Can Wii, Xbox, and Playstation Thrive in a Mobile Social Gaming World?
Tony is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The most interesting part of the annual Electronic Entertainment Expo (E3) in Los Angeles this past week was to see how the makers of Xbox 360, Playstation 3 and Wii – Microsoft (NASDAQ: MSFT), Sony ADR (NYSE: SNE) and Nintendo ADR (NASDAQOTH: NTDOY.PK) respectively – responded to the challenge of the small screen companies.
These companies, on the periphery of the E3 expo, are slowly winning over consumers to the experience of social, mobile and cloud gaming on their smart devices – smartphones, tablet PCs and so-called smart TVs. These challengers to the console makers were sneered at just a year or two ago as console manufacturers thought very few gamers would ever use these devices.
The console makers did strike back by unveiling technology at E3 that enables users to move between devices, while at the same time anchoring (hopefully) users to their traditional consoles. Video game publishers and console makers alike are trying to expand market share in today's multi-screen world which is 10 times bigger than the console world alone. If they are successful, it could open up 2 billion consumers to them rather than just the 200 million gamers globally who use consoles.
Sony displayed its cross-platform technology that allows games to be played between users on its Playstation 3 and its Playstation Vita handheld device. The new technology also allows a user to save a game played on one Playstation device and then resume play on another Playstation device.
Meanwhile Microsoft unveiled its Xbox SmartGlass which is a bundle of technologies that joins together its Xbox Live online service with new wireless capabilities. The new technology allows any smartphone or tablet to used as a wireless remote control for Xbox. Users are also able to pause playing and resume the game on different screens.
Nintendo wasn't sitting still either. And it had better not. Weak sales of its 3DS handheld game console plunged the company into its first loss in its 50 years as a public company. It revealed more details on its forthcoming Wii U console and its new concept called “asymmetric gaming”. Its Gamepad controller with an embedded touchscreen will give players a different view of games than others using regular Wii controllers.
Game publishers are also aware of the changes occurring in the video games world. As mentioned in a previous article, these companies are quickly advancing in their efforts to earn digital revenues. They are doing so through monthly subscriptions, downloads (for franchises like Call of Duty) and the sale of virtual goods. The CEO of the world's largest games publisher and publisher of the highly successful Call of Duty franchise Activision Blizzard (NASDAQ: ATVI), Bobby Kotick, emphasized this point at E3 “There are so many more ways to monetize user engagement today than ever before and that's a very dynamic part of our business.”
At E3, Activision's rival Electronic Arts (NASDAQ: EA) unveiled details of a digital platform that delivers games to consumers across all types of devices. Among the features of this platform will be giving users a single identity across games, flexible payment options, 99.99 percent network reliability and the ability to save game data in the cloud.
The E3 show was really all about change in the industry and investors in the sector should be aware of that. Companies that fail to evolve will soon be left behind, while those that do will do very well as the gaming universe expands to include billions of people around the globe.
tdalmoe has no positions in the stocks mentioned above. The Motley Fool owns shares of Activision Blizzard and Microsoft and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Activision Blizzard and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
