relies on for success. Recent successes from Will Ferrell's Funny or Die in attracting star power for shorts and SNL's Digital Shorts give a more solid building block that allows for high-production style shows like this to build from as well.
CNN, on the link above, has a analyst (Josh Bernoff) saying that while online TV shows have a potential market, that cable is still the big show, and that it'll take decades still for it to change status. I have a feeling it'll make its way before that. It all depends on delivery of content. For the most part, viewing audiences of cable television are older people. The younger demographics tend to either watch movies or... get this - surf the internet! So of course, in a few decades, those currently watching webisodes will be cable TV's target demographic, and if nothing changes between now and then, they would have to switch their way of thinking. Saying that webisodes will dominate by then is a safe, albeit obvious bet.
To say that webisodes will soon be a strong contender for advertising dollars is more risky to say, but also a very potential reality. All the producers have to realize is; their audience is younger than that of TV. Producing the same bland repeats of a genre they do for cable networks won't garner success. If it does become successful though, the young 19-24 crowd is a very profitable demographic for advertising, and look for revenue to shift towards the new media a lot faster than some are predicting.
Wednesday, September 12, 2007
Yahoo gets in on the social networking scene
So, after being pummeled of late by Google, Yahoo signs a deal with Bebo for advertising rights. Good for them.
Social networking is becoming huge, and just about everyone has been affected by it. The networking sites themselves, while just a relatively new concept, have just recently reached a critical mass state for many of thier communities. Basically, now that the ball is rolling, it doesn't need any more pushing to keep moving and growing, the community does that on its own( I know this is a butchering of the critical mass effect for media, I apologize).
The article states that on average, Bebo users log 40 minutes a day. Given the amount of page refreshes that normally occur during that time, that's a lot of face time for advertising.
Social networking is becoming huge, and just about everyone has been affected by it. The networking sites themselves, while just a relatively new concept, have just recently reached a critical mass state for many of thier communities. Basically, now that the ball is rolling, it doesn't need any more pushing to keep moving and growing, the community does that on its own( I know this is a butchering of the critical mass effect for media, I apologize).
The article states that on average, Bebo users log 40 minutes a day. Given the amount of page refreshes that normally occur during that time, that's a lot of face time for advertising.
Gaming media outstrips music and video sales
From Digital Spy:
Its a shift in thinking for a lot of people. I wonder how much this makes the other media moguls worry....
However, hopefully this turns a lot of the focus on video games and virtual media away from just as something nerdy people do to goof off, and towards where it should be; a true mass media that is part of our current culture and has serious implications on our way of life. Something that has value as an engine for behavioral study (such as this article on potential behaviors from viral outbreaks learned from World of Warcraft). I personally have been observing economic behavior for a few years now in online games, and while the environment is unlike the real world, many behaviors can give insight and direction for studies.
A report by Strategy Analytics has revealed that online gaming is now officially outselling both video and music in the digital entertainment market.Now, this is only addressing digital sales. However, couple it with with news that there are predictions for gaming titles to hit 400 million in sales, and what you get is a medium that seems to have finally grown into its own. Gaming has numbers that not only compete with other mainstream media, but perhaps can consistently overtake it. This means a lot for future advertising dollars and investment numbers. EA has been capitalizing on this for a long while now. I can look at all their sports games in the past that I've played, and advertising has become more and more apparent in them as each year goes by.
The firm has stated that the online games market generated $3.8 billion dollars in 2006 and is predicted to grow to $11.8 billion dollars by 2011, with online sales accounting for one third of all software revenue.
Its a shift in thinking for a lot of people. I wonder how much this makes the other media moguls worry....
However, hopefully this turns a lot of the focus on video games and virtual media away from just as something nerdy people do to goof off, and towards where it should be; a true mass media that is part of our current culture and has serious implications on our way of life. Something that has value as an engine for behavioral study (such as this article on potential behaviors from viral outbreaks learned from World of Warcraft). I personally have been observing economic behavior for a few years now in online games, and while the environment is unlike the real world, many behaviors can give insight and direction for studies.
More Periperals, More Audience?
Yesterday, Nintendo released news that they will be adding yet another periperhal to its extensive lineup of plastic pieces that are meant to enchance gameplay, entice others to play on a Wii due to its inviting nature of peripherals, or just reward happy Wii-faithfuls with goodies. I guess it all depends on which camp of gamer you fall under.
Theres actually two really strong arguments to be had. The first is that, just maybe, interactions in gameplay have finally began to catch up with the visuals. There was a large period of disjunction between input and output of games. Original computer games basically matched the interactions. This was simple mind you, as most were text-based games. Even as visuals entered into computer games in the Sierra years of adventure games (mid-80s), much of the gameplay still relied on the input and output of text. There was a connection between what the user put into the game, and what was returned to him.
With the introduction of consoles and mice driven point-and click gaming, a disjoint began between input and output began. If you played any games when this style of play was introduced, think of how much button mashing and random clicking was involved (Kings Quest 6 still haunts my dreams, along with Space Quest 4). This gave rise to what I've argued to be the death blow of the adventure game genre. In the void left behind, came platformers, first person shooters, and RPGs, all which capitalized on directional pads and point and click, without much concern for input/output synergy.
Arcades were always involving more of a specialized synergy in input/output than consoles and computers due to their single-purpose design. Light guns were the original "specialized" peripheral (which has also been ported numerous times to consoles), but arcades also brought more to the table, especially when console gaming began to threaten the extinction of the arcade. Games began including various peripherals that were meant to attract a wider audience, which seemed to be successful.
