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Vol. 2:2]

James Conley,

game playing arena on a pay-per-view or subscription basis. Consumers would then gain access to a complete game collection for a particular console in an integrated setting. As the online emulator would represent zero variable cost to the console manufacturers, they could use this “walled garden” as a communications channel with their consumers. As such it would serve as a forum to conduct market research as well as to promote the latest console system and its associated video games.

Currently there is a huge gap between the commercial availability of games and actual consumer purchases.102 As the statistics in Figure 8 show, most console owners purchase a small fraction of commercially available games.

PlayStation

10.4

1,275

0.8%

Nintendo 64

7.5

290

2.6%

PlayStation2

6.1

457

1.3%

Nintendo Game Cube

4.6

168

2.7%

Limited retail shelf space (typically reserved for the top selling video games) coupled with consumers’ willingness to purchase only a small fraction of the available games, should encourage console manufacturers to explore other avenues in order to preserve customer loyalty and maximize their revenue stream.

1.

Support Backward Compatibility

Console manufacturers should ensure that each successive generation of game consoles offers backward compatibility via emulation, thus maximizing the longevity of the consumers’ software library and eliminating the risk of hardware obsolescence. As of March 2003, Sony was the only gaming console manufacturer to embrace this concept, making the Sony PS2 backward compatible with the PlayStation.104 This allows consumers to still enjoy their PlayStation games without the inconvenience of maintaining two consoles. By meeting customer demand for backward compatibility, Sony deters game players from using emulators to play games designed for the older console.

102 103 Figure 8: Game Penetration. “Games per console” equals the average number of games an average user owns on a particular platform; “total games available” equals the number of titles available for a particular platform; “game

penetration” equals the games per console/total games available.

Press Release, The NPD Group,

Annual U.S. Video Game Sales—The NPD Group Reports on Video Game Sales and Best Selling Video

Game Titles (Jan. 27, 2003), http://retailindustry.about.com/library/bl/03q1/bl_npd012703.htm (last visited July 4, 2004).

104

Since then Sony has announced that the PS3 will likely be backward compatible with the PS2 and

PSX.

Curmudgeon Gamer,

(March 24, 2004),

http://curmudgeongamer.com/article.php?story=20040322202148324 (last visited July 4, 2004). 278

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