For the past few weeks we’ve been very vocal about things here at NAG Online. Some of us here and on the forums added our voices to the fight against DRM on the next-gen consoles and we’ve discussed at length why DRM and second-sale restrictions are a bad idea even in modern countries like America. Well, Sony played the Good Guy role last night and gave us our wish and even added in more treats to sweeten the deal, like that stunning US $399 price tag. The real winners in the race aren’t the ones in the news today, however, its you and a company called AMD.
A Winrar is you
Firstly, this is a really interesting turn of events. Sony was definitely on the fence about whether to follow Microsoft into the publishing scheme of restricting second-sale games and taking a cut of the profits and it must have been a difficult decision to make. Weighing up the mountain of debt the company is sitting on along with an ailing TV division and the still-raw scars of the losses the PS3 incurred for years, it must have been tempting to eye up a possible future where the company scores twice – once in the publishing rights fees for the games that debut on the console and twice when you buy a used game that had to be de-registered off someone’s online profile.
In reality, having both consoles following that path would have resulted in an unintended side-effect: Steam, the world’s most popular game distribution service for Windows, Apple OS X and Linux systems, would eventually have been forced into a similar role. The company was in the news this year about such a move and it wouldn’t have suited their distribution model. Reselling something physical is easy. Reselling something in digital form is a lot more difficult because it’s not really tangible.
Forcing them to allow gamers to buy and trade second-hand games bought on the service would have killed their revenue stream because the publisher would have taken a good chunk of that income. In addition, it would have also taken Steam sales almost completely out of the picture. If publishers on the platform could have earned money for the second-hand sales, they would certainly have jacked up their prices because they would see greater income.
Its not an evil thing. That’s just the way business is done. Profit is profit to your shareholders and investors, no matter where it comes from. Engaging in draconian DRM and second-sale restrictions for all three markets is not beneath the guys who really power these companies, remember that.
But the fact that both Sony and Nintendo have taken the high road is a good sign for the industry. The people heading up various departments in these companies like Shuhei Yoshida, Jack Tretton, Mark Cerny, Kaz Hirai, Satorus Iwata and Shibata and Reggie Fils-Aime have some common sense and they know that destroying the trust they’ve built up with their fan base is suicide. Its a indication that the gaming industry isn’t going to take being so commoditized and its a good sign that consumers know they have a voice and will use it when necessary.
Hell, even John Riticiello understood where everything was going and, now that we know the general direction things are taking with the relationship between EA and Microsoft, seemingly chose to jump ship to save face.
Perhaps the backlash Microsoft has had these past few weeks and the rising crescendo of Playstation fans booing from the other end of the boxing ring will be enough to make them think twice about this weird, weird strategy of theirs.
A Winrar is AMD
There’s the other player who’s sitting back and smiling smugly – Advanced Micro Devices. Remember, these guys make the chips that go into both consoles and into the Wii U and Wii serving as the graphics subsystem. Both consoles have their own custom design and both have their respective pros and cons in their design. The Xbox One will no doubt be easy to port to because it uses DDR3 memory for the system RAM and the latencies have already been accommodated for in the PC, so game engines will work mostly in the same way.
The PS4, using GDDR5 memory which isn’t really suited to use as system memory, means Sony will have to help some game devs accommodate for the latency discrepancy and make sure developers know how to get the most out of the hardware. Considering how they’ve been wooing developers to the Playstation platform and chose Indie games to have a significant slant at the E3 event, I’d say they’re doing the right thing.
But at the end of the day, AMD, the underdog in the PC industry and a value-orientated player in the hardware market, wins most of all. The console wars will escalate to epic proportions this time round and it’ll be up to AMD to supply all the chips required – they’ll sell nearly every one, I’m sure. Recent analyst expectations put the company at earning between US $69 to $99 in revenue for the chips powering the consoles. For comparison, both Microsoft and Sony want to sell 40 million consoles a year. Doing the math, that’s a staggering US $3.9 billion a year.
How much profit they can extract isn’t known, but the Xbox deal was rumoured to be valued at over $3 billion. If Sony’s deal is worth just as much and AMD keeps on coining from sales of the Xbox 360, the Wii and the Wii U, they’re raking in over $10 billion in total over the next four to five years.
And that’s just based on the figures we know about. They may be earning much more than that and we’ll only get to see exactly how much next year. I’d be remiss to also not point out that all the research and development is paid for and AMD is basing the technology in both consoles on products they’ll actually be selling later this year. They’re already earning money from sales of the Radeon HD7790, the card which serves as the blueprint for the graphics component in both the PS4 and Xbox One. If all goes well, they’ll be coining it for the next ten years.
Its love and hugs and kisses and happy people at E3 this year and that’s thanks to Sony. If they had announced a step in the same direction as Microsoft, it would have put a real dampner on the proceedings and leave Nintendo as the last company that seemingly has morals. Good job on playing the Good Guy, Sony.
Now give me Kingdom Hearts 3!