Activision chief executive Eric Hirshberg can't help but look a little self-satisfied when asked about some of the dire predictions made last year regarding video game consoles being a declining business.
"How'd that turn out?" he quips during an interview at the annual Electronic Entertainment Expo (E3) in Los Angeles.
New consoles from Sony and Microsoft have indeed resoundingly defied those expectations, with both the respective PlayStation 4 and Xbox One selling faster than their predecessors after the first six months of availability.
It turns out there's life in those consoles after all. And, as this week's E3 event is illustrating, rather than facing a decline they may in fact be headed for a brighter future than anything they've experienced before.
"The most consistent predictor of success is if you have compelling content and a compelling title that people want to engage with," Hirshberg says. "When you do, people still seem to be willing to jump in and check it out."
Shifting patterns
The doom-saying began in earnest soon after the launch of Nintendo's Wii U in late 2012, and its subsequent quick flop.
People check out the latest games for Nintendo's Wii U console at E3. The console, launched in late 2012, sold only 3 million units during its first key holiday season, and has seen limited support from third-party developers such as Electronic Arts. (Peter Nowak)
With the Japanese company selling only 3 million units of the new console during its first key holiday season, third-party developers such as Electronic Arts began to abandon it. With few new games being produced for it, the flop was compounded.
While Nintendo has had less-than-successful console launches before – its Gamecube also under-performed in 2001 – some analysts took the Wii U's struggles as a sign that the gaming world was shifting.
Several new categories of games have emerged over the past few years, including the casual mobile time-killers found on smartphones and tablets, and free-to-play options on PCs, with all of them competing for consumers' attention and money.
Compounding the issue were the lingering effects of the recession that started in 2008.
"It's pulled back consumer spending across the board," Lewis Ward, research manager of gaming at IDC, told Time magazine last year.
E3 attendees try out games in the Xbox area. Microsoft recently decided to unbundle the Kinect motion- and voice-sensing controller from the Xbox One and lower the console's price by $100 to match Sony. (Peter Nowak)
Heading into last year's E3, where both Sony and Microsoft were to detail their upcoming next-generation console launches, expectations were therefore cautious at best.
But when the PS4 and Xbox One both arrived in November, they exploded onto the market. Reported sales so far have been seven million and five million, respectively, outpacing both the PS3 and Xbox 360 at similar stages in their life cycles. Both those previous-generation consoles went on to sell more than 80 million units each.
The Xbox One's performance has been especially surprising for some, given that Microsoft chose to bundle it with the Kinect motion- and voice-sensing peripheral, which raised its price to $499 – giving it a price tag $100 higher than the rival PS4. Microsoft recently decided to unbundle the Kinect and lower the console's price to match Sony, meaning that sales could pick up even more.
Competitive pressure
So what happened to the doom and gloom?
A huge display at E3 of a monster from 2K's upcoming video game Evolve, which pits four players against one beastie. It's scheduled for release in October this year. (Peter Nowak)
"As a lifetime gamer I can say [the console is] a great experience," says Scott Rhode, software product development head for Sony Worldwide Studios America. "It's predictable. It's not like a PC – you don't have to go out and find the best video card and it's not an expensive proposition.
"If you love games, you're always going to love games on a console."
It turns out that Nintendo's poor sales performance may have been more a matter of competition and poor judgment on its part, rather than a sign of a larger trend affecting the overall industry.
While the company beat its two rivals to the punch by bringing a new console to market a year earlier than Sony or Microsoft, the Wii U was significantly underpowered out of the gate. It more closely matched the existing PS3 and Xbox 360's capabilities than those of the true next-generation devices under development, and consumers knew it so they stayed away.
As for mobile and free-to-play games, they may ultimately turn out to be complementary to consoles, rather than a threat to them.
"Every year, there's always some mysterious force that's going to come in and kill the console, but it doesn't happen," Rhode says.
The bad news
If there is bad news for gamers, it's that 2014 is looking like a soft year in terms of big releases, especially from Sony and Microsoft themselves.
Microsoft has only a trio – the racer Forza Horizons 3, fantasy role-playing game Fable Legends and cartoon-shooter Sunset Overdrive – scheduled for the holiday season.
A character from Activision's upcoming open-world science fiction video game Destiny. It's expected to ship in September this year. (Peter Nowak)
Sony has even fewer, with its own racing title DriveClub and family-oriented puzzle-platformer LittleBigPlanet 3.
With all of those games catering to niche audiences, third-parties such as Activision and Ubisoft are being called on to pick up the blockbuster slack – and they're obliging, to some extent.
Activision has the upcoming science-fiction shooter Destiny on the way, as well as new instalments in its military-themed Call of Duty and toy-meets-game Skylanders.
Ubisoft has new additions to its Assassin's Creed and Far Cry series, both being developed in Montreal, as well as a new racing title The Crew set for 2014.
Although many of the blockbuster games announced at the 2014 Electronic Entertainment Expo in Los Angeles won't be available until next year, publishers were showing off a number of big-name titles that will ship in the coming months, such as Shadow of Mordor for October. (Peter Nowak)
Most of those titles, however, are also being released on the older Xbox 360 and PS3 consoles, which means that players don't yet have irresistible reasons to buy next-generation machines.
That could change next year, with a large number of blockbusters already scheduled for 2015. Both Sony and Microsoft have their respective flagship franchises – the exploration adventure Uncharted 4: A Thief's End and sci-fi shooter Halo 5: Guardians – teed up.
Third-party publishers have either scheduled or delayed some of their big guns until next year, such as Warner Bros.' highly anticipated Batman: Arkham Knight and the new Mortal Kombat X fighting game.
Ubisoft is also holding off on one of its big new titles, the apocalyptic role-playing adventure Tom Clancy's The Division, because its developers are still learning the ropes of the new consoles, a common issue for all publishers.
"The types of games we create now – more open-world, more use of the capacity of the machines – makes everyone struggle with using all those at the right speed," Ubisoft chief executive Yves Guillemot told CBC News. "They delay because they see they can do more with the game."
While 2015 looks like it's going to be a good year for gamers and a watershed for next-generation consoles, it may actually turn out to be too competitive for publishers' tastes.
"There are so many games for next year, it makes me worry," Guillemot says.
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