Despite the words of wisdom, some will still choose to believe their own  tales of lies as  they are more in line with what they want to believe..




 




hapter One


ameCube: Path To Nowhere?

Prophecy has been brought to us!  First, the original scripture has been found proclaiming the future of the Xbox! And the prophecies have come true!   www.actsofgord.com/page46.php  

And now, the GameCube Prophecy!  So it is written.... 

(Pretty much final version.  Less hostile, more facts)



So, GameCube. It's here. It's pretty. $98 million in total sales from
Sunday and before. That includes everything (systems, games, accessories)
that sold on Sunday, that shipped from online retailers on Friday to
customers for delivery on Monday, and units sold to rental chains like
Blockbuster who received some 30,000 units last week. What the hell
happened? Contrary to popular mythology, that is not really stellar.

The Dreamcast had a better launch at $150 million in the opening salvo.
Nintendo 64, about the same. PS2, around $300 million. Wow, the GameCube did $98 million. That's before you factor in that the GameCube had more units available than both, and was launching at the busiest shopping period of the year.

Nintendo announced that there were to be 700,000 Gamecube's available at launch for anyone who wanted one. But supply far exceeded demand for this launch. Less than a 50% sell through on the opening salvo. Good news if you want a GameCube as you get them pretty much anywhere, not so good news when you're trying to release a system and not have it killed by the PS2 as this industry is momentum based.

Then you factor in that the GameCube launch was the result of 2 years of
announcements, 1 year of promises, 6 months of endless screenshots and media coverage, 3 months of magazine and in-store advertising, one month of television advertising, and everything else that goes along with the finest
promotion that $50 million can buy. Things starts to look really bleak.

When you factor that in, suddenly that $98 million starts looking really,
really small.

Last week, over a half billion dollars worth of new consoles and games sold in the world had the word "PlayStation" stamped on them.

Putting things in perspective certainly changes things.

Before we continue, let's clear up a few items. For those of you who know me, I am Gord and need no further introduction. For those of you who don't know me, you'll need an introduction.

I am Gord.

This is not an article to debate the merits of the GameCube and whether you should as an individual buy one. Quite frankly, I don't care. I'm a person who owns a TurboDuo just in case one day I come across a copy of Panic Bomber and I own a Genesis CDX just because it's smaller than a Genesis even though I have no Sega CD games in my personal collection. Rather this is an essay to discuss the survivability, marketability, and long term software development of the Gamecube.

In reading this, undoubtedly many people will disagree with much that is
said. Sadly, this industry has some of the finest propaganda and urban
myths known to man. What's made worse is that many of these ideas are
driven into us before adulthood. It's never nice to look back and go
"everything I learned as a child is a lie!"

No amount of playing games will make you an expert in the field of video
game retail. This is one thing that escape many people. If anyone could
run a video game company, video game retail stores wouldn't have a 95%+
failure in the first year, and Sega (which produces some of the finest games
in the world) wouldn't have lost money for 5 straight years. Try getting a loan from a bank to open a game store, they'll pretty much just laugh at you and say they've never loaned money to a profitable one yet.  Riding in a plane doesn't make you a pilot, driving a car won't qualify to run GM, and
being able to order off a menu won't qualify you to get on Iron Chef.

This essay is written with regards to financial end of things. Video game
companies aren't here just to make people happy. They are here to make
money. If they aren't making money on a particular console, they move to
where they believe the money is.

But this does not exclude you from debating ideas and possibilities. Remember that when I say something that you disagree with, my position is of someone who probably knows a lot more than you.

So unless you own your own store, or sport an MBA in marketing and have direct video game experience, you know as much about this industry as I do talking about making spacecraft. Sure, I know some of theory, but I sure as hell couldn't build one.

If you buy video games, you are the result of marketing, not the student.

Anyway, GameCube. What does it's future look like.

Before we even get into the merits of what the system offers, let's look at
the market it's entering.

The home console market is absolutely dominated by Sony. The hard hard facts are that in the last 34 months, Sony has had an over 90% market share on home console hardware sales, and 95% on software total software sales for home consoles have been on a PlayStation console. That means everyone else is in the "other" category on the pie chart.

The PlayStation brand alone has outsold the NES, SNES, N64 and GameCube unit sales combined! That is no small number, and it was done in the span of seven years compared to Nintendo in seventeen years. Next, there have been more games sold with under the PlayStation banner than the rest of video game sales in history combined!

