Are they really doomed?

It seems like every day we are getting new updates on who is losing money, and how that means our favorite consoles and games are doomed (well, it’s more like we get quarterly reports every 3 months, but work with me here).  It’s hard to know what to believe and what’s just click-bate, especially when most of the people reporting the numbers are gamers who don’t fully understand what’s going on themselves.  I don’t blame game sits for not providing context as they simply pass along some information that’s about video games and no one is claiming to be an expert.  I'm not either.  But I do know my way around a balance sheet, and know a thing or two about investigative reporting.   My goal here, as always, is to dispel ignorance and provide objectivity so I’ll be focusing on disproving commonly held notions rather than trying to pass myself off as an investment banker and provide stock advice.

Before I start, let me speak to the most common statements that get tossed around when talking about a company’s balance sheet, which are complete rubbish.

They are just lying about the numbers

As near as makes no difference to impossible.  As publicly traded companies, they have to submit to diligence are their books are open to review at least 4 times a year.   Due to both heavy regulation and a pretty strong desire to get the numbers right, a quarterly report is generally prepared by an independent firm and your own accountants at the same time, and any discrepancies are investigated.  It is a very serious crime to publish numbers you know to be false. It’s a reasonably serious crime to publish numbers that are wrong even if you thought they were right.

But they have billion in assets!

Imagine you own a retail store. You have a ton of assets; you have the store itself, you have the point of sale system, you have computers, you have office furniture, you have fixtures.  When you start losing money, can you go and sell your point of sale system to generate some quick revenue?  Obviously not, as it’s essential to running you store.  So are the computers, the fixtures, and the store itself.  You might be able to sell the furniture, but just this simple thought experiment shows the problem with that logic; even with a billion in assets, the amount you can sell without drastically impacting your ability to make money in the future is going to be a very small percentage.  Also your outstanding stock NEVER counts and an assist; if people wanted to buy your stock, you wouldn’t have a problem.

So let’s take a look at the big three, asking 3 important questions:  Are they making money from gaming, are they DOOOOOOOOOOMED, and would they ever sell off their consoles.

Sony

Once a giant of manufacturing, innovation and sales, Sony’s decline over the last 10 years has been as tragic as it has been spectacular. In 2000, Sony had a Market Capitalization* of almost $82 billion, making it one of the largest and most valuable companies in the world at the time outside of the energy sector.  They had positioned themselves as the cutting edge of numerous technologies including digital cameras, camcorders, MP3 players, and personal computers.  Sony TVs were considered among the best money could buy, with good reason.  Even at this stage, the PlayStation seemed an unstoppable force, taking market share from Nintendo at a rate higher than anyone expected and fending off any encroachment from the original Xbox.  However due to a string of poor decisions, declining PC sales, decline in demand for high end electronics, competition from Samsung and Apple, and dozens of other factors,  Sony today has only $17 billion Market Capitalization and is suffering yearly loses in the billions.

Is Sony making any Money from gaming:  It comes and goes.  Recently no, but that’s changing.

People often talk about PlayStation “keeping Sony afloat” but that has simply never been the case. The original PlayStation and the PlayStation 2 were money makers for sure, but at a time when Sony was extremely successful in other areas.  By the time Sony started to decline, PlayStation was contributing to losses.  The PlayStation 3 was not well received at launch and was sold well below cost despite being extremely expensive.  The PSP was a disappointment, never approaching the sales targets Sony had set for it.  By the time PS3 started to gain momentum and move units, the disastrous PSV was cutting into the bottom line.  It has yet to reach its first year sales target, despite being 3 years old.  SOE has been the only consistent bright spot, but has never made enough to truly make a difference with Sony as a whole.  But things are starting to turn around with the PlayStation 4.  This year’s PlayStation profit of almost $300 million US may be first yearly profit in almost a decade, but it’s a very impressive number well beyond even the most aggressive estimates. It’s hard to call a single data point a “trend”, but the market seems to be extremely receptive of PlayStation right now, and I think we can expect this profitably to continue with upward momentum in the near future.

Is Sony in any real danger - Very much so.

Look, we all love PlayStation and it’s easy to think of Sony as “too big to fail” ... but they are not in good shape.  The easiest to understand indicator of a company’s overall health is “Levered Free Cash Flow” which is the most basic terms is the amount of money a company will have left to spend (or give back to investors) after it pays off all its debts that are due.  Sony’s Levered Cash Flow sits at -8.87B, meaning Sony needs almost 9 billion more cash than they are expected to bring in to pay for obligations like rent, wages, interest, and non-renewable loans, while they only have 7 billion in the bank.   If they cannot raise that outstanding 1.9 billion in cash some other way they will enter default protect and essentially be bankrupt. But that’s not going to happen just yet.  Sony is a well structured company and is able to sell valuable assist from one area without impacting others.  Still, selling $23 million in assists a day simply to survive is not sustainable for any real amount of time. The “already sold” list includes a  HQ in Tokyo and 250 million in shares in other companies,  as well as Sony’s E-book and PC business.  Not really anything people on a gaming site are going to care about, but It won’t be long until they are forced to sell something much harder to ignore.

Would they ever sell PlayStation – Almost certainly not.  And who would buy it?

PlayStation is very healthy right now and is extremely valuable.  Forbes rates its value as a brand higher then Sony itself,  and I think it’s easy to see why.  An educated guess at an acquisition price for PlayStation is in the double digit billions, which keep the potential buyer list extremely low.  Microsoft and Nintendo can both afford that, but what’s the benefit?  You rarely buy your competitors because Investing 10 billion in their own brands is the smarter play if you have the money to burn.  Amazon and Google are both already invested in the console game with systems focused on the market  they care about, content distribution.  While they might pay for PSN, having to buy the hardware and software business to get it is just a waste of money.  The same could be said of FaceBook, who might be interested in the social side of things but already have “gaming hardware”.  This leaves private investment funds, and they traditionally shun video games like the plague.  So let’s firmly put this speculation to bed; Sony isn't selling PlayStation.

Even if they want to.

It’s far more likely they will sell their phone business to Samsung or Microsoft, which will raise more than enough capital to keep them afloat until they can restructure and truly cash in on the success of the PS4.

