Nintendo news round-up

Since my last post, I just kept collecting links to more and more news stories rather than being able to write a coherent article around them. So here is a rundown of what had happened in the world of console gaming in the past two weeks with some highly opinionated commentary at the end.

First, Nintendo president Iwata admitted to weak Wii U sales but refused to follow analyst advice to get out of the hardware business.

But how was Nintendo to move forward? Some reports noted they would soon be releasing mini-games on smartphones. After all, Nintendo could earn tons of money on mobile platforms, some analysts calculated. Other reports sprung up noting Nintendo would not be releasing mini-games on smartphones. It turns out that what Nintendo really has in mind for the future is a lot more cryptic than that.

The main theme: enhancing the quality of life through entertainment. The key word is health, Mr. Iwata says. Citing a flood of wearable devices already on the market, he says Nintendo is trying out something completely new: non-wearables to monitor your health. (...) For those of you wondering what “non-wearables” for health means, here’s the one clue he’s giving out for today: it’s not necessarily something you will use in the living room

Leaving strategy aside and concentrating on the numbers, there were some negative interpretations of the Wii U's recent sales figures (in German). In fact, there were lots and lots of negative interpretations. However, there were also some positive interpretations of holiday sales figures (in German).

Let us not forget that the Wii U still leads the pack of next-gen consoles by a decent margin.

Wii U: 5,86 million units (Source / as of Dec 31st 2013)

PS4: 4,2 million units (Source / as of Dec 28th 2013)

Xbox One: 3,9 million (Source / as of Dec 31st 2013)

The margin may be far too small considering that the console launched one year ahead of the competition. But it is still in the lead and, as such, the most sold next-gen console at this time.

In the end, Nintendo buying back plenty of its own stock seems to be an economically sound move in the current situation.

As if to save Ninty's grace in these troubled times, rumours of the company's next-next-gen plans surfaced. 'Nintendo Fusion' is supposed to be a project that, for the first time, would wholly integrate handheld and home consoles. And each would be packing quite a punch, according to the rumours which were later spread by another site.

This feels so much like 2005. And one thing is certain: Nintendo is working on their next-next-gen consoles. As soon as one console leaves the research and development labs, its successor hits the blueprints. Whether this is the case for Microsoft and Sony remains to be seen, though. All I can comment on regarding this specific rumour is that Nintendo did announce a much tighter integration of home console and handheld development. But let us briefly examine Sony's and Microsoft's fortune before summing up.

A few days ago, Sony's credit rating was reduced to junk status by the second rating agency. And soonafter, the corporation announced plans to sell its laptop business (including its 'Vaio' brand), spin off its TV business and sack 5.000 people.

Microsoft is not in an enviable position either. It is clear to everyone that the Xbox One did not have a hugely successful start. Already, there are rumours of a cheaper Xbox One in the pipeline and a recent $100 trade-in program for PS3. consoles suggests that Microsoft has signalled out the pricing issue as the culprit.

So what will happen? In a recent opinion piece for a German industry magazine, I noted that I was disappointed with Nintendo because of their uninspired offering so far. Because Nintendo should be able to win this generation hands-down. They won the last generation by a landslide and their new system is completely backwards-compatible (unlike those of its competitors).

Most importantly, though, Nintendo is swimming in money. According to analysts, the company has $4.4 billion in cash reserves. That might be enough to buy a third party publisher like Ubisoft or Capcom. So why have they not beefed up the Wii U to be at least on par with Xbox One and PS4? It is not as if those two are a huge leap from their respective predecessors. Or why have Nintendo not paid Rockstar to get GTA V generation-exclusive on Wii U? There are certainly missed opportunities here. But things are far from over for Nintendo.

How my predictions turned out.

In my last extensive post in May, I made a number of predictions. A lot of them were spot on, some were spectacularly wrong.

I was right to favour the PlayStation4 over the Xbox One for a number of reasons. Kinect was never a selling factor (certainly not one that would warrant paying a $100 / €100 premium), the name did not suggest a great advance from the previous console, Microsoft's emphasis on television content did not excite anyone (nor did the appointment of former CBS president Nancy Tellem as their newest executive) and things have been very quiet on the 'Halo' front.

As far as the PlayStation4 is concerned, I called the touchpad on the controller a gimmick with little use. And, owning a PS4 since its German launch, it really feels like that.

I was very wrong about Microsoft's and Sony's ability to launch their respective console on time. Although neither manufacturer was able to supply a large amount of stock. Xbox One being readily available despite of this (at least in Germany) speaks for itself. However, both manufacturers claim to have sold around three to four million units or so. My predictions regarding the continuing slump of Wii U sales materialised. So it is a neck-on-neck race at the moment, with Wii U apparently at around five million units, which is still about a million ahead of PS4, which in turn is about a million units ahead of Xbox One, according to VGChartz. It is going to be an exciting year.

Big news: The return of Falafelkid

Dear readers.

First of all, I wish you all a happy new year. After a long and painful hiatus, I have some big news for you. You may have asked yourself what I have been doing since I last posted here in May. I have, of course, been very busy in the videogame industry. I have presented the gamescom congress in August, fulfilled my duty as a member of various important juries, wrote a number of articles for print magazines and, most recently, wrote my very own deck of top trump cards about videogame scandals.

Most importantly of all, though, I have been trying hard to change jobs again and finally, I have done so, again for the better. As of this week, I am working for the heute journal, the ZDF network's daily news magazine. It is perhaps somewhat comparable to the BBC's Newsnight or the NBC Nightly News, certainly in terms of reputation and viewing figures. To be invited to work for a newsroom like this is a great honour and privilege. For someone like myself, whose main field of expertise lies within the area of consumer electronics in general and videogames, specifically, it feels unreal.

This new job will entail a number of changes to my personal life. And, as a result, I will be able to reinvigorate this blog. My new job will require me to keep a close eye on all developments in my area of expertise, more than ever before. So, here on this blog, I will be able to share both news, rumours and commentary, which I will trace up as part of my research routine. It will remain to be seen whether I will write shorter posts almost on a daily basis or whether I will continue to write longer articles, perhaps one every other week or so. I may even decide to ditch written text for shorter video clips. But my new job will definitely bring my professional work back in line with this blog. So I thank you for sticking around this long and looking me up again. I promise you I will do my best to make it worth your wait.

Thoughts on the PS4, Xbox One and Wii U

So now the eighth console generation is complete. Here are some thoughts on yesterday’s Microsoft presentation, as well as the PlayStation4 reveal some time ago and the three-way-race in general. But let us start with the Xbox One.

What’s in a name? Money, success, reputation…

Firstly, the name is a big mistake. Quite obviously, Microsoft named the predecessor Xbox360 rather than Xbox2 so people would not think it inferior to a PlayStation3. Now, they are pitting an Xbox One against a PlayStation4. I realise they want to hint at the desired unifying function of the device – as the one device you need – and hope that similarly to ´the 360´, people will call it ´the One´, but some will have associations of inferiority compared to the PS4. What is more, the original Xbox is sometimes referred to as the Xbox 1.

