So far the Xbox 360 has been unchallenged in the next-gen console war. That all changes this fall, however, with the introduction of Sony’s Playstation 3 and Nintendo’s Wii. Is the 360 ready to take on the competition?
The good news is that a year after launch, the Xbox 360 has a pretty strong story to tell. It’s well-established in the marketplace and is already home to a number of impressive games. But the 360 still lacks one thing: high definition DVD movie playback. While Microsoft is expected to ship an external HD-DVD drive for the 360 this fall, every Playstation 3 (both the $500 and $600 packages) will come standard with a high-definition Blu-ray disc drive. How will this difference between the two systems impact the next generation console race? Privately, executives at Microsoft admit that Xbox 360’s weakest link may be its lack of a pre-installed high-def movie drive.
While the major-player movie studios line up behind one high-def DVD format or the other, the main thing we want to know as gamers is whether a high-def disc drive will impact our games, not just our movies. Sony has stated that the storage capacity of Blue-ray (up to 50GB) is need for epic games, but some analysts are skeptical. American Technology Research P.J. McNealy feels that few developers will take advantage of all that space because of the sheer cost of building such asset-rich games. And while 360 owners may have to deal with possible disc-swapping down the road it’s hard to make a case that the lack of an HD drive is going to greatly impair gaming on the 360.
But today’s $400-to-$600 consoles are expected to provide more than just basic gaming features. In fact, the right-out-the-box DVD playback for the Playstation 2 is often cited as a major reason why that system gained more than 50-percent market share. After all, it’s reasonable to assume that most hardcore gamers are also movie buffs. And if you’ve recently invested in an HDTV for gaming, chances are you’ll also want to see movies in HD. This is exactly how Sony justifies consumers to spend $100 to $200 more on the PS3 versus the competition. The value proposition is as follows: $500 to $600 may be expensive for a game console, but it’s dirt cheap when you compare it to the $1,000 cost of a stand alone Blu-ray disc player. If Blu-ray indeed becomes the high-def standard, you don’t have to be a Nobel prize-winning economist to realize that mainstream consumers – and even 360 owners – may opt to buy a $500 PS3 instead of an expensive standalone player for high-def movie playback. Of course, the opposite could happen: If HD-DVD becomes the standard, the PS3 Blu-ray drive could be an expensive deadweight that sinks the system.
As you’d guess, Sony is doing everything it can to ensure Blu-ray wins the next-generation format war. It sees the Playstation 3 as a Trojan horse that can be used to push Blu-ray as the standard. After all, by next March Sony plans to have a beachhead of 6 million Blu-ray players in the market via the PS3. Meanwhile, HD-DVD will have to gain installed base through $500 stand-alone players and the still-to-be- priced 360 add-on drive, which analyst estimate will be bought by only about 5 to 10 percent of the 360 owners. Sony is, in essence, betting the company, the Playstation brand, and Blu-ray with one roll of the dice.
Did Microsoft make a mistake by not including an HD-DVD drive in each 360? It’s too early to tell, but Microsoft knew that a major drawback of shipping the 360 in 2005 was that HD-DVD- technology wouldn’t be ready. Now there’s no turning back: The bets have been made, and the resolution of this high-def disc-format war will forever shape the videogame business. Who has the best exclusive games certainly will matter – and the 360 has quite a few lined up with titles like Gears of War and Halo 3. But if you’re looking to determine who will win the console war, watch the HD-DVD-verses-Blu-ray battle closely.
- Geoff Keighley