October 12, 2007 | posted by Michael Baxter in IABN |

It happened in June. Nintendo’s market valuation passed Sony’s. Okay, it was only temporary, and it was a little odd. After all, Nintendo revenue is around an eighth of Sony’s but, all the same, it was highly significant. So far, 2007 has been a disaster for Sony, and a remarkable success for Nintendo. It’s also been a victory for imagination and creativity over muscle.

The plan at Sony was simple enough to define. Let’s build the ultimate games machine: a product boasting a state of the art central processor and a new type of revolutionary disc storage. Built on the twin pillars of the cell chip and blu-ray DVD it seemed as if Sony had scored another coup in the games market. Okay, the company might be struggling on other fronts, as deflation erodes profit margins in the consumer electronics industry, but at least in the games it appeared the company had produced another technical masterpiece.

It was expensive and it was late, but neither of those things should have been fatal. And yet the product limps forward. Its undoing seems to be in two areas.

Firstly, the PlayStation 3 is a hugely difficult machine to develop for.

It’s all very well having a massive storage capacity, it’s all very well having a super fast processor, but unless the games publishers are able to exploit these features they are being wasted.

Whenever a new games machine comes on the market it always takes time before games developers are able to push the machine to its limits. It usually takes several years before the machine boasts a truly outstanding game. It just takes time for developers to understand the product, and its idiosyncrasies.

But, with the PlayStation 3, there is more to it than that. This was a hugely expensive machine to develop, with massive component costs. It’s so complex that the latest versions are not even backwardly compatible with the PlayStation 2. But that’s not just a headache for the people charged with making the machine: if it’s difficult to make, then chances are it’s difficult to write software for too.

Yesterday, Capcom decided to pull the development of its latest game in the hugely successful Monster Hunter series for the PlayStation 3. Why? It was “‘Due to high development cost of titles for PS3,” said Capcom managing corporate officer Katsuhiko Ichii.

But there is another problem with Sony. Another major challenge to its plans for dominating the world of video games, and the problem is called Nintendo.

Nintendo, with its Wii, has pulled off a masterstroke of clever design. It thought outside the box, and came up with a new innovative games controller, a sleek box, and a machine that games developers seem to love.

We said above that Capcom has pulled its latest Monster Hunter title for the PlayStation 3. Instead the game will be appearing on the Nintendo Wii. This is quite a turnaround, because not so long ago, Capcom was planning for the title to be exclusive to the new PlayStation.

Can Sony bounce back?

The snag is this. Developing titles that do the PlayStation 3 justice is an expensive business. Very expensive. And until the user base is there it’s difficult to see how it can be profitable to write software of the required magnitude.

As for Blu-ray, unlike DVD, it faces a challenge from a new quarter. Forget HD DVD, the real threat lies with the Internet. The ability to download movies from the Net is improving fast - okay, the quality is far below that of Blu-ray, but attitudes are changing, The iPod generation is no longer quite so keen on storing their music and video on discs.

It’s a psychological change more than anything. Time was when we liked to feel we could touch our music and videos, but not any more. The new generation of DVD standards have a new challenge, the fight against a change in consumer attitude.

Does that mean the PlayStation 3 is doomed to fail? Not necessarily. This is a class product. It truly is incredibly powerful: all it will take is a couple of games that do the hardware justice, and attitudes might change. Blu-ray DVD might not change the world like DVD did, but the Internet isn’t really a viable challenge yet.

Sony might get away with it. It will take time, but even so, as far as the non-portable games market is concerned, Sony is drinking in the last chance saloon. And even if she can pull it off eventually, it seems unlikely that the Sony Formulae of a powerful games chip and a new standalone storage device, a trick it also used with the PlayStation 2, will work for a third time. If you like this article, why not register for our daily newsletter? Or if you already receive the newsletter, then start spreading the news and tell your friends and colleagues. To register visit this link

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