However, Microsoft is in good company. A lot of consoles are badly named these days. The ill-fated multimedia version of the PlayStation2 was called PSX, even though that name had been associated with the console’s predecessor. More recently, both 3DS and Wii U also suggest that these consoles are mere variants of their predecessors rather than a new console generation and I am convinced that the names alone account for a great deal of lagging sales. In the next generation, the only aptly named console is the PlayStation4, which sends out a clear message about what to expect. But do not get me started about the Vita. If anything, Vita sounds like a diet supplement for pensioners. So even Sony can mess up console names big time.

Who were those people?

What irritated me was the selection of speakers. Who is Yusuf Mehdi? He has been part of the Xbox division for less than two years. Phil Spencer and Marc Whitten are not exactly executive celebrities, either. Almost all of the people on stage were unknown to me, with the exception of Don Mattrick. Why is that? Since launching Xbox360, Peter Moore, Shane Kim, Peter Molyneux, J. Allard and Robbie Bach all left Microsoft. This painful and significant managerial exodus was very evident yesterday and I am skeptical whether the new people in charge have the vision and experience people like Moore, Allard and Bach had. They certainly lack their charisma.

As much as I think that both Sony’s PS4 presentation and Nintendo’s various video conferences left a lot to be desired, it is always reassuring to have familiar and experienced executives like Andrew House and Kaz Hirai or Reggie Fils-Aime and Satoru Iwata up on stage. Microsoft has to ask itself what signal it is sending to current Xbox fans when they introduce former CBS president Nancy Tellem as their newest executive. She is almost 60 years old and, probably, has not been an avid gamer. That is not being presumptuous considering her generation.

Games, please. That will do for me, thank you.

What even are the Microsoft Entertainment Studios Tellem is heading? What would we as gamers want them to produce? I appreciate Microsoft closing deals with established producers of television and movie content. But I do not want them to produce such content themselves. Let us consider the short ´Quantum Break´ trailer. The live action sequences were poorly written and acted. If this is the best Microsoft (or Remedy) can do, they should stop right now and get back to making videogames.

The ´Halo´ spin-off series will not be any better, I presume. Spielberg will most likely only be executive producer of the project. And remember that Peter Jackson already tried to turn ´Halo´ into an exciting new interactive genre somewhere between game and movie. He failed miserably and I am unsure whether Spielberg (or rather the person who actually gets to direct this) will do a better job. Remember Spielberg’s first and failed effort to break into the gaming industry with ´Project LMNO´? There is still a possibility of this new attempt going down the tubes as well (pun intended).

And where were the games? They really only showed the new ´Forza Motorsports´, ´Quantum Break´, ´Call of Duty: Ghosts´ and a sleuth of EA Sports titles which were not presented one by one but as part of a montage. Instead, there was a strong emphasis on television content and other media, as well as on switching between them fairly seamlessly.

Kinect stays rubbish

When I say fairly seamlessly, I am talking about a slight and noticeable delay, though. Watching Yusuf Mehdi change from game to television to browser and back by short voice commands really made me wonder who would be applauding such a feature frenetically (some people did but they were miraculously not in view of the camera’s wide shot). Anyone who called the Wii’s motion controls gimmicky can knock themselves out with voice commands and gestures replacing pushing a button on some kind of controller you would have to be holding or have lying next to you anyway.

Microsoft tried forcing the original Kinect down people’s throats already and it turned out to be a dud. While the company gladly communicated impressive shipment figures for the hardware, they never released any figures for Kinect software sales which would have shown a tie ratio between the two. This, I am sure, would prove that a large number of people bought the hardware for uses other than gaming and, in fact, other than connecting it to an Xbox. Just about every research scientist and hacker in the West must have bought what still is amazing hardware at a reasonable price. But name some great Kinect games and you will be hard pressed to find even a single one. Back in my old newsroom, we came across so many fantastic homebrew Kinect applications on PC and always wondered when Microsoft would turn these ideas into Xbox software. It never happened. There are some okay kids games amidst the rubbish mini-game and invariable sport compilations. But I have yet to see Kinect software on par with solid PlayStation2 titles like the ´EyeToy´ series or ´SpyToy´. Not that they were landmark videogames. You understand my point.

Having realised this, Microsoft is now marketing Kinect as a user interface only. There was no mention of Kinect being used for games, I recall. Again, Microsoft is emphasising non-game features and greatly downgrading the hardware capabilities of the Xbox One in favour of including Kinect in every SKU. Speaking of hardware power, all the developers that had started developing games in the new 4k resolution can shelf those assets until the next generation, should any of the current hardware manufacturers make it to another generation. It is almost certain that one of the three will drop out of the race this generation and I would put all my money on that happening. But more about that later.

While Mehdi alluded to 4k gaming as a possibility on Xbox One, I am highly skeptical about this assertion. So is the author of the Forbes article who summarises: "In theory, the Xbox One could support 2K or perhaps even 4K gaming – if there’s content for it at those resolutions."

Microsoft’s focus: North America?

It was also clear that Microsoft was speaking to the US market only. An NFL partnership is an impressive feat and shows that Microsoft has the biggest muscle to close such deals on its home turf, but they excite next to no one in Europe or Japan. My worry is that, with the Xbox One, Microsoft will simply abandon the Japanese market altogether and see Europe only as a secondary battlefield. Alluding to their leadership position multiple times, Microsoft made it clear that the focus of yersterday’s presentation was North America alone. Because in terms of worldwide sales, Microsoft is a far cry from leadership.

So will the PlayStation win?

Well, at the PlayStation4 briefing we got to see some games, at least. The demos shown were impressive and an improvement over the PS3 standard. But the leap in visual fidelity will still be the most subtle ever. Ordinary buyers may not even see the difference between this console generation and the next. Also, bear in mind that a title like ´Killzone: Shadow Fall´ may not look quite as good as the demo shown. We have been there before.

It is also clear to me that Sony rushed the event. They appeared nowhere near releasing hardware. They did not show the console most likely because there is no console to show, I guess. The retail hardware must not have been final yet. A number of developers like Square Enix and Quantic Dream showed only demos. Was this a console that will launch this year? Hardly. Also, noticably, Electronic Arts was absent from the event. This was especially strange in the wake of reports that EA was planning to support the new Xbox and PlayStation rather than the WiiU. These reports have since been confirmed. In the light of this, EA being a no-show is even weirder.

Perhaps most importantly of all, no good use has been shown for the touchpad on the new DualShock, the only real innovation of the PS4 (discounting the Share button). If I did not miss anything, they only announced the feature without showing any uses for it. That, of course, is weak. I have been to a semi-secret event abroad where I had the opportunity to go hands-on with the PS4 dev kit. And while its controller is of course work-in-progress, it felt rather cheap. The new touchpad seems less a touchpad and more a large button. Moreover, the button appears to be digital and not analogue and is not very comfortable to reach.

Then there is the fact that PS3 controllers will be incompatible with the PS4, there will be no backwards compatibility other than, perhaps, streaming solutions in the future and even PSN purchases may not be transferable to the new console.