(edit: Many people have emailed me and spoken of a list from Edge Magazine that claims the NES sold 62 million units worldwide. Nintendo's own published figures claims 33.7 million world wide (source: www.icwwhen.com ), not inclusive of Japan's 1988 sales (estimated to be between 4-5 million) and worldwide sales in 1993 and and 1994 of less than a million. That brings the total to around 40 million. A far cry less than 62 million. Anyway, I've fired off a note to Nintendo do get some figures from them.)

(edit: SNES sales. The last number I could find regarding SNES unit sales
was 36 million when they launched the redesigned unit. At this point the
SNES was a non-contender in the market and didn't rack up more than a few million in sales before it ceased to be. 40 million units maybe. Same
story, I've emailed Nintendo to get sales figures.)

Further, the PS2 is the fastest selling home console ever. It's past 22
million units sold worldwide, and it has only been outside of Japan for a
year. The Genesis in it's glorious 6 year run only sold 21 million. The
Dreamcast? 7 million before Sega pulled the plug on it.

Further more, the PS2 has set TEN monthly sales records. Every month of this year, it has broken the previously existing record for system sales. And
this during the "quiet" time.

So what does all this mean? It means the GameCube has some very serious
obstacles to hurdle.

First, the problems.

This is a Sony industry. Everyone knows Sony, everyone loves Sony, Sony is the ticket to the fun. Whatever you may think of the PlayStation and PS2, it owns this industry. The GameCube not only has to prove why you should buy it, but also why you should NOT buy a PS2. And that's not even considering the Xbox factor.

In the last console generation (circa 1995 to 2000), nearly 90% of consumers bought one console. ONE CONSOLE! That is the market. The theory that people will buy two consoles is a lie. And the overwhelming majority of people who bought two consoles were N64 owners migrating over the PS1. Nearly one half of the people who bought at N64 between 1996 and 2000 also bought a PS1.

Obviously this is going to cause some claims of "lies!" so let's do the math.

To date, Sony has sold nearly 100,000,000 PS1's. That's a lot. And for the
sake of the argument, we'll pretend Nintendo sold nearly 30 million N64's
(though sales data suggests between 20 to 24 million, but who cares). So,
assuming every N64 owner also bought a PS1, that means 70% of the market bought ONE console. One console. Just one.

Now, obviously this didn't happen. Somewhere near half of N64 owners bought a PS1. Now, so we have 15 million N64 owners who remained exclusive, and 15 million who were multi-console (and 15 of the 100 million PS1 owners).

So, you've got 85 million PS1's who belong to one system owners, and 15
million N64's who belong to one system owners. That's, well, 100 million.
Add in the 15 million owners who bought multi-systems, and there you are at a market peak of 115 million users.

Basic math shows that 87% of owners owned one system.

Now knowing this, the market has shown that the overwhelming majority of
them will be owners that will only buy one system. The market has also said
"Yes, we love the PS2" so that makes the GameCube crippled out of the gate. If the market was not happy with the PS2, things would look better for the GameCube.

Trying to sell a product the public does not want when in their mind a current product on the market is better and offers more is a very uphill battle.

Next, never has a system sold well that was less powerful than what came out before it. Never. Ever. Not once. In fact, one could argue it is retarded
that a company would release a system that offers less than what came about before. Well, guess what boys and girls, that's exactly what the GameCube is. Even Nintendo says "it's less powerful than the PS2." Here is an exact quote:

"Instead of going for the highest possible performance, which does not
contribute to software development, our idea was to create a
developer-friendly next generation TV game machine that maintained
above-standard capabilities." - Nintendo

Why did this happen? Because prior to Sony showing up, everyone just bought the parts off the shelf and built their own machine. Everyone was on a level playing field. Everyone was happy.

Sony shows up and says "Hey, I've got a better idea. How about I just make everything in the machine instead?" and designs a super console from the ground up. There is no way to compete with that short of doing the same. Nintendo would have to spend every penny they've got to match Sony's R&D and manufacturing facilities, so that isn't really an option. So go with Plan B, do enough to get by.

The GameCube is no slouch. The GameCube is a lot easier to
make games I am told by developers who contact me, but the Xbox is the
easiest to deal with of all the three current consoles

If you believe that the GameCube is more powerful than the PS2, please note that you have been lied to. Welcome to the world of PR.

The hard facts: Nintendo claims the GameCube can do 12 million polygons a second peak performance. That's pretty nice. Sega claims that Virtua
Fighter 4 runs at 63 million polygons a second on the PS2. That's where you have someone remind you that you're drooling.