Nintendo

Oh Nintendo, you crazy little games company.  With their 4th straight year of loses totaling almost 2 billion US dollars there has to be a lot of hurt to go around.  Worse, by their own sales estimates it looks like there is no chance for the Wii U to fully recover, they have no new hardware on the shelf to replace it with, and the DS isn’t paying the bills any more.  It’s easy to assume that Nintendo is in just as bad a bind as Sony ... and unfortunately  that’s about the only thing that’s easy to do.  Where Sony and Microsoft have the decency to neatly categorize everything in a logical fashion (Sony Music, Sony Movies, Sony PlayStation, Xbox Entertainment), Nintendo’s corporate stature is an a misrepresented  and tangled mess.   We tend to think of Nintendo and Nintendo of America interchangeable and that's lead is to think of Nintedo has just being a games company.  Nintendo of America is just selling games and systems (and owes a baseball team.  Because why the hell not?), but the global company has a hand in everything from hotels, a  taxi company, restaurants, food, candy, TV shows and movies without any clear department structure that makes it easy to track who is making and losing money, .  Given that Nintendo of America has seen double digit percentage stock price decreases (and hundred million market cap. loses) on days where Nintendo's global stock has seen an increase, it's clear that games are a unexpectedly small price of the Nintendo Pie.

Nintendo also owns this small little PRIVATE company which I’ll get to soon, and because it’s not publicly traded I can’t simple look at its balance sheet and tell you what’s going on with it ... and that’s a problem.

Is Nintendo making any Money from gaming:  Mother of god, yes

But 4 straight years of losses!  I know.  But the Wii U is failing!  I know that too.  But software sales are plumping!  I know, I know, I know.  Like I said, with Nintendo it’s not that easy.  Remember that small little private company I was talking about?  It’s called “The Pokémon Company” and it’s not really small or tiny.   By all estimates it is worth considerably more than Nintendo on its own or Sony’s global operations, at about 23 billion US.  It’s hard to accept, but nevertheless true:  For all the next gen hype and market share debate, for all the $100 million controllers and games with $500 million budgets,  even the most conservative estimates put Nintendo’s profits from licensing it’s video games characters as generating more money than Sony, Microsoft  and Nintendo themselves make selling gaming hardware and software.  Combined.

So why is Nintendo posting a lose?  I wish I could tell you.  But without access to the balance sheet for the Pokémon company to make some educated comments about how their profits are being reported by Nintendo, or where the money is going, I can’t really say.  And that only compounds the fact that it’s hard to say where Nintendo’s money is coming from or going to, given its lack of structure.  For all we know, they could be losing a billion a year in a bad hotel deal, or own a race car driver who is under performing.  Wouldn't surprise me one bit.   What I can say without doubt is that game related sales (because selling a plushy of Pikachu is a game related sales) are extremely profitable for Nintendo when you look at the big picture.

Is Nintendo in any real danger – Not even close.

Nintendo has around $8 billion US in the bank, making them one of the richest companies in the world (top 25) when it comes to cash on hand.  Nintendo could support itself without operational income anywhere from 25 to 35 years, and that’s without having to sell another assists.  Most importantly, when compared to Sony, Nintendo’s burn rate** is extremely high, and they could shut that off at any time in order to balance things out.

Would they ever exit hardware (sell off isn't really a valid question for Nintendo) – No, but there is a strong “crazy” factor at work here.

Let me introduce you to Seth Fischer.  Everything you have ever heard negative about Nintendo’s current operations, including calls for the CEO to step down, calls to move out of hardware, calls to sell on mobile platforms ... Seth is personally (and generally solely) responsible for.   A US investor in charge of Oasis Management, Seth bought into Nintendo because he thought the Wii U would be another Wii.  This hasn't made him very popular with people who’s money he used to do that, and he has been doing everything he can to get Nintendo to follow a more “US” approach to profit.  He has influence in the US media, and we generally read stories about the crazy things he wants to do (like add micro transactions to Mario 3D world) as “Nintendo investors urges ....” when that’s simply not the case.  The board of directors, as a whole, have complete confidence in Iwata.  Sure, the Wii U is far from a hit ...but  he also brought the Wii and the 3DS to the market.  The Wii is the best selling home console of all time, and given time, the 3DS should overtake the original DS to be the best selling handheld as well.  So he’s got that going for him.

That said ... Nintendo is crazy!  It’s hard to predict where they will be even a year from now because more than other company in this article they have the money and freedom to just bet it all on a whim, and the historical data shows that every 8 years or so they like to do exactly that.

Microsoft

What can I say about Microsoft?  Comparing there balance sheet to Sony or Nintendo is like comparing a major league baseball player to some guy on the company softball team.   Currently the 23rd most valuable company in the world, Microsoft holds its own against banks, automotive giants, and power companies.  It’s annual sales total more than the combined value of the entire video game industry. They are worth 17 Sony’s or 23 Nintendo’s.  Microsoft is so rich, they could buy Nintendo AND Sony at current estimated market value (not subsidiaries or assists) with the cash they have in the bank and it wouldn't even drop them down a spot on the “most cash on hand” list.  So big fish in a small pound has never been more accurate.

At the same time, the Xbox is a tiny fish in a vast ocean.  Contributing less than 1% of Microsoft’s bottom line, it’s not uncommon to make it though earning calls without it even being mentioned.  It’s a big deal to all of us because we are gamers ... but it can’t be overstated how little most of the people at Microsoft care about it.  Put in perspective, Sony make more of its total bottom line as a percentage selling magnetic storage tapes then Microsoft makes from Xbox, and when was the last time you saw a tape backup at E3?

Is Microsoft making any Money from gaming:  Maybe?  Probably not though

Xbox entertainment has finished in the green every quarter since 2007, which seems to be a clear cut indicator that I just lied to you with the headline up there.  But I didn't ask if Xbox was profitable, I asked if Microsoft was making money off gaming.  From day one Microsoft has envisioned the Xbox as a content delivery platform and monetized it in ways that go beyond gaming, and they have done a fantastic job of it. While the average PlayStation 4 owner spends almost 90% of the time the console is on playing games, the average Xbox One owner spends less than 40%.  The other 60% of the times they are using apps, buying movies, buying TV shows, or buying music.  Unlike Nintendo who shipped all that non-gaming profit off to a subsidiary, Microsoft just reports all under the same line and the profits roll right into “Xbox Entertainment”.  That makes it impossible to tell how much money they are making from games, but I’m not going to let that deter me.

