Given the reality that the Internet and peer-to-peer networks are here to stay, we recommend that console manufacturers/game makers avoid the posture of the music and motion picture industries by embracing emulation. We recommend a three-pronged strategy that entails: embracing and monetizing emulation by developing emulators for discontinued consoles, expanding game availability by supporting backward compatibility, and protecting intellectual property by expanding the IP portfolio.
“Clearly there is a market for commercial emulation software,” stated Marc
columnist and author of the C.A.G.E. arcade emulator.98
Emulators are pervasive and consumers were willing to pay for them; sales figures for both commercial emulators for the Sony PlayStation, Connectix and Bleem!, far exceeded initial projections. Bleem! reported over fifty thousand units sold in the first month, and Connectix reported over one million dollars in VGS sales every week for its first three weeks on the market.99 Instead of viewing all forms of emulation as a threat that must be dealt with legally, console manufacturers should adopt emulation and “share dreams rather than fight zero sum games.” 100
Develop Emulators for Discontinued Consoles
Console manufacturers must assess their portfolio of corporate assets and prioritize them by revenue, profits, and popularity. The consoles that still generate significant rents should be protected from unauthorized emulation by protecting all related intellectual property, while console manufacturers ought to emulate older systems that generate virtually zero revenue from game sales.101 Proactively creating and marketing best of breed emulators for the older systems would allow console manufacturers to win back customers from the emulation community. Moreover, it would also enhance the console manufacturer’s brand equity and recapture customer loyalty by demonstrating responsiveness to customer demand. Console manufacturers that produce their own emulators will have a major advantage over any emulator developer because they can “dump” their BIOS without any legal consequences. Consumers are also likely to flock to such an emulator which will be best of breed, legal, priced competitively, and made by the original console manufacturer—a trusted source of quality.
Monetize Older Games
By adopting emulation, console and game makers have an opportunity to generate additional, previously unrealized revenue and regain a modicum of control over their software’s fate. They could for example, make it available in a “walled garden” online
98 99 100 101
Hank Barry, Address at the Kellogg Digital Frontiers Conference (Jan. 18, 2003).
Each console manufacturer has a slew of consoles that have been discontinued and no longer generate
profits. For example, the Nintendo Entertainment Systems (NES) and the Super Nintendo (SNES) generate
zero revenues for Nintendo as all games have been discontinued and are only available via secondary markets such as eBay. Furthermore, the Nintendo 64 is at the end of its console lifecycle with only one percent of overall sales generated in 2002.