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News from E3 May Influence the Way You Spec and Install Games in A/V Systems

Last month's E3 Expo in Los Angeles provided some interesting news for the world of video same consoles, and for once that news pertained to more than just the latest edition of a sports game or the latest adventure for your favorite characters. This time around the E3 news will likely have some impact on the way you specify and install games as a part of the total home entertainment systems that you are involved with, even if you never sell a console or even pick up a game controller.

Last month’s E3 Expo in Los Angeles provided some interesting news for the world of video same consoles, and for once that news pertained to more than just the latest edition of a sports game or the latest adventure for your favorite characters. This time around the E3 news will likely have some impact on the way you specify and install games as a part of the total home entertainment systems that you are involved with, even if you never sell a console or even pick up a game controller.

Now, in what is referred to as the 4th generation of platform design, game consoles have traditionally run in five-year hardware cycles. The last major platform advances in this sector came about three or four years ago with the introduction of Sony’s PlayStation2, Nintendo’s Game-Cube and Microsoft’s first entry in the market: XBox. Thus, we are now at what is basically the midpoint of the product cycle, and while some pundits had predicted that new processors and the demand for advanced features would cut a year or so off the life span of this cycle, evidence is that it will continue on through to the 2005 “holiday selling season.”

Of course, the game market is far from stagnant. Not only are gamers always on the lookout for new excitement, but they also spent more money on software last year than was spent at the box office for movies (according to E3’s sponsor, the IDSA). Seeking to expand their market even further, game publishers are looking for increased console sales to widen its potential market. Remember, unlike most other consumer electronics products, game consoles are usually sold at a loss to the manufacturer for some time. Its profit comes first in the form of first-party published games or royalties from third-party game publishers-the “blades,” if you will, to the “razor” of the console. The more consoles out there, the more games sold.

Thus the reasoning goes for the loss leader pricing. (Note, however, that at some point in the hardware cycle the consoles do come down in manufacturing cost so that they can generate a profit too. That is said to have happened at this point for PS2, but not for XBox.)

As a continuation of its efforts to move more consoles into the market, both Sony and Microsoft have cut the price of their products by $20, to $179. These cuts were immediate, and they are already reflected in advertised pricing. Starting this month, Sony will bundle the PS2 console in a single SKU package with its network adapter at an MSRP of $199. This combination is a $20 price reduction over the previous price of the products when purchased separately.

At first glance this would still seem to price the PS2 $20 above an XBox, as the latter has had connectivity built-in from the first unit produced. Any price comparison, however, should take into account the current $49.95 price tag on the XBox Live “Starter Kit” required to begin playing online games, and the $5.99 per month or $49.95 per year fee that applies after the first year. For the moment, at least, there is no extra charge for the online connection when playing networked PS2 games, although that is certainly subject to change as time moves on.

If it seems that these announcements presage heightened interest in online console gaming, you are correct. Considerable attention was paid to online gaming at both the Sony and Microsoft press events during E3. If it also seems that the third major force in the console game world, Nintendo, is missing from both the price reductions and any mention of online products, you are also correct.

Although Nintendo showed both dial-up and broadband connectivity adapters for its Game-Cube system at E3 back when the product was first introduced, there have been no sightings of either adapter or any online games since. While it is unfair to tie the absence of any visible online strategy to its sales results, it is worth noting that GameCube is in third place in terms of console sales, with 6 million units sold in the U.S. to date, compared with more than 9 million for XBox and more than 27 million for PS2. Perhaps the only way one can be generous to Nintendo and mention connectivity is to say that, after E3 opened, they announced a bundle of their own with a Game Boy handheld game now being included with GameCube at the current $149 MSRP for the console alone. There is connectivity between the two, in that “Boy” can be used as a controller for “Cube,” but that’s about it.

Additional hardware news comes from Sony, will have greatly reduced noise when compared with the current model. As we go to press there was no announcement as to when the new PlayStation consoles will begin to ship, but indications were that it will be within the next few weeks. No pricing change is scheduled with the introduction of the revised hardware, but a Sony spokeswoman at E3 did say that the new unit will be available only in the bundled package with the network adapter.
Now that we’re all plugged in and ready to go, attention naturally turns to software, for at the end of the day it is the games that provide excitement.

Starting in reverse alphabetical order, the XBox team emphasized its commitment to online gaming with a pledge to add an additional 50 online-enabled games by year-end, over and above the current roster of more than 20.