Doing some quick math it’s easy to figure the answer is “not much”.  Xbox Live Gold subscriptions alone are bringing in $700 million with almost no overhead, but Xbox is reporting profit numbers much lower than that.  In fairness, these are the people who spent $100 million to make a controller worse, so we can assume they have a burn rate** even higher then Nintendo.  Bottom line on the bottom line is that Xbox is making money, and it looks like a fair bit of money ... but games seem to be a loss leader in the overall strategy.

Is Microsoft in any real danger – No.

Obviously.  They are going to make 22 billion in profit this year and have 80 billion in the bank.  I’m done. (for maximum effect, please picture me dropping a microphone to the ground as you read this)

Would they ever sell Xbox – Why not?  Also ... why?

I don’t think there would be any objection to selling Xbox from the board, and if the motion was tabled it would more than likely carry.  As I talked about just last week MS started off more of a branding exercises then anything else, with a secondary goal of content distribution.  The Xbox investment, on this level, might better be served today focusing on cell phone and mobile destitution.  Not only is that where the money seems to be, but it fast becoming a better way to reach the youth demographic as the average age of gamers is going up every year (by about ... .one year ).  But the much more important question is why would they sell?

With 80 billion in the bank, they have too much money*** and selling off Xbox to raise capital would just be counterproductive.  Microsoft is actively looking for more ways to increase its brand awareness and product diversity, regardless of how much of a gamble they are, as they are in the same boat Google was when they bought a thermostat for no good reason, or Facebook was when they bought OR for about 10 times what it was worth. They are not going to give away something they already have, especially if it’s in the green.

The final word

So there you have it.  3000 words to tell you that regardless of what you read in the latest “The sky is falling” article, we can expect more of the same for the conceivable future.  Sony is struggling, Nintendo is stumbling, and Microsoft keeps doing their thing, but it’s all going to work itself out without any major shake down.  No one said it better than Mr. Kevin Butler ... Long Live Play.  And that’s exactly what’s going to happen, regardless of where you like to do your playing.

*Market Capitalization – The poor man’s “What a company is worth”, Market Cap. Is the value of each share multiplied by the number of shares issued.  It has no direct translation to value, but is a strong indicator of the trending of what a company is worth (as it goes up or down, so does the worth of the company)

**Burn Rate – The rate at which you tell your R&D, marketing, and other controllable spending to “burn” though money.  Companies with high burn rates are good investments because in hard time they can just “turn off the taps” and stop investing so much in these areas.

***Too much money -  This is very much a real thing.  Money is volatile.  If the US dollar went down 5 cents, Microsoft would lose 4 billion in cash.  Having this much cash on hand also means you haven’t been able to found ways to leverage investments, and shows you don’t have people in place to manage your cash flow.  It’s a very poor indicator.

Little Xbox in Big China

With the Xbox set to release in China, there has been a lot of talk, and not a lot of objectivity, about what that means for us as gamers.  Below, I do my best to give a no-bias outline of what we can expect.

Why Xbox?

Before we look at X-box in China, lets look at why we even have an X-box in the first place.  No one really wants to enter the video game market, and with good reason.  Traditionally a small slice of the entertainment pie, the industry had proven itself to be volatile and unforgiving from its conception.   You hardly have time to recoup development costs before your console is obsolete, and a single piece of unpopular hardware or even software could be disastrous.  Even Sony’s entry into the market in 1994 was more the results of a opportunity that presented itself after a Nintendo mistake then a real desire to be console makers.  It’s rather shocking, then, that in 2001 software giant Microsoft decided to enter the console business with the Xbox.  They had just seen the launch of the Dreamcast devastate Sega (a failure they played an important part in*) and launched alongside the Nintendo game cube to do battle with the PS2, a juggernaut of sales that showed no signs it was ready to give up market share (spoiler: it didn’t).  It’s seems almost self evident that Microsoft would have been much better off leveraging the PC as a gaming platform if video games were something they wanted to do, or by spending the money to market Windows to developers directly.  Why then, make an Xbox?

The answer is hidden in plain sight; the Xbox name.  The brand has become so common place it’s easy to forget its origin as “The Direct-x Windows Box”, a modified Dell computer taken to market with the goal of doing exactly what Microsoft should be doing; selling the Windows brand to the 18-25 demographic, and selling Windows tech to game designers.   Even Bill Gates himself downplayed the video game aspect of the Xbox, refusing to call it anything other than a “Multimedia Device” when speaking internally. He sold it to shareholders as being in line with the goal of Multimedia Convergence, meaning his goal from day one with the Xbox was to use it as a content deliver platform.  Some say he spent more time and effort on getting professional wrestler “The Rock” to do the official announcement at GDC then he did on what they were going to say about the system, because the branding was more important to him then the product.  He just needed someone "cool" to say it ran direct-x, and call it a day.  It was brilliant.  A targeted marketing campaign to reach people that were moving off PC gaming to console would have a cost in the millions, and a re-branding of Microsoft as a whole to be a “hip” company the next generation would be interested in would be in the hundreds of millions.  By spending that money instead on a console, they were able to build that brand awareness with a key demographic and have something to show for it.   And it worked.  Brand awareness with young adults started to see double digit increases.  The numbers of developers that used Direct X sky-rocketed.  I think they sold a few copies of “Halo” as well, if that’s important.

Xbox One, take two

Over the last few years, Microsoft has seen strong increases in the US and global enterprise market, and has shown they are more than able to fend off powerful rivals such as Goggle and Apple in that space.  Unfortunately that’s the only space they are winning in.  Although they have yet to get to the point where they are losing market share in the consumer market at dangerous levels, just about everyone else is doing a much better job of getting a foot in the door, and over the last 2 years Sony has very successfully eroded their current console market share.  Because of this, China is both the Wild Wild West, and the land of opportunity.   With over 1.3 billion people already using knock off or pirated  Microsoft products ripe to be monetized and a market that is opening up to consoles for the first time in 14 years, it seems like the perfect opportunity to do more of the same; use the Xbox brand to sell the Microsoft brand, use the Microsoft brand to make money.  Given a head start of over a year, a contract with one of the most respected companies and China, and the fact that both major console competitors are Japanese** Microsoft looks like they are in an incredibly strong position to capture the market and it’s hard to say why we shouldn't take note of that.  After all, there are more gamers in China then there are PEOPLE in the USA, and that has to mean China will have a huge impact on the market moving forward.  Doesn't it?

What games?