Predictions

This is going to potentially kill both PlayStation4 and Xbox One: the issue of backwards compatibility and their restriction of used games. I appreciate Microsoft shying away from an always-on connection. But curtailing used game sales by requiring an activation code is almost just as bad. Why invest in the hardware if you know that your increasing software portfolio will be tied to that specific console? Anyone who spends time on videogame forums knows that gamers plan their purchases like this: buy a new console or game, play it for some time and then sell it on. If you want to own more than one console, there is no other way for people with average incomes. Disrupting that cycle is foolish and might turn out to be economic suicide. The same goes for backwards compatibility of software and periphery. I myself have an impressive collection of 360 titles and accessories. If I cannot use any of that anyway, I might as well buy a Wii U or PS4 instead.

Likewise, this is Nintendo’s biggest hope. Around a hundred million Wii consoles have been sold to date with far more accessories and games alongside them. Compatibility is a great incentive for these owners to update, while PS3 and Xbox360 will have to start with a clean slate, anyway, so they can change to another manufacturer without any disadvantage. You can tell Nintendo is betting on this effect by them not including a sensor bar and Wii remotes in some bundles.

I predict that the Wii U will continue its slump for most of 2013. But Xbox One and PlayStation4 will both not meet their promised launch windows later this year and will be delayed until spring 2014. This will allow Nintendo to widen their lead to about 10 million Wii U consoles sold by the time the two competitors make it to market. And these too will meet a lukewarm reception, particularly because at a fairly small increase in visual fidelity over their respective predecessors, they will carry a price tag nearer to the $500 mark. The two consoles will certainly not be able to overtake even the abysmal Wii U figures to date. In fact, I don’t see any of the three consoles making it anywhere close to selling a hundred million units in lifetime sales.

Ironically, the company best suited to deal with the huge obstacles facing the next generation of consoles is Nintendo. Even if Electronic Arts and other publishers withdraw their support, they can always fall back upon their strong first-party licenses. They own the two top-selling franchises in the world and with the inclusion of near-field communication in the GamePad, they will surely land a hit as big as Skylanders once their new Pokémon game comes out. In fact, Nintendo was heavily involved in the development of ´Skylanders´ and they will reap the benefits of supporting Activision soon enough. Likewise, they are enjoying healthy support from Ubisoft after agreeing to let ´Rayman Legends´ go multi-platform, as did the original ´Skylanders´.

Also, even market analysts are greatly underestimating how much money Nintendo earned in the first few years of the Wii on the market. The console was never subsidised and remained at its launch price for around three years, which must be a first in the industry and made Nintendo billions. Factor in that the 3DS has finally picked up sales-wise and stands at more than 30 million units sold worldwide and you realise that, ironically enough, Nintendo is probably still the most financially able of the three console manufacturers. Sony and Microsoft are both expected to not be able to subsidise their new consoles at all.

The long-term future appears bleak for all three of them, though. By 2016, either Sony or Microsoft will withdraw from console hardware for lack of money. And regarding the remaining two, I see the industry returning to the economic rationale that governed hardware like the Atari 2600. You sell the hardware at a decent profit, but scrap license fees for developers. This, if anything, will be a lesson traditional hardware manufacturers may learn from Ouya, GameStick, Project Shield and other such consoles – which are doomed for other reasons. This will be the topic of my next post, though.

What to expect from tomorrow's PlayStation event

Only a day ahead of Sony's PlayStation4 event in New York, I would like to briefly single out one aspect from the recently leaked controller images and comment on what to expect from the new console - and what may not be on the cards.

In my lengthy article below, I already noted why you should not expect the PS4 to be the hardware beast the PS3 was, due to Sony's shaky financial situation, costly new controller features and a desired low price tag.

Examining the leaked images of the PS4 controller prototype, I picked up on an aspect other commentators seem to have failed to notice. While other media outlets have dissected the controller only, I find the rest of the image much more interesting. Let us have a look, courtesy of Destructoid.



First of all, the authenticity of the image is corroborated by the Wii development kit resting on top of the PS4 hardware. But it is the PS4 development kit we should be focusing on. Notice how it is only a little bigger than the Wii kit. And then bear in mind the size of the first PS3 dev kits that were circulated prior to the current PlayStation's launch.



As you can see, the early PS3 dev kits were huge. In comparison, that PS4 kit is only a fraction of that size. This may be an indicator of the hardware being on the humble side, as I expect it to be.

And once again, I am absolutely convinced that neither Sony nor Microsoft will launch new consoles in 2013. If Sony announces a 2013 launch for the PS4 tomorrow, expect that date to be pushed back to 2014 at a later date.

EDIT Unsurprisingly, the English newspaper The Times reports that the new PlayStation is set to be cheaper than its predecessor.

Industry sources and leaked internal documents suggest that Sony is considering pricing the new device at about £300, more than £100 cheaper than the starting cost of its predecessor, the PlayStation 3.

In comparison, the Wii U premium bundle retails in the UK for around £290, just less than the price tag proposed for the new PlayStation. £300 convert to around $460 and €350.

Just days ago, the Wall Street Journal had reported that the new PlayStation would incorporate streaming technology, most likely in the wake of Sony's acquisition of Gaikai last year.

Sony Corp. is planning to offer technology to stream games to its next videogame console, people familiar with the company's plans say, alongside other enhancements to bolster its position in the market.

The new technology, to be unveiled Wednesday along with the new console, will allow users to play games delivered over the Internet, these people said. The streaming service, they added, is designed to use current PlayStation 3 titles on the new console; the new device is also expected to play new games stored on optical discs.

What we know about the next PlayStation and Xbox

The next PlayStation and Xbox are rearing their heads. But they will not launch until late 2014 and will not be the graphical beasts some expect them to be, I am sure. Firstly, let us consider all the various news and rumours surrounding those consoles. And let me start this article with what I know about the next Xbox.

Development kits for the next Xbox have been in the hands of at least one European developer for at least six months, I can exclusively reveal. The source is an employee within the studio and he states that the console's architecture will closely resemble that of a PC. This is not shocking news. We heard rumours about development kits for the new Xbox being in the hands of at least one studio back in May 2011. But it is interesting to hear that the console will likely be modelled around PC architecture.

Meanwhile, VG Leaks has published tech specs, which appear to corroborate my story. Digital Foundry offers more interpretation of this data (thanks to Joystiq). The commentators on all articles seem to agree that these specs are on the humble side, probably because Microsoft is looking to bundle some kind of Kinect hardware or a tablet controller, like Nintendo, and need to offset the additional costs for such peripherals. The specs list a Natural User Interface or NUI, which might be just that.

The PlayStation4 is rumoured to feature similar architecure. According to Eurogamer, Sony's new console will also feature an AMD CPU with eight cores. The article sums up the expected specs of both the new Xbox (Codename Durango) and PlayStation (Codename Orbis) by noting:

The AMD connection that defines both Durango and Orbis confirms that both consoles are much closer in design to gaming PCs than their predecessors, which may result in stronger ports to the computer format.

And Sony seems to want to do away with traditional controllers, as well. CVG reports that various sources have told them Sony is considering "biometric sensors on the grips and an LCD touch screen" for the new controller. All this comes at a hefty cost, of course.

Other rumours regarding the new Xbox and PlayStation concern possible launch dates and price tags. The consoles will launch in October and November 2013, respectively, and retail for between $350 and $400 in the US, Colin Sebastian believes. Sebastian is a market analyst with Baird Equity Research and has been covering the industry for many years.