The Wii capitalized on this, creating a remote that basically could turn into various peripherals all by itself, and by adding small plastic frames, adds to the imagination and user input, such that it more closely matches what the visuals are giving back in output. The Wii truly has become the home version of the arcade machine.
The second argument is the actual profitability behind this venture. Nintendo seems to have a knack for selling the extras to a system that its rivals just havent been able to repeat. Sure, the system costs $299 can versus the $599 PS3, but to have true value from the system, you need 4 Wii-motes, which (last I looked) costs $49 each for the remote, and 39$ for the nunchuck addon. Ask an Xbox 360 or PS3 owner how many controllers they have, and I imagine the number hovers between 1 and 2, with the fraction on the lower end of the scale.
Add on top of the extra remotes, the additional peripherals that Nintendo has been selling, and well, you get the idea. The company has been taking a different approach to the gaming market than it's rivals. Enter low, and sell a lot of fun extras, and make up the difference. Its a form of price discrimination thats common among economic models where market power is apparent amongst its firms.
Take the example of the Two-dollar theaters and normal Cineplexes (its an example from Jeff Church's Industrial Organization textbook found here). While the main theater sells new movies for say 10$, the other theater sells slightly older releases for 2$ a ticket, but then recoups costs by selling popcorn at a slightly higher price. What this allows the theater to do is capture those people who go to the theater for the expeience - the movie, the popcorn, the atmosphere - but are willing to sacrifice the fact the movie may have been released at the 10$ months ahead (which may be overpriced for that section of movie-goers to pay for a movie).
Think of the Wii as that two-dollar theater, capturing those looking for a different experience. Not only are they providing intuitive gameplay that actually connects the user, but they're doing it in a way that has them essentially competing in a different market.
Theres actually two really strong arguments to be had. The first is that, just maybe, interactions in gameplay have finally began to catch up with the visuals. There was a large period of disjunction between input and output of games. Original computer games basically matched the interactions. This was simple mind you, as most were text-based games. Even as visuals entered into computer games in the Sierra years of adventure games (mid-80s), much of the gameplay still relied on the input and output of text. There was a connection between what the user put into the game, and what was returned to him.
With the introduction of consoles and mice driven point-and click gaming, a disjoint began between input and output began. If you played any games when this style of play was introduced, think of how much button mashing and random clicking was involved (Kings Quest 6 still haunts my dreams, along with Space Quest 4). This gave rise to what I've argued to be the death blow of the adventure game genre. In the void left behind, came platformers, first person shooters, and RPGs, all which capitalized on directional pads and point and click, without much concern for input/output synergy.
Arcades were always involving more of a specialized synergy in input/output than consoles and computers due to their single-purpose design. Light guns were the original "specialized" peripheral (which has also been ported numerous times to consoles), but arcades also brought more to the table, especially when console gaming began to threaten the extinction of the arcade. Games began including various peripherals that were meant to attract a wider audience, which seemed to be successful.
The Wii capitalized on this, creating a remote that basically could turn into various peripherals all by itself, and by adding small plastic frames, adds to the imagination and user input, such that it more closely matches what the visuals are giving back in output. The Wii truly has become the home version of the arcade machine.
The second argument is the actual profitability behind this venture. Nintendo seems to have a knack for selling the extras to a system that its rivals just havent been able to repeat. Sure, the system costs $299 can versus the $599 PS3, but to have true value from the system, you need 4 Wii-motes, which (last I looked) costs $49 each for the remote, and 39$ for the nunchuck addon. Ask an Xbox 360 or PS3 owner how many controllers they have, and I imagine the number hovers between 1 and 2, with the fraction on the lower end of the scale.
Add on top of the extra remotes, the additional peripherals that Nintendo has been selling, and well, you get the idea. The company has been taking a different approach to the gaming market than it's rivals. Enter low, and sell a lot of fun extras, and make up the difference. Its a form of price discrimination thats common among economic models where market power is apparent amongst its firms.
Take the example of the Two-dollar theaters and normal Cineplexes (its an example from Jeff Church's Industrial Organization textbook found here). While the main theater sells new movies for say 10$, the other theater sells slightly older releases for 2$ a ticket, but then recoups costs by selling popcorn at a slightly higher price. What this allows the theater to do is capture those people who go to the theater for the expeience - the movie, the popcorn, the atmosphere - but are willing to sacrifice the fact the movie may have been released at the 10$ months ahead (which may be overpriced for that section of movie-goers to pay for a movie).
Think of the Wii as that two-dollar theater, capturing those looking for a different experience. Not only are they providing intuitive gameplay that actually connects the user, but they're doing it in a way that has them essentially competing in a different market.
Tuesday, September 11, 2007
And so it begins
The first area is Economics. I just finished my Masters at University of Calgary in the fall. Most of what I studied was Behavioural and Macroeconomics. This is my "professional side", the side I got a degree in, the one I had written papers for that have been considered to polish up for publication. The other side is my more casual side, that of virtual media, which usually involves online games/communities. This side of my writings is actually unpolished, but more often read and used by others for references in thier own works. Both are fun and interesting to work with, and it really peaks my interest when one area feeds into another.
So this is what this blog will end up being. Posting views, comments, and other things of interest that deal with virtual media and/or economics. It may not always look like it flows well, but hopefully it'll feed into one another as time goes by. And, just maybe, it'll be of interest to others to ead as well.
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