There might be more gamers in China than anywhere else, but there is also a uniquely Chinese infrastructure at play.  The ban on consoles isn't doing anything to free up the ban on anything we here in the west would consider “a game”.  We all know by now that video games in China can’t have violence or drug use, but we often forget they (as well as all media in China) can’t feature ideologies that are not pro-china, can’t mention world events, can’t talk about themes that involve questioning the government, can’t mention religions other then Buddhism and Taoism*** ... and that’s just the big stuff.  Any published media needs to get by an “ethics” review, and that’s where things get subjective and subtle.  Maybe the map screen shows lines around Tibet.  Maybe you mention a date where something bad happened, and that needs to be changed.  Who knows.  Localization is a non-negotiable that you have no control over, and it’s obtusely corrupt to boot.   The games people play in China, therefore, are mostly casual and simple games on mobile platforms they already own.  Social games, like our “Second Life” are the most popular, as they allow people to interact from home in a society where going outside has heath risks, and personal interaction is riddled with class, ethnic, and  social stigma.  The idea that Microsoft is going to make money developing and selling traditional games is laughable, and predictably that’s not at all what they are looking to do.

Instead, they spent over a year working on content distribution and hosting agreements with one of China’s largest media outlets ... and that’s a big deal.  This will allow them to play on China's national and brand loyalty while taking a cut of everything that gets sold on their platform.  They will work on releasing casual MMOs, while repurposing games like Peggle to appeal to this market.  And while this isn't a core area of Microsoft’s focus, it’s important to note that by breaking down the huge barriers of entry to the China’s market as a publisher, they could easily set themselves up to be the  go-to console for indie and small developers looking for a breakout hit.  In addition, this puts them in a position to negotiate distribution of TV, Movie and Music to over a billion people for thousands of publishers who would otherwise be unable to get a foot in China’s door.  This could very well give them enormous power when it comes to distribution contracts in other markets.  But what’s that mean for the Xbox owner here in the West?

Number, numbers everywhere.

Any other year, any other console generation, this would seem far less important.  But with fanboy devotion at an all time high, news sites posting “click bate” to drive comments and traffic, and information and sales figures being tracked and published at an unprecedented rate, this story is perfect to fuel the flames of the “console wars”.  Let’s not beat around the bush; it has an effect on a landscape people really seem to care about.  If you look at the plan, for all effective purposes the Xbox One has overtaken the global sales title from PlayStation 4, as they have already signed an agreement to “sell to” 5 million consoles.  If you’re a Sony fanboy who has spent the last 4 months defining your worth as a person based on the sales gaps between the systems, I can see where this might be a problem.  If you’re an Xbox One fan boy waiting for a chance to “pounce” on your enemy, I can see why you would care.  The obvious rebuttal is that the sales don’t count until the system launches, or that “sell though” is all that matters, but I have some good (or bad) news for you.  First, your fanaticism is not based in reality, so you never have to worry about FACTS.  Second ... China's sales numbers are completely meaningless.  They won’t affect Xbox’s ability to lure developers to Xbox One, and won’t result in Xbox One getting any new games (and why else would sales figures matter?)

If you look at everything I've been talking about to this point, it seems very clear that what Microsoft is doing is trying to make the Xbox One the best possible tool for developers and publishers who were ALREADY interested in the Chinese market.  Microsoft has paid off the right people on the ethics committee and already has a deal for distribution, so if you are planning on making a game for China putting it on Xbox One can save you a world of hurt.  But we would have gotten these games anyways, and they wont spend any more money on development just because the craps shot that is China now has slightly better odds.  At the same time, any new game made for China to take advantage of the console itself will need to be so “Chinese” that it’s not going to be ported to the west ... “Super Chairman’s Communist adventures” tested poorly in the US market. The only way we would see a port is if the game had a big enough budget to support localization, which simply wont happen any time soon.   Given how fickle China’s government is no one is going to invest in an AAA game, because what happens when the ethics committee pulls the plug because Xi Jinping decides he doesn't like the color blue any more and it can't appear in media?

The Final Word

The Xbox One in China  is already a winner for Microsoft.  Even if it crashes and burns, the money was well spent in creating distribution partners and brand awareness in this very difficult space.  But win, lose, fail, success ... the opening of the Chinese console market is not going to have any impact on gamers outside of China for a long time.  There is nothing to see here, and we should all move along.

Did I miss anything?  What do YOU think about the Xbox One coming to China?  Let me know in the comments below!

*The Dreamcast used a optimized version of Windows CE which was fully Div X compatible.  It took over two years to develop, and this was a large factor in both the huge development cost of the system and it’s high sticker price, which ultimately lead to its downfall.

**Anti Japanese sentiment in China can’t be overstated.  Protests and rallies in support of rejecting everything Japanese still happen to this day, when you think they would have bigger problems to worry about.

***This is a resent change, and like all things China, hard to make a definitive statement about.  While China’s leadership is STRICTLY an atheist organisation they recognize religion as a strong pillar of a functioning society and have allowed the practice of the two religions mentioned, as well as Islam, Christianity, and Protestantism.  Actions by Xi Jinping starting in 2012 seem to be eliminating these 3 religions in favor of the “traditional” values of Buddhism and Taoism.

Against the Flow - April 2014

At the end of the month I like to take a look at what the industry is talking about and see where I'm going against the flow.  These are opinion that seem to be prevalent in the industry with both fans and insiders, but I just can't seem to get my head around, important questions that are not being asked, or opinions that seem to run counter to what everyone else is saying.

I can’t understand how the @ID parity clause is so misunderstood (or seen as a bad thing at all)

Read the following pitch and see if you can find any flaw with it

“Here is the deal; I’ll give you a free dev kit.  I will pay for your middleware.  I will provide free tech support for both.  I will wave all publishing fees.  Pretty good, ah?  This allows a small startup that can’t afford the risk of console publishing to develop a game virtually risk free, opening up that market to 100s of strong, innovative dev teams that would otherwise have to bank all their hopes on being noticed on page 97 of Steam's Green Light program.  It seems like it’s almost too good to be true that a major corporation would just give away free stuff … and it is.  There is small price to be paid; the game you are making, using support I am paying for on a system I am paying for which I am going to pay to list and publish needs to come out on my system.  I know, seems like a no brainer right?  Without that, given the ease at which you can port a game between next gen consoles and the PC, people could abuse the program by getting me to pay for them to develop a game for another system.  But I know … limiting your game to only one system takes away a huge market, so I won’t even do that.  All we want you to do is put it out on our system FIRST, or at the same time as any other systems.