Also with a hardware connection (literally) but without a true online story, Microsoft announced a product that is not so much a game, but rather a $39.95 package called “Music Mixer” that will turn your XBox into a thin-client product able to be used in conjunction with any Windows-based PC to push music and still photo content stored on the computer up the home network to the XBox. The rationale for this is that computers tend to live in rooms in the house other than where the “big screen” is. That, however, is often exactly where the Xbox is found. Music Mixer isn’t prefect by any means, and it doesn’t come close to the capabilities offered by numerous other “thin client” audio streaming solutions in the custom installation industry. If nothing else, the fact that Microsoft is offering it does validate the concept.

As for Sony, they are not offering a thin-client solution of its own, but a creative independent company called BroadQ has developed a product that offers all the capabilities of Music Mixer and many more for PS2 partisans. That technology, which goes Music Mixer a few steps better by supporting the playback of full motion video materials stored on a PC with full VCR-like transport controls and compatibility with MPEG 1, 2 and 4 formats, as well as JPEG, WMV, AVI and DivX codecs. Where Music Mixer is limited to Windows systems, BroadQ’s technology works with Mac OS or Linux systems as well as Windows PCs. In an effort to expand sales of its product, BroadQ’s technology is now being sold by Mad Catz Interactive as part of its Game-Shark Media Player for $49.95, and it is currently available.

A further hardware/software connection of potential interest from will be its EyeToy product, to be available later this year at $39.95.

From a hardware perspective it takes the form of a web-cam unit that is meant to sit on top of the TV set, though for systems placed in low light areas, this inexpensive option will present a design challenge.

What is EyeToy other than a camera with a cute name? When you connect it to a PS2 and load one of the special games that come with the accessory, the first thing you see on the screen is an outline that looks like the chalk marks placed around a murder victim in an episode of CSI. In this case, however, the “victim” is very much alive and you step inside the line to make certain that you are synced up with where the camera is looking. Once this initialization takes place you literally become the center of the game, using your hands in free space to move cursors, select options, play games, or even try a header or two with a special soccer game. The results are spectacular, and the bigger the screen, the more fun it is. My favorite EyeToy game was “Wishy Washy,” where you use both hands to race against the clock or a competitor to “clean” a fog off the screen. It isn’t too far fetched to predict that games like this will add great family appeal to console gaming, and again, they are perfect for a large-screen environment. The average retailer who sells PS2 hardware won’t have the slightest idea as to how something such as EyeToy must be integrated into a theater environment, but that’s what you do best. Take advantage of that in your promotional materials, and perhaps even consider installing a PS2 with EyeToy in your demo room.

On the game front, Sony showed its commitment to the online concept with a wide range of new titles that will be released in all categories over the next few months. Sports, fighting, high-concept adventure and role playing games (RPG) are all on the slate for PS2, again showing how serious the publishers and console makers alike are about on line.

Here, too, installers can show their stuff by providing the home network backbone and connectivity required for this hot gaming category, regardless of whether the client chooses XBox, PlayStation2, or in many cases, both. Remember: although both systems take advantage of standard Ethernet connectivity via RJ-45 jacks, these products have neither USB, PCI nor PC card connectivity. As mentioned in this space a month or so ago, that means that the gamer needs a hard wire broadband connection from a router. Failing that, driverless bridge power using power line transport of 802.11 wireless must be called into play. Again, this is something you do best, and it is visible way to promote your expertise in designing, installing and maintaining home networks.

A final note of interest that involves both hardware and software from the major players was the announcement at E3 from Sony. The manufacturer says that it is back on track to bring AOL to the PlayStation2 world. This requires not only the obvious use of the network adapter, but a hard drive, as well.

Yes, we know you’ve heard that one before, as Sony said that that would deliver a 40GB hard drive option for PS2 at E3 two years ago, and they have yet to deliver on that promise. Final details with regard to cost and timing are not yet available, but at least it looks like this time that Sony is serious about adding the HDD to PS2.

The news from E3 clearly indicates that your clients will likely be using their home theater systems and video displays for much more game play this coming year than in the past. They will not only do it as a single player activity, but interactively through the use of network online products and games use with the consoles, and more importantly, the home networking you provision. The days when you could ignore video games as an activity for the teenager’s room are long since past; the generation that grew up on Pong, PacMan and the early Nintendo and Sega consoles are now right in the middle of your core consumer base. Your expertise in playing to their familiarity with the latest developments in the game console market can only further enhance your ability to compete in a crowded custom installation world.

Looking at that total market, given the demands of these new games, what will the optimal display products on which to view the games and programming? Stay tuned, for next month we’ll give you a sneak peak at what your vendors, and your competitor’s vendors, will be offering this fall.

Michael Heiss ([email protected]) is a technology and marketing consultant based in Los Angeles.