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Why Ballmer and Hirai will control the next-gen war

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Monday Muse: PS4 and Xbox strategies will closely reflect the commercial fitness of Sony and Microsoft, writes Rob Crossley

What can we learn from that remarkable day in March 2001, when Sega killed off the Dreamcast?... read more

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Why Ballmer and Hirai will control the next-gen war

Postby flyfletch » 29 Apr 2013, 13:32

I would imagine that indie developers are important, more so now than ever. I seriously doubt they will be the making or breaking of the next gen consoles though.
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Why Ballmer and Hirai will control the next-gen war

Postby Taus » 29 Apr 2013, 13:34

Pretty impressed with Rob's articles these days

The advent of new consoles and a new generation has given scope to more detailed analysis and opinions over and above the 'business as usual' reviews

Pretty good, you should write more pieces in this vein however would add that MS are under a degree of financial pressure

The analogy that MS turns a greater profit hence has more money is true on a facile level but does not allow for the cost of financing or shareholder value. Essentially, as a listed company, MS' management are using shareholder's capital to invest in MS products and services. Shareholder capital comes at a cost, not in terms of interest, but an 'opportunity cost', i.e. what return a shareholder could make if he / she decided to divest from MS and invest in another asset / company

Typically if MS do not return value in excess of its cost of capital then there will be downward pressure on their share price. We are already seeing this at the moment in terms of MS. They are presiding over declining revenues from mature produces (Windows, SQL Server, Office, Windows Server) and their new products (Surface, Zune etc) are not generating the returns which shareholders' demand

The exception being XBox, that has been a successful product, however MS are under their own pressure, the days of $75M on a single title maybe over for them as well unless they can leverage their platform to a wider audience which the rumours are pointing to a 'yes' to that strategy

If Sony are gambling on indies, MS are gambling on multimedia - taking a gaming device and turning it into a media hub. If they are not able to grow XBox revenues next gen they will come under pressure, like Sony, to divest, streamline their product lines, concentrate on higher return products
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Re: Why Ballmer and Hirai will control the next-gen war

Postby El Mag » 29 Apr 2013, 13:35

You take that back, the Dreamcast isn't dead it's just sleeping!
Like a midget at a urinal, I was going to have to stay on my toes.
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Why Ballmer and Hirai will control the next-gen war

Postby WHERESMYMONKEY » 29 Apr 2013, 13:36

So how does Nintendo figure into the equation or do they just not count as a hardware manufacturer anymore because the wiiU isn't a graphic whore's wet dream.
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Re: Why Ballmer and Hirai will control the next-gen war

Postby Diomedes1977 » 29 Apr 2013, 13:40

Well, now we games have to show MS that no, they cant actually "buy" the market. If they havent won this generation (they will end last ones in fact) and are willing to put DRM, ban second hand etc....just imagine if they were the sole rulers of the videogame market.

And, if the rumors are true, the PS4 is somewhat more powerful and is expertly designed, and will have 100% japanese support etc....hence it should win in gamers hearts.
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Why Ballmer and Hirai will control the next-gen war

Postby RoOhDiNi » 29 Apr 2013, 13:44

"Who will win Next Gen?"

Steam and Nintendo :P
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Re: Why Ballmer and Hirai will control the next-gen war

Postby StonecoldMC » 29 Apr 2013, 13:57

Roll on the Next Gen!

Its going to be a long month to wait for this MS reveal!
"Nintendo want to make money by supplying fun, Sony want to make money by supplying Art, MS want to make money."

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Re: Why Ballmer and Hirai will control the next-gen war

Postby TheLastDodo » 29 Apr 2013, 14:01

Storm is coming...........

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Re: Why Ballmer and Hirai will control the next-gen war

Postby Barca Azul » 29 Apr 2013, 14:22

I get the impression that MS are fishing with hand grenades though. Yes they can throw cash about, but unless they look at the genres of games they make, they wont find they can cater for all.

If you look at the last few years since kinect, there has been little fresh content for core/mature gamers is the impression i have.

Im sure there are a few like me who dont give a flying carpet over map packs or 3 week exclusives.

GTA IV DLC hurt, but it was timed.

Im not tied to one of the three, I just feel MS 1st party isnt as good as the other two and until they fix it, im unlikely to go back to them.
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Re: Why Ballmer and Hirai will control the next-gen war

Postby Rob Crossley » 29 Apr 2013, 14:23

Taus wrote:Pretty impressed with Rob's articles these days

The advent of new consoles and a new generation has given scope to more detailed analysis and opinions over and above the 'business as usual' reviews

Pretty good, you should write more pieces in this vein however would add that MS are under a degree of financial pressure

The analogy that MS turns a greater profit hence has more money is true on a facile level but does not allow for the cost of financing or shareholder value. Essentially, as a listed company, MS' management are using shareholder's capital to invest in MS products and services. Shareholder capital comes at a cost, not in terms of interest, but an 'opportunity cost', i.e. what return a shareholder could make if he / she decided to divest from MS and invest in another asset / company

Typically if MS do not return value in excess of its cost of capital then there will be downward pressure on their share price. We are already seeing this at the moment in terms of MS. They are presiding over declining revenues from mature produces (Windows, SQL Server, Office, Windows Server) and their new products (Surface, Zune etc) are not generating the returns which shareholders' demand