I understand this might not be for everyone.  As such, this is a completely opt in program.  If you would rather go the traditional path and pay me for a dev kit and publishing like you would on any other console, that’s fine too.  In that case, you can come to my system whenever you want.  It’s completely up to you”

No?  Me nither.  But when Microsoft made that deal the WHOLE OF THE INTERNET freaked the hell out, and are still bringing up the “parity clause” as the reason behind game delays from major publishers, games that are already on PC not coming to Xbox, and for why the last Radio Head album sucked.  There is ignorance, and that’s OK.  Cecil from straight dope and I make it our mission to fight ignorance in all forms, so it keeps me going.  But then there is WILLFUL ignorance.  Just flat out ignoring the material you’re commenting on.  That has to stop.

I think minimalist and retro indie games on console are really not a big deal (and a rip off)

Indie has become a meaningless word, so it’s important to start with a definition.  An “Independent” game is a game without a publisher, which are generally considered freer to experiment because the developers don’t have to answer to a second party who is cutting the checks.  They are a pretty wonderful thing to be honest, and without them the industry would be in serious risk of stagnation.  But let’s not confuse indie games with low budget games, and confine what I’m saying to apply specifically to minimalist games (Tomas was Alone) or retro graphics games (Spelunky).  Both Sony and Microsoft have invested very heavily in this type of game, with MS confirming that 75 games are in development for the Xbox One and Sony porting just about every indie game ever made to the PS4 (and then some).  To fanboy’s it’s the best thing ever when a game comes to the system they define their life by, and a pointless waste of next gen tech when it goes to other guys ... and I hate to say it ... in this case, the fan boys are half right.

Let’s call a spade a spade; a console is a discounted PC with a better OS for gaming.  If you could buy a PC that didn't need manually driver updates, didn't crash, and played Titanfall at 1080p/30FPS for $400, we simply wouldn't need them.  I personally find a lot of advantages in console gaming, but the PC will always win on one important point; distribution.  You can buy PC games anywhere, from anyone.  Not only do you have steam sales, but you have steam sale re-sellers and the humble bundle to make sure that building a games catalog on PC is quick, easy, and inexpensive.  On the console side, you have a single distributor, and sales (when they come) are often gated behind a $60 a year subscription.  For triple A titles, it’s not that bad a deal; the extra money you have to pay to have a computer that runs them doesn't lead to any long term savings.  But what about indie games?

You already have a PC that can play Indie games, because you’re reading this.  Even if you’re reading it on your cell phone, then you likely have a cell phone that can play most indie games.  They are designed to be accessible by everyone (as they bank on volume sales) and don’t use assets that require a lot of horsepower.  This also makes them pretty stable; even on grandma’s computer with drivers from the 1990s and 14 different search bars, your indie game is going to run smoothly and not crash.  So at this point you have a choice ... you can buy indie games on PC for prices like 7 for $1 (Humble Bundle) or you can pay $14.99 for them on console.  I’ve heard the argument that “I don’t mind paying full price because I support the developer” ... and for that may I direct you to the Humble Store.  Where Sony and MS both take at least 30% of the sale price, Humble Store only takes 10%.  If you want to support your developers, you should be getting all your games there.  Or ... buy from the developer directly.  It takes a bit of leg work, but then they get 100% of the price (not to mention how much better off they would be if they didn't have to port it to console in the first place)

All and all, I know there are some valid reasons to play indie games on a console, but I think they are minor when compared to the huge cost saving of playing them on PC.  I’m always the advocate of perspective, and if Sony put out a Vita game that cost $1 but if you wanted to play it outside your house you had to pay $14 more, everyone would say that was stupid. Yet when game that is $1 on steam is $15 on vita, the same people say it’s worth $14 it to play it on a portable.

I really want to know what’s going on in Japan

5 months later, we seems to still talk about relative sales numbers like they mean something.  Fine, I can handle that ... fanaticism is a real thing we just have to deal with.  But can we please start talking about sales numbers as an absolute as well?  In particular, I don’t really have the time or money to hop on a plane and head to Japan to figure out what’s going on, and would very much appreciate it if a news organization could do that for me.

I was shocked when Sony told us they would be pushing back the launch of the PS4 in Japan, but I figured it was due to the obviously higher than expected pre-order numbers in the US and limited stock.  It’s not the nicest thing to do, but moving stock from the market you dominate to the market you want to dominate and have a real chance of doing so make sense.  And it worked!  The PS4 was a fantastic success and the bestselling home console of all time.

Imagine my shock then, when I learned that some of the biggest names of Japanese gaming development wanted nothing to do with it.  While Sony was bragging about 200+ developers making games for the PS4 the fact that none of them were Japanese went more or less unreported.  When Atlus said they had no games in development for PS4, Persona was going to be a PS3 exclusive, and NIS soft wasn't going to put out a PS4 game until 2016 ... again, it wasn't enough to take us away from the Xbox vs Sony troll wars.  What did it matter?  The PS4 wasn't even out in Japan, and given how much everyone loved it in the west, when it released there it would set records and everything would change!

Except that didn't even close to happen.  With only 560,000 units moved at the time of this writing* the PS4 is hardly a breakout hit.  Worse, it’s being consistently outsold by the Vita, a system that is rarely considered successful.  The most common argument you hear is that “it’s nothing ... the CRAZY Japanese are just slow up upgrade”, which like most things on the internet has no basis in fact.  The PS3 sold 615,000 units in the same time period at its launch despite the PS2 being nothing short of a religious symbol and the Wii U, universally accepted to be the bench mark of a failed console, outsold the PS4’s current total in its first month alone (with 633,000 units). The PS4 is tanking by the standards of its worldwide launch and, in retrospect, it looks like Sony and game developers knew it was going to happen.  Why didn't we?  If the Japanese game market has shifted so dramatically from the west, you would think this would be more important to write about then if a game is coming to the Xbox One in 720p.

It’s not just the PlayStation that is seeing disappointing sales.  We hear so much about Nintendo “slashing sales expectations” on the Wii U and the 3DS that it’s easy to overlook the fact that the 3DS is outselling its targets in NA and EU by a wide margin.  This means that not only is the 3DS missing sales projections in Japan, it’s missing them by so much that they even strong sales in other markets can't make up for it.  Game sales are also wonky, with the weekly top selling list reading like the barging bin of an anime convention.  Yokai Watch and Hatsune Miku-Project DIVA-F outsell Metal Gear and Final Fantasy.  DO NOT GOOGLE Hatsune Miku.  Trust me.