I strongly disagree on the proposed launch dates. To my knowledge, no console has ever been revealed at an E3 and launched the same year. Microsoft and Sony also have a vested interest in dragging this generation out for as long as possible, because they are only just starting to earn some money with the 360 and PS3, respectively.

Also, Sony boss Kaz Hirai has been hinting at the fact that they want to be last this generation. I am convinced that you will not see either successor on store shelves until late 2014, at the earliest, in any territory.

Sebastian further expects both consoles to comprise off-the-shelf components rather than custom-made ones, which will allow retail prices to be lower than expected and learning curves for developers to be flatter. Here, I absolutely agree. With the PlayStation Vita, Sony already went down that road.

The downside will be a lack in graphics power, I believe. Games may look better at the beginning of the launch cycle, because developers will already be familiar with the hardware. But this also means that games will not look significantly better when the console is nearing the end of its life cycle.

In fact, do not expect the new PlayStation and Xbox hardware to be a huge step up from the Wii U, at all. Since both Sony and Microsoft are clearly intending to bring cosoles with more complex controllers to market, they will have to make compromises when it comes to the raw hardware power of the machine itself. A biometric controller and a next generation version of Kinect cost a lot of money and neither company wants to price themselves out of the market again with a $600 console. A target price of no more than $400 seems realistic to me.

Bear in mind that both Sony and Microsoft are not doing too well financially. Sony has just agreed to sell their US headquarters a few months after having their credit rating slashed to junk status by rating agency Fitch.

Microsoft is doing a little better but has just posted that quarterly earnings for the Xbox division were down eleven percent from the same quarter last year. Operating income from this division is actually up a little from last year, but it is clear that the Xbox division is not significantly contributing to Microsoft profits in any meaningful way. Remember that I had a close look at the Xbox division's profitability in mid-2007 and from 2002 up until then, the division had generated total losses of around six billion Dollar.

One analyst even predicted that Microsoft might sell off its Entertainment and Devices division, which includes the Xbox branch, to corporations like Sony or Barnes & Noble. Microsoft's priority, the analyst noted, was to save the Windows operating system and they would be prepared to sacrifice any other enterprise necessary.

Yet few people seem to understand what the combination of the two manufacturer's cost-consciousness, costly controller designs and a desired low price tag mean for hardware power. Some developers have started producing games that run in the new resolution 4K (approximately four times bigger than 1080), expecting that those consoles will be able to deliver that at a decent framerate. In my mind, it is almost impossible that we will see such a leap in visual fidelity in this generation.

As far as costs are concerned, bear in mind that the Wii U hardware is only an incremental step up from 360 and PS3 because the tablet controller does not come cheap. Yet Nintendo still needed to sell the Wii U at a loss, a risky strategy Nintendo has avoided for the past generations. Sony and Microsoft face the same problems and then some, as noted above. And they have less financial muscle than Nintendo at this time. I guess we will all have to accept that the Wii U is a next-gen console, after all.

EDIT Sony has invited industry professionals to an event on February 20th at 6pm EST. Sony Computer Entertainment America teases the "meeting" with the tagline "see the future" both via its blog and its Twitter account. The main event page features an email registration form and a cool teaser video ending in the infamous ´triangle circle cross square´ button logos.

Sony Computer Entertainment Europe features the same teaser website in each respective language. Surprisingly, however, SCEI's Japanese website features no teaser. You would expect them to be the first. It is a given, though, that Sony wants to tease the PlayStation4 at the event. At any rate, I will stick by my prediction that Sony's new home console will not launch before late 2014.

Why I am cautiously optimistic about the Wii U

So now we know all about the Wii U. Nintendo announced the price, launch date and other details. And, last Friday, I had my third and longest hands-on session with the console yet. Here is a little video clip I produced at the event (in German), if you are interested. And here is a German podcast about the Wii U which had invited me. At first, I was fairly skeptical about the Wii U. After last week’s event, though, I feel a little more confident with a few reservations remaining. Here’s why.

Gameplay > graphics, a winning formula?

When I played the console first at a post-E3 event in Cologne, the graphics were clearly underwhelming and, to a large extent, they still are. I can promise that you will not see a game that will immediately convince you that this is a step up from the current generation, graphically. While the next Xbox and the next PlayStation may have a similar problem, this is a real concern for Nintendo. Obviously, titles coming out after the launch window will look better. But a title like ´Super Mario Bros.´ with its simplistic design style is hardly the best vehicle to show off HD graphics. And Nintendo made the big mistake of developing all first party titles for the launch window in 720p resolution only, for whatever reason.

Some third party games, like ´Skylanders: Giants´, do not look much better than their Wii predecessors. And others, like ´ZombiU´, are a mix of great graphics (when the player is using the tablet like a torch) to some plain awful textures that would have been an insult on the Gamecube (take a closer look at a piano inside a big lobby when you play the game).

Of course, some games look great. My absolute favourite is ´Rayman Legends´, which is a stunner with wonderfully layered two-dimensional backgrounds scrolling fast at a rock-solid framerate, dozens and dozens of enemies on-screen and beautifully rendered particle effects. But, in general, the first wave of games will not wow anyone. Nintendo has clearly invested as little in the graphics hardware as possible to keep the price down without having to subsidise. But, Nintendo would have you believe once again, graphics are not everything.

What is only the more convincing, is the idea of asymmetrical gameplay. There are plenty of mini-games in NintendoLand, where one player has a bird’s eye view of a map and is on the run, with other players having only a third person’s view chasing him. Asymmetrical gameplay can just as well relate to mature games. ´ZombiU´ also makes innovative use of this feature, where one player becomes the Zombiemaster and can spawn various types of zombies on a map and another is the survivor who has to defeat them and capture the flag. This aspect of the Wii U is clearly the strongest argument to buy one and I expect Nintendo to market the console accordingly.

The idea of one privileged player within a group is reminiscent of a number of board and family games as well as pen and paper roleplaying games and the Wii U might enable those ideas to finally be incorporated into console gaming. This strength only relates to local multiplayer, of course. But it was local multiplayer that became the Wii’s killer app. The bottom line is that Nintendo is clearly making the point with the Wii U that gameplay outweighs graphics power.

Pricing and SKU strategy

Discussions about gameplay and graphics aside, I consider pricing the most important issue. A great console with great games can easily be priced out of the market and become a flop. Vice versa, a mediocre console can sell well at a budget price. Remember that the original GameBoy won against two far superior competitors, the Atari Lynx and the Sega GameGear, only on account of being cheaper and having a longer battery life. At any rate, the Wii U is fairly competitive in terms of its price tag. In 2006, the Wii launched at €250 / $250. The Wii U adds 50 bucks to that for the basic model and twice that for the premium bundle. It is more than I would have hoped for and a cheaper price tag would have practically guaranteed success, but neither the next PlayStation nor the next Xbox will be able to match that, for sure.