(edit: As this seems to be the most disputed part of the essay, I contacted a few programmers who are actually working on the GameCube.  The consensus was that the GameCube is easier to make better looking games on in a short time, but if given longer the PS2 would outperform it.  Another point raised was that the GameCube has 24MB of RAM that can easily be used for program data.  The rest is reserved for audio and is too slow to be used for anything useful.  They would like to send out a big thank-you to Nintendo on that complete lack of foresight.)

Next up, developer support.

The Dreamcast had more developer support. The N64 had more developer
support. The Saturn had more developer support. The Bandia Wonderswan might even have more developer support. The GameCube is the least supported system since the Virtual Boy. While everyone is making PS2 games, and a lot of people are making one Xbox game in cases it takes off, Gamecube support is very much in the minority.

The public does NOT buy a system unless they feel it will give them lots of
new games down the road. Look at MS. They are screaming "Xbox has
developers! Honest! More than we can fit into a bus!" which is the right
approach. Joe Average will NOT buy a system if he feels that there won't be lots of new stuff coming out. And Nintendo burned a lot of bridges with
their barren N64 release schedule for good games. They need to come out and say "hey! Hundreds of games are coming out!" except that would be a lie.

A quick peak over to GameSpot to sneak a peak at the previews. After you remove the previews for games already out, you come up with the following:

GameCube has around 60 titles previewed.
Xbox was around 140 previewed.
PlayStation2 has more than 300 previewed.

Well, that's a lot. And that doesn't even factor in the sheer number of PS2
games that will only be available in Japan and weren't in the list.  Nintendo's website lists some 100+ games to be coming out, but GameSpot doesn't count a preview as "this game was announced."  It's safe to expect that all the consoles have a lot more games in development that were not listed.

Nintendo's plan is to go with fewer games. Uhm, ok. And they plan to be the biggest developer on the GameCube. When you're making nearly 100% of the money on a game sold, it's easier to remain profitable. Assuming the system sells.

The GameCube launch in Japan. Call it what you want, say anything nice you can. In the non-sugar coated version, the GameCube imploded on the launch pad.

After the first week of sales, it sold less than 140,000 units out of nearly
500,000. Imagine walking into a movie theatre on opening night to see the
latest blockbuster movie that everyone was talking about, only you get there
and all of three people in their seats when the movie starts. To date, the
GameCube still hasn't broke 300,000 units sold in Japan. Go team Nintendo. On or about November 17, Nintendo issued a statement that they had shipped a grand total of 510,000 GameCube's in Japan. An entire 60,000 extra units since it launched. That just screams trouble.

On top of that, sales for the third party titles were abysmal. At least in
the early days of the N64, anything that said "64" sold by the truckload as
everyone thought they would all be as good as Mario64. So developers kept thumping out games. Granted, they mostly sucked, but the masses bought them in hopes of another Mario64.

Publishers are around to do two things. Sell games and make money. Not one or the other. It's both. As soon as they aren't doing either on a console,
they move on. The complete lack of software sales on the GameCube (outside of Luigi) has raised a lot of eyebrows. The hope that the few people who bought the system would buy many games has evaporated. On the PS2, they know they will accidentally sell games by the truckload. On the GameCube, it's looking very hopeless.

Not only did the system not sell as expected, but it had the lowest level of
software purchases with a major system launch EVER (outside of the N64 where you had a choice of Mario and Pilotwings). In Japan it launched with
software selling at 1.3 titles per system on average. That's pretty weak.
The U.S. launch wasn't much better, at 1.7 titles per system.

And if you were a third party developer, you'd notice that third party games on the GameCube have not been selling. A better metaphor would be to say that the third party titles have been murdered and left for dead on the shelves. It's been all Luigi and Rogue Squadron that's been selling. The beauty that is Super Monkey Ball sits at the stores unloved, and for that I shed a tear.

Important note: The average game has a very limited shelf at full retail. More than half of a games sales will be had within 21 days of it reaching the distribution channels. There is no "sales might pick up later" for most games. With 3rd party titles having a very visible lack of sales, that cuts right into future developments.

Fifa for the GameCube in Japan went on sale a couple weeks ago and racked up 4,400 copies sold in the first week. Odds on favorite it won't pass 10,000 at full price. That gives EA a grand total of about $250,000 total in profit assuming 10,000 copies sell. Factor in advertising, promotion, and the costs in producing the games and you just know EA is going
"well, we just lost money."