Rounding off the craziness, Microsoft announced a slew Japanese of game developers that will be supporting them with “launch window” titles for the Xbox one in September, including heavy weights like Atlus (the same Atlus, you may recall, that isn’t making games for the PS4) and level 5.  This, despite the fact that it’s a near certainty that it’s not going to have sales anywhere close to the PS4 or Wii U.  In fact the only positive thing I can say about the Xbox One’s chances in Japan is that it won’t sell worse than the 360, but only because that would require people to fly to the US, buy Xbox Ones, and RETURN THEM IN JAPAN on launch day.  So clearly these are US focused titles, for the US market … developed then ported to what used to be native Japan.  I don’t get it … and it bothers me that no one seems to want to know.  Speaking of far away places we know nothing about ...

I think China matters in a big way.  Just not to us.

This is already longer then I want it to be, and this topic is going to require a lot of context.  As such … it’s getting it’s own article!  Follow me or keep an eye out for this to come next week.

Edit: May 8th - This article is finished and you can find it here http://www.ign.com/blogs/headpirate/?p=278

Did I miss anything?  What did YOU notice this month that everyone else seemed to miss?  Let me know in the comments!

*This number is from an average of several different reporting sources and could be off by 50,000 or so in either direction.  Without paying for a full out NPD report, it’s the best I can do.

Payday: 3/28

So you either weren't interesting in the South Park, TitanFall and Infamous, or perhaps big budget isn’t your thing.  Nothing to worry about!  There is still plenty out there for the budget gamer this week on every platform.  Here is how I would spent $20 this payday.  As always, I've done nothing to ensure any one system is represented over and other.

FINAL FANTASY VII - $3.99, PC (Steam)

Often overlooked by fans waiting on a true remake, the FF7 PC update on steam is still the best way to enjoy this timeless classic.  If you haven’t played it, the low price tag, increased resolution, and controller support should give you all the motivation you need, and if you’re a returning player you’ll find steam cloud saves, achievements, and the new cheat system breathes new life into what is still one of the most engrossing and stratifying JRPGs you can play.

Bioshock - $4.99 (PSN+ and Xbox 360 Gold)

First person shooters are never easy to recommend.  Huge market saturation and the fact that most don’t age well means there is very rarely any good reason to go back and play something you missed instead of enjoying a contemporary.  Bioshock is a stand-out exception to this rule.   The game play and level design feel fresh even beside the greats of today and the story is one you simply need to experience.  I've always considered this and Boardlands to be the "gateway" FPS; strong enough on story alone to be worth playing even if you're not a fan of the genre.  My last play though of this game was only a few weeks ago after the Burial at Sea DLC, and my option hasn't diminished at all.

Defender's Quest: Valley of the Forgotten - $6 (Humble bundle weekly sale; comes with 7 other games at this price)

At $6 Defender’s Quest is any easy sell; as part of a bundle of 8 quality games at that price it’s a no brainer.  With the ever increasing number of low budget but well executed games being released, games that truly set themselves apart are few and far between.  Defender’s quest merges RPG elements with tower defense action and a comical story that’s easy to enjoy if you don’t take it too seriously. The end result is an experience that you’ll want to come back to over and over again, and "star rating" that lead to gear unlocks will reward you for doing so.  Nothing else in the bundle is really stands out, but Evoland, Incedipede, and Planet Stronghold are worth a look.

Dr. Mario - $4.99 (Wii U Virtual Console)

Not a sale, but new to the Wii U Virtual Console this week is the classic puzzle game Dr. Mario.  Fun, simple, addictive, and updated to use the game pad, this is a great way to make sure you’re Wii U is collecting more love then dust (if you have that problem)

So there you have it!  Did I miss anything?  How would you spend your money differently?

A year with WildStar (review and retrospective)

I can still remember how excited I was when I got the E-mail.  I would be the 403rd person to log into the WildStar servers, joining the first round of close beta.  I had been following the game for some time and couldn’t wait to get a look.  If you haven’t done “ground floor” beta testing before, it’s a very different experience then playing an MMO; the server population is extremely small and at any given point you could be grouping with a developer (and at this point it was more likely you were grouping with one of the 300 or so friends and family of the dev team playing then one of the 200 public beta testers).  In game chats about the direction of the game happened every Thursday, you could join pre-made groups with team members of weekends.  I remember posting a bug report to the forums at around noon on a Friday, to see it fixed within the hour.  I’ve had a year now,  sometimes on and off playing, sometimes obsessive playing.  I’ve seen 5 server resets, 2 complete UI overhauls, and countless updates.  Last week the NDA has finally lifted, and I can’t wait to talk about the game.  What I hope to bring you here is part review (of the current build, which may change before release) and part retrospective on the development cycle, which should give a lot of insight to the way the game is updated in the future.

WildFly

I’ll be clear about one thing from the start; if WildStar picked up the licence to make a game in the Firefly universe the only thing they would need to do is add some Chinese curse words.  The music, the art style, the charter design, the plot, and just about everything else that makes up the “feel” of this game invokes the series.  That’s not a bad thing and I bring it up simply because of the effective picture it paints.  If you’re unfamiliar with the show, it seamlessly blends classic Westerns with Sci-Fi to create a world that is extremely relatable while still being alien; where some things are very different, but the whole and most importantly the people feel the same.  On the surface, WildStar appears ups the ante with non-human races and fantasy aspects, but these additions are superficial.  The alien races might as well be re-skinned humans, with simple world views like “honor is good” or “we love nature”, but this does nothing to stop them from adding charm and a good bit of humor.  Fantasy elementals are handled with technology in an almost comical way, from firing spells out of guns to carrying around a giant combat modified defibrillator on your back.  Overall you get something fresh and bursting with personality, but far from perfectly realised.  Despite an overall enjoyable art style and a fantastic attention to detail in the character models, the graphic are simply outdated even by MMO standards.  Despite a wealth of Sci-fi influence to draw on, you could easily mistake the zones and even some dungeons are coming from World of Warcraft or Everquest.  There are a few standouts; mostly the internal areas, but they are too few and far between.  One of the starting areas  is particularly bad; I found myself thinking I was in Winterspring (a vanilla WOW zone) until some broken down vehicle reminded me I was in a different game.