What I consider a huge mistake, though, is the strategy of selling two different models, so-called Stock Keeping Units or SKUs. Nintendo has never before opted for such a strategy and even frowned upon Microsoft and Sony for doing so, if I remember correctly, calling such a move confusing to consumers. The PlayStation3 launched with two SKUs in each territory which added up to at least five distinct models being available worldwide at the same time. From launching in 2006 up until now, Sony apparently released six different SKUs in North America alone.

In the case of the Xbox360, the original Core bundle was only ever meant to establish a low starting price for marketing purposes. It made no sense to buy it, since it came with no hard drive and no memory card, the latter cost at least $35, reducing the price gap to the premium bundle by more than a third. The basic Wii U bundle makes a little more sense, but only a little. No game is included which is a cost of around $70 / €70, which already exceeds the price difference between the basic and premium bundles. So, here too, Nintendo simply wanted to tout the Wii starting at 299, even though the vast majority will be opting for the premium bundle. Consumers which are less tech-savvy may even be confused. They cannot simply buy THE Wii U, but will have to choose which one they want. This, I am sure, is a question that can only put some of these people off.

Excuse me, which gen is this?

The media reception has been pretty good, though. With the Wii U, Nintendo received some fairly positive reception in the mainstream press. And it is clear that Nintendo insisted on the Wii U being the first next-gen console, since this crops up in many articles. Of course, some critics have already denied the Wii U the next-gen status. But it all boils down to definition. Remember that both Will Wright and American McGee called the Wii the only next-gen system for its innovation.

I personally define the generations the only way that makes sense, by mere count. Completely irrespective of what the console has to offer, this will be Nintendo’s sixth home console and it ushers in the eighth console generation. They could choose to bring no more than a calculator to maket. If they call it a home console, it is a successor to the current model and constitutes the next generation. It really is as simple as that. Who would have considered calling the PlayStation2 last-gen because it lacked the power of GameCube and Xbox?

Late to the party: competition not before 2014

And as far as competition within this new generation is concerned, Nintendo will not have any before late 2014. I am sure that Microsoft or Sony both cannot bring a console to market in 2013. Nor do they want to. They have lost billions with their current consoles. They will not want to burn any more money, before the current consoles have even started to earn them any profit, for a change. So the timing might play out well for Nintendo. The Wii U might not get any new competitors for two years, giving them a solid headstart. Being first worked for Microsoft this generation, at least for a few years. It might work for Nintendo now. In terms of pre-orders, the console was sold out in the US at Toys R Us, Best Buy and Target, only days after becoming available, according to Joystiq.

These figures are a pretty good sign, albeit an early one. The only downside to this strategy is that when the competitors do come out, they can be expected to be far more powerful, creating a similar situation as in this generation. The Wii U will not get any cross-platform titles, because it will not have the power to compete with the new PlayStation and new Xbox. It will have to get exclusives or nothing. By then, Nintendo hopes, the Wii U will already be a huge success, though.

Software: great third party support and Nintendo on a buying spree

The Wii U will have 23 launch titles in North America, which is a decent amount. And the third party support for Wii U is phenomenal in Nintendo terms. With ´ZombiU´, ´Rayman Legends´, ´Bayonetta 2´ and the new ´Monster Hunter´, there are some pretty nifty second and third party exclusives. But the Wii U gets also multi-platform titles like ´Darksiders 2´, ´Assassin’s Creed 3´, ´Call of Duty: Black Ops 2´ and ´Mass Effect 3´ at launch or within a launch window. However, I foresee a possible problem related to that. With the Wii, precisely those games never made it, for lack of hardware power. And that may have been an asset rather than a liability. Now that any PS3 and 360 game can be ported over, will the Wii U get enough third party exclusives? The Wii didn’t get ´Resident Evil 5´, but it got two exclusive rail-shooters in the series that were both great fun and made fill use of the unique hardware. Will the Wii U realy flourish as a console that will also have the next Resident Evil, like the other consoles, but will most likely go without an exclusive installment in the franchise? I have my doubts. With such original hardware, the Wii U relies on exclusives making good use of it. If there are not enough of these titles, there simply is no reason to buy a Wii U over a PS3 or 360. ´ZombiU´ is an extremely clever idea, because it incorporates the tablet screen distracting from the television into its gameplay and thus vindicates this hardware setup. But with cross-platform games, the tablet functionality may only have been hastily tacked on and offer a real distraction from the main screen. Then, the tablet would turn back from an asset into a liability.

While that is a valid concern for third party relations, Forbes is noting that Nintendo has changed its strategy and is widening its portfolio of first and second party studios. After recent acquisitions, both the ´Xenosaga´ and ´Fatal Frame´ franchises (the latter also being known as ´Project Zero´) now belong to Nintendo. Also, the ´Dragon Quest´ series is now, apparently, exclusive to Nintendo consoles.

Although the exclusivity deal on ´Bayonetta 2´ caused quite a negative backlash, people may hopefully realise that Nintendo saved the game from being cancelled and in doing so probably saved the developer Platinum Games in the process. The game will not become a huge seller for Nintendo, but they still chose to step in and save what undoubtedly is a hardcore game. This sends a clear signal to the industry and to gamers where this company is heading.

On top of that, Ubisoft, Capcom and Namco Bandai are “gravitating towards Nintendo”, the Forbes article notes and mentions the rumours of Nintendo wanting to buy back Rare in order to gain access to the ´Banjo Kazooie´ franchise. And let us not forget that Nintendo still owns the two best-selling videogame series of all time. So, software-wise, Nintendo is certainly doing well.

Don’t call it a gaming console: Meet Nintendo’s multimedia home entertainment system

Funnily enough, the Wii U seems to have the potential to become a better multimedia hub than Xbox360 and PS3. While Nintendo has always remained focused on their consoles being gaming devices first and foremost, the Wii U could beat Sony’s Microsoft’s efforts in multimedia functionality hands-down. The main reason is the TVii service, announced for North America. With it, users can compile all the different television content sources they have access to, ranging from their cable provider to services like Hulu, Netflix or YouTube.

Coupled with the built-in second screen, which is the biggest buzzword in television right now and a market still almost completely untapped, this may become the hottest feature of the console. If this feature will be available in other territories including similar deals with local content providers, the Wii U will definitely be a success. This is the killer app your television and computer have been waiting for. And while the content deals may not be exclusive, the competition will not be able to offer a similar service until 2014, if I am right.

Final thoughts

The media reception has been largely positive, both in the general and special interest magazines. And the week after the launch announcements, Nintendo shares rose five percent in one day. Within days, online preorders for both models were sold out with most retailers in the US. But all this is no guarantee of success. The biggest problems Nintendo might face is that of communicating the Wii U’s appeal. With the Wii, it was simple: Here is the controller. It looks like a television remote, so it is familiar. Here is Wii Sports and here is tennis. You know what to do. The Wii U, with its emphasis on asymmetric gameplay, is far more complicated and, as such, the gameplay experience nowhere near as self-explanatory. So, more than ever, good marketing will be the key to making the Wii U a success. Here, Nintendo needs to invest some, before they can earn some.

There are many aspects about the Wii U that make me quite optimistic. There are some that are highly questionable. But, all in all, I will say that I am cautiously optimistic about the console’s ability to become a hit and win the race for market domination once again. I am very interested in what you think, though, so please share your thoughts in the comments.

