Loyalty, innovation, and the gaming console war

video-game-kid.JPGThe video game console wars are in full swing.  The winner will be determined not just by new customers but in many cases by the loyal, installed base of gamers.  The three companies, Microsoft, Sony, and Nintendo are pulling out all the stops to try and come out on top.  Some of their tactics are working, others are not.  The console that wins may be the one that has the best “Customers Rock!” attitude.

 Microsoft’s Xbox360 has been out since Christmas 2005 and has a great head start, as they have already been through the long lines to get the Xbox360 and the inflated eBay prices.  The Xbox360 appeals to the “hard core” gamer with its  incredible graphics and wide array of intense, action-packed games.  Microsoft is also reaching out to its existing customers through an ever-growing list of over 300 Xbox games that are backwards-compatible with the Xbox 360. 

Sony’s PS3 came out in November this year, as did Nintendo’s Wii.  Sony has a very large installed base of loyal PS2 customers but has done very little to engage them in the excitement over the new PS3, which has great new graphics as well.  Sony instead has seen a lot of backlash in the last few days for its failed WOM campaign for the PSP, alliwantforxmasisapsp.com (currently cached version can be seen here), which Sony admits was “poorly executed.” (Thanks to NextGeneration News for this story.)  What would be happening with the PS3 if Sony were working with its existing customer zealots?  Sony would have a leg-up on its competitors.

In the United States so far, Nintendo’s sales are outpacing Sony’s.   Is this due to Nintendo’s large installed base?  Possibly, but of greater importance is that Nintendo has been listening to its customers.  Console aside, when gamers are asked what their reasons are for playing video games, one of the top reasons is always “fun”.  Should this really be a surprise?  When Nintendo created the Wii, this is what it kept in mind, keeping video games fun.  Many of the video games made for hard-core gamers can require a steep learning curve, which keeps away the “average” gamer.   Nintendo designed the Wii to be a fun, innovative family console that even Mom would love.  Nintendo has done a series of interviews internally with its own design team which showcase their thinking in the Wii’s development.  Most of Nintendo’s focus has been on improving the customer experience for the gamer, rather than just making it better, faster, and flashier.  Nintendo has seen its share of problems with the new Wii as the game controller strap breakage has caused unintended consequences an early recall.  This will all be water under the bridge soon.

Who will win the console wars?  My prediction is that the Wii will come out ahead of the PS3 with its unique, fun gaming experience that seems to be broadening the market for video games.  How Xbox will fare will depend on how closely it stays linked to its customer base.  The results of the final analysis will have little to do with “faster and flashier” and everything to do with how loyal customers are treated – and whether they are having fun.

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