Unfortunately this desire to see more WildStar and less generic MMO gets worse before it gets any better.  The game has a strong and interesting story focusing on the conflict between the brown coats and the alliance ... I mean Exiles and Dominion and the mysteries of an extremely interesting place call the Nexus.  It’s a story I would love to be immersed in, but the game doesn’t make it easy.  The lack of voice acting prevented me from making any real connection with the characters in the world I was a part of, and seems almost unforgivable in a modern MMO trying to sell itself on the weight of its personality and story.  Making matters worse, plot is often relayed in the form of text boxes while you’re out in the field and can easily be lost if you in a battle or otherwise engaged.  And like most other MMOs it’s hard to tell what you should read.  When trying not to hold your group up, it’s not always obvious if that wall of text that just popped up is plot critical information you’re going to regret not taking the time to read or just some whimsical banter about exactly why you’ve just been sent to kill ten swamp rats.  It’s not all bad, mind you.  What you do read is genially humours more often then it’s not. You will find a lot of the same wonderful charm you see in the trailers while playing the game, as well as some truly engaging plot ... you’re just going to have to go looking for it and carefully filter it from the trivial content.

Not the combat we want, but the combat we deserve

WildStars combat and character system started off as a refreshingly complex mix of new ideas and old standards.  It’s two most radical departures from the ordinary were an attribute system that forced trade-offs by making every attribute valuable in some way to every class (only 4 of the 6 classes were live at this point) and combat system that was generally challenging.  There was no fodder; if a quest told you to go kill 4 bears, you could expect 4 challenges and long fights vs. bears that would pass as mini-bosses in any other MMO.  You built your class by picking a limited number of skills from an available list, similar to Guild Wars 2.  You could augment the skills with perks, and there was a healthy amount of customization which allowed some classes to play multiple roles equally well.  Attacks are delivered without targeting; either effecting everyone in your party, a cone in front of you, the closest creature or something similar, while enemies telegraphed devastating area of effect attacks, creating an action oriented game that kept you on your toes.  It was different, but not unwelcome.  The core system focuses on build and burn abilities; one attack creating a resources which other attacks consume.  Unfortunately, it tested poorly, and not without reason.  Mob density was a huge problem, as a single wondering monster turned any fight into a retreat (or worse).  Given how long a single kill could take, would cost you a significant amount of time and a string bad luck could turn a whole play session into an unenjoyable waste of effort.  Wonky mob tethering only added to the problem; attempts to move enemies out of groups often resulted in them going invisible and warping back to their home at random.  The telegraphs were often overwhelming; as soon as you had more than a single enemy (which was unavoidable as some encounters were groups of less powerful monsters) it was easy for them to force you into situations where it was simply impossible to keep up; by the time you had positioned yourself to deliver your own attack, you had to move again before you could execute it.  Rather than tackle the big problems, the developers took the easy path and lowered kill time, scaled down the telegraphs, and made combat generally easier.  It’s wasn’t enough to quite the voices of the mass market however, and calls for simpler and easier to understand attributes were soon raised and answered.  Simplified gear and crafting followed.  Then less customization and class choice, so that people didn’t need to worry about making an unplayable build.  What we have now is exactly what you would expect from a game looking for mass appeal.  There is one core attribute to focus on for each class, once you pick a role there is a correct way to “build” for that role, and combat itself is quick and forgiving.  This isn’t to say it’s not enjoyable, but if you have played guild wars, Neverwinter, Anon, or any out action based MMO, there is nothing new waiting for you here.

More isn’t more (except when it is)

Paths, one of the games key features, seem a fantastic way to keep the game fresh and enjoyable regardless of your play style.  There are 4; explore, soldier, scientist and settler, which focus you on tasks outside the standard level progression and reward you with unique and powerful abilities.  Combined with 6 classes, this provides and absolute unprecedented level of verity and choice, and near infinite level of repayable  .. on paper.  In reality, only settler and explore really stand out, with soldier and scientist mostly have you doing a little more of what you are already doing.   As for the classes, the fantastic and unique stalker and engineer are a blast to play, while the Espre, Medic, and Spell Slinger feel way too similar to each other, and the warrior is a very generic tank.   Over the games development, the team has made changes to the path systems to ensure they are all useful and diverse, and this has always seemed a focus. The same can’t be said about the classes.  While the class monotony was a key talking point from tester almost from day one, they never given much attention.  They argued that combat itself was complex enough as it is, and the design will serve to amplify the minor differences.  Once you enter a group and move to the fantastically designed instances, for example, things can get chaotic.  With positioning playing such an important role, understand not only what you need to do but where you need to do it from can be a real challenge.  Playing a healer stands out as particularly frustrating as heals can affect people around you, in front of you, or closest to you, and there are still telegraphs to worry about.  Voice chat is almost a must; there isn’t any time to type.  If you like this or not is going to be a matter of option, but the point made by the developer is valid; the depth of combat itself amplifies the small differences to the point where each feels unique, but only for players who invest enough time in the game to see these elements.

Mine!  All mine!

Anyone who has played an MMO and been even slightly invested in it knows one thing; developers talk a lot and do little.  They fill the forums with grand visions of vast improvements, new systems, and game changing ideas, then spend all their time nurfing class you like to play.  So when the Wildstar devs started talking about their own grand vision of customizable EVERYTHING,  I didn’t get to excited.  When player houses went live, only a few weeks after they said they were working on it, with a charming and original twist (your house is in zone that has its own quests) ... I still didn’t get that excited.  Then custom gear game.  And custom mounts.  More housing items.  More gear.  A few months from launch, the influx of new and improved customization items hasn’t slowed down; in fact it has speed up considerable.  This is the area of game play where Wildstar is really making its mark.  The world and story are good enough to make you want to play there, and the customizing dose a fantastic job of making you want to live there.  Ironically the opportunity for a strong crafting system, something that generally goes hand and hand with customization, was lost very early on when a somewhat interesting system was scrapped altogether in favor or something simple and generic.  Quality of life improvements are also an issue; for a dev team that keeps its’ base informed about where they want the game to go, they rarely talk about the basics like run speed, travel distance, or the other minor issues that can make or break an MMO.  Bag space is a huge problem; not only is it unreasonably limited in size but there are no dedicated crafting material or costume item storage like you see in most modern MMOs.  As such, I found myself unable to get sucked in the way I felt I should.  Every time a new and wonderful improvement was added, some minor detail kept me from enjoying it.  The vendor with that new great item was 40 minutes of real time travel away, or I didn’t have any space in my bag for that new gear set.