The beginning of the end: id, Bigpoint, THQ close mobile divisions

Renowned developing studio id Software (´Doom´, ´Quake´) is shuttering its mobile development, as are the publishers Bigpoint and THQ. The hype surrounding mobile games on smartphones and tablets seems to be coming to an end.

With only a few sentences, John Carmack revealed rather important news in his keynote speech at Quakecon a few days ago, namely that id Software was shuttering its mobile development division. Carmack said:

We did make the decision to close up our mobile development, which saddened me a lot, in that I love doing the mobile work — taking that time, spending a month, a year or something working on a mobile project, but we had some developers on there that we wanted to bring onto the Doom 4 project.

And it was looked at as something that; yes, this is fun, this is fun for the company and it's entertaining, it makes money, but it's not a grand slam sort of thing on there. The Bethesda family really is about swinging for the fences. I hope we do get back to mobile in various ways in the future, but the big real aim is blockbuster, AAA titles, and for id that means Doom 4, it means that we get the whole company behind that after we get Doom 3 the BFG Edition out the door, essentially everybody will be focussed on Doom 4 as a project.

Carmack was the first big name developer to pledge support to mobile platforms like iOS and perhaps the most vocal supporter of mobile development, first assigning a team of people to iOS development in 2007 and praising Apple for both iOS and their App Store.

Back in 2007, Carmack had noted:

We are operating on the assumption that mobile gaming has a potential for huge growth. (...) It's at a tipping point. Everybody has a phone, and almost every phone is powerful enough to do good games on it. (...)

The whole reason we are in the mobile arena now is I was just really appalled at how bad [mobile games] were. (...) We're already making profit on 2 million units of games sold, but we are kind of holding out this hope there might be a breakout moment when the industry gets five to 10 times larger.

Evidentally, this expected growth did not materialise. And other big companies are abandoning mobile development, too. Bigpoint is at the other end of the core-casual spectrum, but they are following id Software's example. Bigpoint CEO Heiko Hubertz told GamesIndustry.biz:

I'm a big believer in mobile, it's going to change many things in the games industry. But I also think it's not the right time at the moment to be in this market because to generate revenues in this market is very tough. (...)

For that reason we decided also to close our internal mobile games development. We will not continue to create mobile games internally. (...) We had around ten games in development, some of them are finished and will launch in the next few weeks but most of them will be completely closed and shut down.

Finally, financially troubled publisher THQ can no longer afford to be developing mobile games. In their most recent earnings conference call, the company's president Jason Rubin says (at around 16 minutes into the call):

We have (...) stopped develoment in certain areas that are not productive for our new strategy. Consistent with this vision, THQ has made a few changes to previously announced projects.

First, we made the determination not to pursue any future casual Facebook games. Second, we will not be publishing casual mobile games, including those with Innovative Leisure. (...)

By cancelling these explorations outside of our core business, we feel we can improve focus on our core game portfolio, which remains unchanged.

So publishers in financial trouble jettison mobile development because it is not profitable enough. But with id and Bigpoint, affluent developers are getting out of mobile development, too, both casual and core.

In my last post, I already rounded up some facts about developing for Android and iOS, which revealed how unprofitable it is for the majority of developers. Let me repeat the key facts.

It takes pot luck to have your game found in a sea of hundreds of thousand apps with extremely poor filter options on all mobile platforms. Most apps are never downloaded and studies claim that 29% of downloaded apps are only used once. 72% of apps are either free or just $0.99 (Apple's 30% take in the case of iOS not factored in).

Being successful in either the App Store or Google Play has been likened to a lottery, with more than half of developers not even breaking even (this figure is suspected to be perhaps as high as 90 percent). Even developers themselves are out to destroy some common myths about app success. For example, havin an app in the top 100 charts might mean you are making no more than $4 a day.

Some developers have already turned their back on platforms like Android because it simply is not profitable anymore. And with Trip Hawkins, the first industry veteran has left a previously hyped-up mobile games developer he founded himself.

So has the hype surrounding game development for smartphones and tablets given way to the realisation that these platforms really are not all too profitable? Undoubtedly, if you ask me.

´Ouya´ - a new game console and why it will fail

Details emerged yesterday about a new videogame console that may be in the works. The console called Ouya will apparently run Android and offer free games. It was discovered by The Verge through an entry on AngelList, a portal connecting start-ups to potential investors. The entry has since been removed, but the Google cache still exists.

The page notes a number of industry veterans as attached to the project. Founder and CEO is Julie Uhrman, "former IGN head of digital distribution." Peter Pham, co-founder/partner at Science” and of Photobucket and Color fame is an advisor. As is Yves Behar, ”founder chief designer fuseproject, CCO Jawbone”, who will design the console. Most prominently, Ed Fries, ”VP of Microsoft, Retired - co-founder of Xbox project”, is on board.

The project website’s Google cache outlines the Ouya console in surprisingly few words:

Open, accessible game console for the biggest market in games: TV.

Any developer can publish games, just like mobile or social games today (but like no other console game platform). Orders of magnitude less expensive to develop.

Inexpensive enough for every consumer to buy, $99, and all the games are free to play. Every console is a dev kit; build peripherals, root the system -- built to be hacked.

Designed by Yves Behar and fuseproject, creators of Jambox. Built with Android as embedded OS.

Apart from two product renders and an interface mockup, that is all the information there is. There is a dedicated product website at www.ouya.tv, but the anonymously registered site redirects to the Wikipedia entry on disruptive innovation.

Now, this all sounds pretty good at face value. But I believe such a project is sure to fail. First of all, industry veterans are no guarantee for success. It may sound impressive to have Ed Fries behind the Ouya. But many of you may still remember the ill-fated Phantom gaming console, which also had a former Xbox founder behind it, Kevin Bachus. The device never even came close to being sold.

But I would like to draw up another comparison, the Indrema L600. Not heard of it? I do not blame you. Indrema was meant to be a Linux console with the idea of nurturing a vibrant developer community, which would supply its own free games, alongside some boxed games which were to be sold. The project was spearheaded by John Gildred. Here is a kind of obituary:

Gildred founded Indrema in January 2000, when funding was easy to come by, and had a staff of 50 until recently. The first Indrema model, code-named the L600, was scheduled to ship this summer [article written in April 2001], months before Microsoft's Xbox. However, venture capitalists didn't like its chances against Xbox or Sony's PlayStation 2, even though Gildred's plan was to slowly roll out a grass roots campaign and grow from there.

Hundreds of independent developers were developing games for the platform, which was to launch with 30 games. The open-sourced system allowed for anyone with a computer to get the development kit for free online and create games for Indrema. Games were to have been distributed online and at retail.

So why did it all go under? Gildred spoke frankly about why the Indrema L600 failed.

A final decision has been made to terminate Indrema. This is the result of a long and thorough search for subsequent round funding, which has proven unsuccessfull. (...) There were many technical obstacles. We had a tough time with heat management, latency between processes, and of course, cost to build. (...) I can't discuss the money specifics, but we needed upwards of 10mil. (...)