The exception being XBox, that has been a successful product, however MS are under their own pressure, the days of $75M on a single title maybe over for them as well unless they can leverage their platform to a wider audience which the rumours are pointing to a 'yes' to that strategy

If Sony are gambling on indies, MS are gambling on multimedia - taking a gaming device and turning it into a media hub. If they are not able to grow XBox revenues next gen they will come under pressure, like Sony, to divest, streamline their product lines, concentrate on higher return products


Really interesting response, Taus.
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Re: Why Ballmer and Hirai will control the next-gen war

Postby KK-Headcharge78 » 29 Apr 2013, 14:24

Well in my opinion, I predict the following for the next gen;

It is there for MS to lose and will be largely determined by the release schedule, launch line-up and affordability vs the PS4
Sony will be considerably more powerful if their 1st and 3rd party support is very strong
Ultimatley MS's resources will allow them to keep ahead of the curve IF they don't go too 'social' and do concentrate on the core
The Wii-U will be as good as dead in the next 2-3 years due mainly to poor 3rd party support and the hangover of crap marketing and their competition nicking the blueprints of the Wii
Nintendo will cease to make consoles in the next few years concentrating on their strong hand-held proposition and licensing out their 1st party stuff
The Nextbox and PS4 will be largely defined by their 1st party stuff otherwise they will offer near identical 3rd party line-ups
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Re: Why Ballmer and Hirai will control the next-gen war

Postby fustacluck » 29 Apr 2013, 14:30

WHERESMYMONKEY wrote:So how does Nintendo figure into the equation or do they just not count as a hardware manufacturer anymore because the wiiU isn't a graphic whore's wet dream.


I'm guessing CVG will start talking about the Wii U as a contender when Nintendo does, but their lack of support over the last 6 months coupled with the announcement that they won't even be holding a press conference at E3, and that they've only sold less than half a million consoles so far, speaks volumes.
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Why Ballmer and Hirai will control the next-gen war

Postby Stan_Goodspeed » 29 Apr 2013, 14:34

Microsoft can spend much more on timed exclusives, but like its name implies this is a short-term strategy. They have no footing in Japan and come second - if not third - in key markets like the Middle East & Europe. Sony dominates in these regions and no third-party publisher would give up on such markets for its most popular brands. Once the PS4 reaches 20-30 million units sold, what kind of CEO could possibly convince its board that a €50 million payola was a wise choice?

The Xbox guys clearly know their lack of first-party offering (and overall lack of exclusive franchises compared to Sony or Big N) is their only weak point, but paying upfront to get timed DLC can only get them so far. They'll never get total exclusivity on franchises like GTA or MGS, their biggest asset is their multimedia approach. Until Apple strikes, that is.

My guess is a status quo for next-gen, with Sony perhaps gaining back some lost marketshare in the US.
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Re: Why Ballmer and Hirai will control the next-gen war

Postby toaplan » 29 Apr 2013, 14:39

Sony's stock price has doubled in the past 6 months, as investors are growing more confident due to the PS4 and Hirai's other turnaround initiatives. "Abenomics" and the depreciating Yen have also contributed to this.

M$ always tries to use the $ from the Windows quasi-monopoly to expand and attack new markets - usually without much success. No matter how much $ they have thrown at those new products, consumers just haven't wanted the Zunes, Kins, MS Web TVs, Bings, Windows RT tablets etc. when there are better and cooler products out there.

The Xbox360 has been one of the few of those that hasn't crashed and burned hard, and even it seems destined to end up in last place in sales of this console generation. Last time MS was able to catch Sony by surprise with an early launch and some killler new features and they were further helped by the unfortunate mistakes Sony and Kutaragi made with the PS3. This time they are facing a better-prepared Sony.
Last edited by toaplan on 29 Apr 2013, 14:45, edited 1 time in total.
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Re: Why Ballmer and Hirai will control the next-gen war

Postby Barca Azul » 29 Apr 2013, 14:41

Stan_Goodspeed wrote:Microsoft can spend much more on timed exclusives, but like its name implies this is a short-term strategy. They have no footing in Japan and come second - if not third - in key markets like the Middle East & Europe. Sony dominates in these regions and no third-party publisher would give up on such markets for its most popular brands. Once the PS4 reaches 20-30 million units sold, what kind of CEO could possibly convince its board that a €50 million payola was a wise choice?

The Xbox guys clearly know their lack of first-party offering (and overall lack of exclusive franchises compared to Sony or Big N) is their only weak point, but paying upfront to get timed DLC can only get them so far. They'll never get total exclusivity on franchises like GTA or MGS, their biggest asset is their multimedia approach. Until Apple strikes, that is.

My guess is a status quo for next-gen, with Sony perhaps gaining back some lost marketshare in the US.


Id guess a CoD exclusive could have a similar effect for next gen as GTA IV this time round, but would Activision want to take the risk?

Rumour is some kind of EA exclusive for nextbox, but im guessing it would be the Respawn tittle, as you cant see them giving FIFA or BF as an exclusive.
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