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Analyze This: Are Gamers Really Saying "I Want My HDTV!"?
I think HD resolution is the essential difference between this cycle and the last. Although it is clear that there will be much more happening on-screen, with more independently acting characters, the visceral improvement in graphics is probably the first thing noticed by consumers. I'm not sure that Capcom's mistake implies that others will repeat the mistake, and don't think that the industry is "prematurely jumping into HDTV." HDTV is the second fastest growing consumer electronics product (behind the iPod), and it's going to end up the household standard in a few years. With that said, Microsoft and Sony are struggling with how to market the concept, given that HDTV has penetrated only around 20 percent of U.S. and less than 10 percent of European households. It's worth emphasizing, but if they over-emphasize it, the majority of the market may feel that it's not important to buy a next-generation console until they purchase an HDTV. I'm with you on the [Xbox 360] external HD-DVD drive. Since it's unlikely
that 100 percent of 360 owners will buy one, it is equally unlikely that
any publishers will create game content on HD-DVDs. As a result, it's merely
a movie peripheral. It has value to Xbox 360 owners who want to add that
functionality, but no real value to someone who has as yet to buy a console.
In the final analysis, it makes the PS3 (with HDMI and a 20 GB hard drive
at $499) a better deal than the combined Xbox 360-and-HD-DVD drive at $579.
On the Nintendo front, Nintendo has sacrificed graphics that can be viewed by the minority for a price that can benefit the majority. So, no, I don't think that they've made a mistake in the short run. Over the long run, we'll have to see: If HDTV adoption rates accelerate, the differences between the Wii and the Xbox 360 and PS3 may become more important, and it may end up that sell-through of the Wii begins to decline. That's a couple of years away, and my crystal ball isn't quite that clear. Movies are a bigger driver than games. It's not even close. Movies and broadcast television (also available on DVD in many cases) are the reason we own TVs, and video games are a peripheral activity. It's true that the hours spent playing games rivals the hours spent watching TV, but the purchase decision for HDTV tends to be made by the head of household, who is not usually the primary gamer. Consumers in the U.S. spend $9 billion at the box office (around 1.2 billion
tickets), $16 billion on DVD purchases (around 1 billion discs), around
$8 billion on DVD rentals (another 2 billion transactions), and another
$2 billion on pay-per-view (around 500 million transactions). In addition,
we watch countless movies on HBO and free TV. In the final analysis, there
are over 5 billion movie transactions in the U.S., and around 300 million
game transactions (all purchases plus rental). Movies will migrate to HD
at around the same pace as games, and virtually all new movies are shot
in HD. Movies are the driver for HDTV adoption, and games are a distant
second place.
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