Timing [is essential]. The capital markets are very difficult, and it takes money to build the box. I wish there was some work around to that problem, but not yet. I do see that more and more, it is becoming easier and cheaper to build an embedded prototype in your basement. I foresee much more activity that way. It will be interesting to see the progress over the next year.

Back then, there were also rumours that the big console manufacturers had done their part to discourage potential Indrema investors. Gildred officially denied this (”I don't think there was an agenda by the competition to kill interest in funding Indrema.”), but Microsoft, Sony and Nintendo certainly have some leverage over their third parties. Most importantly, Gildred had some advice for similar projects.

If I do a game console project in the future, I will make sure that the capital will be there for 3yrs. (…) My suggestion to the next startup, finish product before talking about it.

The people behind the Ouya console have certainly ignored this advice. What we have are a few sentences describing the product and some product renders.

Of course, these are different times. Back in 2000, investors would have reacted much more skeptical to the concept of free games. And while it is unclear from the sketchy details whether the Ouya will actually offer access to Google Play, Android has attracted a huge developer community and there are some casual titles worth our albeit brief attention. Also, a $99 price point for the hardware sounds rather attractive.

But why invest even that? What benefit would people get from buying the Ouya when they already have an Android smartphone running the same or similar games? What benefit would there be for developers to support the platform? What business model would be in place?

The incentives for developers to throw their weight behind a platform such as Android or iOS have been grossly overstated. Bear in mind that it is already a one-in-a-million shot to have your game found in a sea of hundreds of thousands with extremely poor filter options on all mobile platforms. Blogger and entrepeneur Hector Rodriguez rounded up a number of facts regarding app development.

The app stores are somewhat of a junkyard, already Apple’s app store and android market boast well north of 500,000 apps each. Most apps are never downloaded or ever used. Studies claim 29% of downloaded apps are only used once (I am anecdotal evidence of that).

There are over 200,000 developers in the app stores, way too many, a fertile campground for techie newbies and citizen developers. Not a market for the ‘respectable’ enterprise or application development (AD) teams.

+72% apps are either free or just $0.99, with an average price for non game-related apps of $2.22. On top, take off the “expensive” (sic) 30% take for apple and there is no self-respectable business that could grow beyond the anomaly of Zynga. App stores can not simply compete in dollar size with enterprise markets.

Being successful in either the App Store or Google Play has been likened to a lottery, with more than half of developers not even breaking even (this figure is suspected to be perhaps as high as 90 percent). Even developers themselves are out to destroy some common myths about app success. For example, havin an app in the top 100 charts might mean you are making no more than $4 a day.

Some developers have already turned their back on platforms like Android because it simply is not profitable anymore. And with Trip Hawkins, the first industry veteran has left a previously hyped-up mobile games developer he founded himself.

So, perhaps, things have not changed all that much since 2000. I am sure that we will next hear about the Ouya when we learn of the project being cancelled. This is sure to go the way of the Phantom and the Indrema L600. And do not get me started on the Pandora handheld. While it is still available on the market, the company hopes to sell 4.000 units in a few months. I suspect the GameBoy Advance outsells the Pandora. But at least they made it to market. I am sure the Ouya never will.

EDIT The Ouya console project has now appeared on Kickstarter with a target of 950.000 US-Dollar already surpassed with just under a months to go. Finally, there is the wealth of information needed to secure funding for such a project. There are details about the business model for developers ("developers can offer a free demo with a full-game upgrade, in-game items or powers, or ask you to subscribe" - essentially the standard ´freemium´ model), notable words of praise by prominent developers, tech specs (the console will feature a Tegra3 quad-core processor, 1GB RAM and 8GB of internal flash storage) and the commitment "to have a finished product ready to ship to you in March."

Here are the details about how far down the road the project is:

We have a functional prototype, and we have almost completed our industrial design (the shape and materials of the product you see here). We know the hardware specifications, and are working with electrical and mechanical engineers to test the performance of the hardware. We have begun work on the user interface and software. We’ll pull all these pieces together and test how they fit, while we finalize the product. (...)

With your help, we need to:

* Convert our prototype to production-ready models and get all the regulatory approvals (yeah, we need these to sell them)

* Deliver developer kits (for early developers so we can have games on day one, though every console will include an SDK once we launch)

* Place our first production orders (we are working with a manufacturing firm with lots of game hardware experience, but we need to know how many to make!)

* Ideally, fund some initial game development (i.e., 1st-party games)

The information provided is thorough, though perhaps not exhaustive. At any rate, above points of criticism and caution remain. Not a single game is promised at this stage ("It’s a little early to share a final roster.") Also, I do not yet see a viable business model for the company (or, indeed, for the investors). As far as the company is concerned, they are mimicking Apple ("We'll share revenue – you get 70 percent."). This will further segment app developers' attention by introducing yet another unreliable market likely based on pothole luck more than anything else (see above).

And as far as hardware is concerned, building a $99 device packing a Tegra3 quad-core chip does not reek of any profit. In fact, it sounds more like a subsidised console. Do not get me wrong, I wish them all the best. But I am still absolutely convinced that this project will be dead in the water by 2013. Just less than a million US-Dollars of funding sounds like a lot. But it is very little in the home console business. Companies like Microsoft, Sony or Nintendo have poured that money into their new consoles more than a hundred times over.

EDIT Former Microsoft executive and Xbox co-founder Ed Fries has responded to my article. Here is his statement and I agree wholeheartedly:

Hey Andreas. You are right that there is no guarantee this will succeed. With technology the hard part is often not the idea, but finding the right time for that idea. Compare ipad to the Apple Newton, for example. Even when the ipad shipped, many critics were very skeptical until it started to sell. Indrema may have had the right idea but they tried to launch it at a very different time. Think how many things have changed in the last dozen years. We now have (more or less) ubiquitous broadband for distribution. We have the cloud for storage. We have cheap commodity parts that can do 1080p at 60 fps. We have a strong and growing independent game development community. We have a "free to play" game design model. And finally we have a customer base that is becoming increasingly used to paying for and valuing digital goods.Whether all of these together will add up to enough to make OUYA successful remains to be seen but it's certainly an exciting new time to try this idea once again.

EDIT Developer American McGee (´Alice´, ´Bad Day L.A.´) has weighed in on the debate about the Ouya. Although the console is by now nearing $5 million in funding on Kickstarter with just over two weeks to go, he is as sceptical as myself, speaking to Game Informer.

Being based on the same chipset the major tablet/phone makers are cramming into their lineup of existing/future mobile devices it would seem the major benefit is the included console controller. But device makers are ramping-up production on “console” controllers for iOS and Android (with OS support for both coming soon). This brings me back to my original question about the long-term viability of traditional consoles – why would I want my gaming content tethered to a TV and stuck in my living room?

Current-gen Tegra-powered tablets can be plugged into a big-screen display/7.1 audio setup via HDMI (and connected to a 360-style bluetooth gaming controller). The difference with Ouya is what? That it doesn’t have a built-in display and can’t be taken on the bus? Not sure I get it, but then again I might be missing something.

Breaking: Sony buys Gaikai

Breaking news: Sony has just acquired the videogame streaming service Gaikai, according to Venture Beat. The link was just forwarded by Gaikai CEO David Perry himself, who had previously founded Shiny Entertainment (Earthworm Jim, MDK, Sacrifice). The big question is how this acquisition might affect Sony's plans for the next PlayStation. More as this story develops.