The final word:  Who’s paying for all this?

Wildstar has a lot going for it.  The world is interesting, the combat will be enjoyable to the right type of player. All the systems that are in place, from PVP “raids” to well-crafted dungeons, are at least serviceable, and no matter what you want to do with your time, there is opportunity to have fun doing it.  Most importantly, Wildstar has one of the most responsive, quick to act, and capable dev teams I’ve ever seen.  If they are given the time and support to continue to polish this game post release, I see great things.  But will they?  Wildstar is already over budget and half a year late.  It’s also going to be pay to play, putting it in the direct line of fire of extremely polished games with unlimited budgets like FF14RR, ESO, and WOW.  Is what’s available today (or in a few months) enough to bring enough players over and keep them their long enough that the dev team get the money then need to continue to make the improvements the game needs?  Sadly, I don’t think so.  This isn’t to say you shouldn’t take a pass Wildstar; it’s worth playing.  At its core it is a strong MMO with a low barrier of entry absolutely brimming with style and charm.  But in going for mass market appeal with a higher budget and subscription model, WildStar needs to be more than just a good MMO.  It needs to be a successful one.  What good are a million different ways to customize your house if there aren’t a million other people making different ones?  The best thing I can say after playing for a year is that WildStar is a solid MMO with great potential.  I like it; I like the races, I like the story, and I like the people who are making it.  But when I step away from that personal like to give an objective opinion I can’t help but realise what I’m saying is that WildStar is just another solid MMO with great potential, and in today’s market we get a few of them every month.  Only time will tell, but this vision of the future may very well be fleeting.

PS4 Price Increase in Canada

If you read my posts or follow me you'll know there are few things that bother me more then Fanboys.  I love games, and can't understand why anyone would hate a game or a system based on who made it.  But the real problem isn't even that simple.  Game designers, publishers, and console makers pay attention to what the fan base is saying (look at how different the Xbox one is today from when it was shown at E3), and if all we are saying about a system is how wonderful it is and how we will continue to support it and only it no matter what, and will never accept the competition even if they start doing all the right things you are sending a negative message.  It's not long before that console maker will say to themselves "well, if they are going to blindly support us regardless, let's see what we can get away with"

Not at all shocking, Sony has decided to do just that up here in Canada.  They are raising the price of the PS4 itself by $50.  You could try to argue that this is due to the falling Canadian dollar (as $450 CND is about $400 US right now), but that ignores the fact that neither Nintendo or Microsoft have done this.  Even worse, they are upping the price of PS4 exclusive games to $70, even though NO OTHER PUBLISHER is doing this for any other games on any other system.

So a big hats off to all you Canadian Sony Fanboys.  You spent the last 4 months making this bed, and now we're all forced to lay in it.

Pay Day: Feb 27th

For many of us tomorrow is pay day, so today is a great day to cast my glance over all of gaming and answer that burning question;  What should I blow my money on?  I’ve taken into account sales from Steam and Steam key reseller, Xbox Gold, PSN+ and the E-shop to come up with the best possible way to spend $20.   I make no effort to represent all systems; the best games and the best deals are all that matter. This is what I’ve come up with for Feb 27th, 2014.

Humble Bundle 11 ($4.66 at time of writing) – PC, Linux, Mac

A no brainer given the fantastic quality and mind blowing quantity of games being offered in this bundle.  Dust, Twisted Dreams, and Guacamelee serve up 3 similar yet diverse takes on game play that answers a simple question: what if developers had skipped 3D altogether, and just made better and better “classic style” SNES games?   You get non-stop side scrolling action, brilliant visuals, and even character development to keep things fresh.  The Swapper provides a more cerebral experience with an introspective puzzle game that all but tricks you into thinking about the weight of the actions you are taking.  The only real question was if it was worth it to spend the extra money to get the bonus games, and Anti-Chamber seals the deal.  Another challenging and stimulating puzzle game that has some of the best “ah-ha!” moment you’re going to get all year.   Monaco adds a solid mutli-player experience to the mix.  Just make sure to set your donation level to give nothing to Fez’s developer or you're supporting Phil Fish, and that will make a Panda Cry.  Although in fairness, Fez is also a flat out fantastic game.

Persona 2: Eternal Punishment ($3.49 on PSN+) – PS3/PSP cross buy (via PS1 classics)

I generally don’t recommend you spend your new money on old games, but I’m willing to make an exception for Persona.  It comes down to what makes a game age well; you need quality of life features that were ahead of the times, and game play that hasn’t’ been repeated in dozens of newer, flashier games.  Persona 2 delivers!  Well kind of.  The game play with its mix of social simulation and RPG can’t be found anywhere else, the combat doesn't rely on graphics fidelity to make it work, and the story is engaging enough to help you see past the outdated visuals and lack of voice acting. As for quality of life ... is a JRPG, you shouldn't be expecting that to begin with.

Ni No Kuni: Wrait of the White Witch ($6.99 on PSN+) – PS3

With all the COD, GTA, Last of Us, and next gen hype we’ve been getting, Ni No Kuni seems to have missed out on the GOTY contender  spotlight it deserved. Which is a shame, as this game is an absolute gem.  Not only is it the best JRPG in years, but it’s one of the few “must play” games of 2013.  Level 5 delivers outstanding visuals, fresh and challenging game play, and a story that rides that live between cute and engrossing in that way only Japan can.  With an easy 30 hours of game play just to get from start to finish, and double that with side quests, what you are getting for you $7 is simply unmatched.

Mass Effect 2 ($4.99 on Steam) – PC

It’s hard to say anything about Mass Effect 2 that hasn’t been said before.  From start to finish, this is one of a few rare games that dose everything right.  The story is complex, but not complicated or hard to follow.  The characters are unique, diverse, and interesting yet still “human” enough to make meaningful connections with.  Your decisions matter and change the game, but you never feel you're missing out on the road not traveled.  The mechanics are simplified and accessible and yet still challenging and stimulating.   Topping it all off,  last mission of this game I still hold as the most enjoyable hour or so of gaming in my entire life, and given the number of games I play in a year that’s not a statement I make lightly.

So there you have it.  Did I miss anything?  Let me know below, and I’ll see you next pay day!