Fifa at 4,400 copies was the top selling third party GameCube game from November 12-18 in Japan. Konami's soccer title on the PS2 during the same time sold 11,000 copies bringing it's sales total up to more than 50,000 copies. That is what gets noticed. PS2 games sell, GameCube games don't. (source: Dengenki Sale Charts)  If you were a publisher, where would you publish your games?  The consoles where you will lose money, or the one where money is there waiting to be spent?

Culture note: The 2002 Fifa world tournament is being held in Korea and Japan next year and Fifa interest is very high at the moment.

And with the lack of a GameCube market in Japan that is buying third-party games, that means third party games will greatly slow down in both development and release.  And by will, I mean already has.  Then the trickle down affect occurs as fewer Japanese games get released here.  And companies here know there is less of a market for their games in Japan and becomes a factor in deciding how much spend on making the game.

The mass market will not buy a system unless they know it's getting lots of
games in the future. Period end. The theory that "as long as it has good
games now" is a lie. Good games now get the interest, and the mass market
needs to know more is coming out to commit to purchase. Otherwise, it's not worth paying much for the system.

The mass market has shown it cares not for the GameCube. For it to sell in any serious numbers, Nintendo is going to have to do something very creative in it's marketing. The current plan is not working.

Inertia:

This is a money industry. Consumers go where the games are, publishers go where the consumers are. Right now, consumers are in Camp Sony. Camp Sony is huge. Camp Sony is growing at 2 million new members a month.

Camp Nintendo is producing less than 500,000 GameCube's a month. Camp Nintendo is less than 4% of Sony's size. The Japan model shows that GameCube failed to slow down PS2 sales there after it's release. That would be safe to say the same thing will happen here.

Right now everyone is making more PS2 games than GameCube games. And by simply looking at these numbers, they will continue to make more PS2 than GameCube games. Shifting to exclusive GameCube support is financial suicide for a publisher. While Nintendo will undoubtedly use their support and money to gain some exclusives (i.e.: Resident Evil), it won't matter. It won't be enough to sustain the machine. It will garnish some sales and some attention, but it won't change the market (the Dreamcast had an exclusive Resident Evil that was for the time THE best looking game on the market).

At this point, it's called inertia. The market will continue to support the
dominant console simply because it has the most to offer. The GameCube
doesn't offer any appreciable advantage over the PS2, and it's software
seletion will always be lacking. It would be very inconvenient for
consumers to choose the GameCube over the PS2.

Assuming the impossible, the market said "Damn it, we love Rogue Squadron and little monkeys!" and completely stopped buying PS2's, there would be no market left by the time the GameCube hit critical mass. Assuming Nintendo were to immediately double production to one million a month and then began a scaled increase each month, it would be 2003 before we saw enough units to sustain the market.

In the meantime, this industry would collapse. There would be nothing left
but Nintendo. Imagine if you ran a business, and then suddenly had to run
it with 4% of the business you had before? It just isn't going to happen.

As such, developers will continue to make PS2 games. The PS2 could turn out to be a tool of the devil, and they would still make most of their games on it. It's the only way to survive.

Nintendo needs to focus on becoming "the great second console" or target the child's market which they are good at. But the mini-DVD's are hardly child friendly, and this does not help Nintendo's cause in targeting this demographic.

Conclusion:

Perhaps a better example would be to look at the Dreamcast. It had a
slightly better launch, for the time it had a hell of a lot better games, a
distinct graphical advantage, and it sold about the same number of units to
begin with. And it had to deal with Sony.

Sega produces a lot of good games. And I'm not talking publishes like
Nintendo (where Nintendo now outsources most of their games that they
publish), they actually write their own games on the most part. And Sega
targeted the largest demographic group that purchases video games with their games (males 16-24),

And in the end, the Dreamcast failed to become an economically viable
machine. It had the games, it had the power. It didn't have the consumers
willing to keep buying games. The machines are now sitting on shelves for
$50. And yet they still don't sell!

This is the fate of the GameCube.

If all it took to be a successful console was a nice price and some nice
games, we would all own Dreamcasts.

In the end will it outsell the Xbox? Not a clue. Will anyone care in a
year? Only the zealots.

Even Nintendo is saying their main money maker for the next several years
will be the GameBoy Advance, and that the majority of their resources will
be poured into that.

Even Nintendo doesn't believe the GameCube will be #1 when it's all over.

And the final question:

Should you buy a GameCube? Hey, it's your money. Just make sure you're
buying it to play what's out now, as it's long term viability is highly suspect. In every respect the Dreamcast was a better contender, and it's now sitting on store shelves with a $50 price tag and a little note saying "please love me."