EDIT Here is the official press release from Sony Comnputer Entertainment, verifying that it is actually the PlayStation business making the acquisition, not Sony Corp. as a whole. The press release reads that "through the acquisition, SCE will establish a new cloud service, ensuring that it continues to provide users with truly innovative and immersive interactive entertainment experiences."

No more Gamescom beyond 2012, newspaper speculates

This year's gamescom may be the last, according to an article in Germany's biggest newspaper, the tabloid Bild.

The Gamescom, the world's biggest computer and videogame expo by visitor count, has been incurring losses in excess of half a million Euro and is under review, the article claims, which goes on to conclude that the event "failed" and has "flopped". The Gamescom has replaced the Games Convention, which was held in Leipzig, and the article was published in the paper's local Leipzig section. So a degree of exaggeration must be factored in. Also, the newspaper itself - perhaps comparable to USA Today or The Sun - is the subject of some controversy. Here is a translation of the article.

Cologne fails with stolen games fair

Leipzig - In 2009, the computergame fair "Games Convention" moved to Cologne with much fanfare but against the wishes of many exhibitors. Since then, it is known as the "Gamescom" - and has been incurring high losses. Now the stolen expo may even be scrapped altogether.

The reason is an internal review which describes the expo as a "debt-incurring venture." The paper notes a minus of 565.000 Euro for the fair - and advises "to review the strategic necessity of the loss-making event." Even if fair spokesman Franko Fischer says: "The 'Gamescom' exceeds our expectations with positive gross margins."

That may be. But in Cologne, every event is offset against the high rent, which the fair has to pay for its halls. And here, the "Gamescom" has run up a minus of more than half a million Euro.

And Cologne has further problems: Off-the-record, exhibitors are complaining about the high costs (rental fees, accomodation). Also, the industry giants Microsoft, Nintendo, Sega and THQ have already withdrawn from "Gamescom" 2012...

I was able to bring you the exclusive news of Microsoft being a no-show this year, alongside Nintendo, Sega and THQ who cancelled earlier. Also, Sony threatened to cancel and may have received a significant discount to commit to the show after all. Bear in mind that each of the concerned publishers is one of only thirteen members of the German industry association, which made the decision to move to Cologne in the first place. So, it could well be that the association is going to officially withdraw their support for the gamescom after 2012.

As unfortunate as this development is for the industry at large, the Gamescom is indeed facing a potentially fatal crisis.

Dissecting the Xbox720 leak

A document has surfaced that may be a detailed feature overview for the next Xbox as well as a road map for future updates. On 56 pages, the document – marked “confidential – for discussion purposes only” – details the next generation of Kinect, as well as AR goggles that allow the game to take place all around the living room.

The information first appeared on Nukezilla pretty much without anyone noticing it and the entire document has now surfaced on
Scribd. It appears that the document dates back to 2010. It has since been removed from the website, apparently at the request of a law firm working for Microsoft.

The next Xbox, according to the document, would ship with a Blu-ray drive and a new version of Kinect. The latter would be only a marginal evolution of the current technology. The console would launch in 2013 for $299. Key hardware features would be “licensable architecture (both for incoming and outgoing licensing)” and “support for alternate form factors / devices with different total system feature set”, which might mean that other hardware manufacturers like Dell or Samsung may build their own Xbox compatible console or include the hardware in other devices like television sets, much like the 3DO back in the day.

Another feature noted is this: “split application/system resources: allows title compatibility through cost reductions and different device types.” This might suggest that the console can stream content to mobile and other devices: “Take your entertainment everywhere. Start on one screen but instantly pause and play it again from any other device makes it best way to enjoy your TV, movies and music when you’re on the go.”

Streaming content might refer not just to games but a “TV App” as well as an “XTV Pay TV Service” which are said to launch already on the Xbox360 in 2011 and 2012, respectively. For the next Xbox, more content would be synchronized across various devices: “Use your phone, slate or PC to enhance primary game play or learn more about what you’re watching on TV. Start watching on any screen - pause - resume on another.”

Yet another feature would be a “modular design to facilitate SKU updates later in lifecycle”. Such a console could be expanded in the same way the N64 had an expansion slot for more memory. In fact, the document describes the idea that such a modular design, coupled with the launch of a cloud solution in 2015, would make successor consoles obsolete. You would “never need to upgrade hardware again.” Confusing in this context are remarks about a proposed 10 year life cycle for the console.

In 2012, a “new haptic controller” is set to launch for Xbox360 so users can “control your TV experiences via gesture, voice and touch.” But for the next Xbox, Microsoft seems to have a real controller revolution in store. The document describes augmented reality glasses, dubbed “Kinect Glasses” or “Fortaleza” after a Microsoft Innovation Center near that location in Brazil. These glasses would probably be comparable to Google’s Project Glass and launch in 2014, one year after the new console. These glasses would not be a mere Xbox peripheral but a device in its own right that would feature Xbox compatibility.

Baffling is the reference to “9/24” in both the file name (“XBox-720-9-24-Checkpoint-Draft-1”) and a headline (“9/24 Agenda”). It is a fair assumption that it refers to the date September 24th. But it is not clear which year is meant, nor what event would have taken place at that date or, indeed, will.

So much for the details. Let us now consider the authenticity of the document. There are a number of options here. Firstly, the document may constitute Microsoft’s genuine plan for its next console in every detail. In this case, the ideas detailed here would all still be valid and could be expected. Then again, it might be a complete fake, rendering all the information useless. There are a number of options in between, though. As a cynic, the leak might have been deliberate to steal Nintendo's Wii U thunder. This is not likely, but still a possibility to consider. Alternatively, the document might have been only one of a larger number of papers with ideas for the next Xbox that were meant for nothing more than a brainstorming session. As such, they might contain some authentic information, but would consist largely of one of many engineers’ ideas of where a new Microsoft console might go. The disclaimer found on the document (“for discussion purposes only”), as well as the somewhat sketchy drawings may support this theory. Also, the document begins by mapping out a methodology, whereby a tentpole idea such as “Kinect, cloud rendering, glasses” leads to various signature experiences on behalf of the user, each requiring hardware, content and an adequate platform. Outlining such a methodology suggests a more academic and perhaps more hypothetical approach.

As far as the actual content is concerned, there is nothing I find totally unrealistic. The Kinect glasses are a very ambitious project and I am unsure whether such a product (by Google, Microsoft or anyone else) would be ready within the next few years. Also, I doubt that Microsoft will be able to launch a new console in 2013. The regular cycle was to introduce a home console in one year and launch it in the year after. But these are marginal disagreements.

Altogether, the sheer volume of 56 pages would make this a very elaborate fake, if it were one. The images and overall layout appear to me too good for a fake but not good enough for a final presentation. The document is a draft, after all, as the file name suggests. So I do believe the document is real but I am sure it was used in only one of a number of presentations that were largely hypothetical. So we should not treat its details as something Microsoft is actually planning to bring to market but rather as something that was considered at one point but might never make it to store shelves.