Nintendo (NTDOY) fell short. Microsoft (MSFT) is reportedly about to do something stupid.
Help us, Sony (SNE). You may be the video game industry's last hope.
What a Tease
Sony has a PlayStation media event slated for Feb. 20 and there is little doubt about what this reveal will be about: The PlayStation 4. The 45-second teaser that has already attracted more than 5 million views on YouTube is filled with stylish imagery featuring the console's four iconic controller buttons.
There are no official details on pricing, specs, or even an actual release date for the PlayStation 4. Most of that will undoubtedly be announced at this month's unveiling. However, the pressure is clearly on Sony to become a leader after being a laggard during the current console generation.
Nintendon't and Microhard
Nintendo was the first of the three gaming giants to introduce a new platform this cycle. November's debut of Wii U was timed well. Video game hardware and software sales have been sliding for three years, and Nintendo beat its rivals to market a new system ahead of the 2012 holiday shopping rush.
The Wii U is a clear upgrade from the original Wii that revolutionized the industry with its motion-based controls in 2006. Six years later, Nintendo raised the bar with its touch-screen tablet controller that doubles as a nifty second gaming screen.
Unfortunately for Nintendo, it's just not selling as well as the Japanese gaming pioneer had expected. Nintendo claims that it will sell just 4 million Wii U units for its fiscal year ending in March. It had originally projected 5.5 million consoles being sold.
Sony and Microsoft are widely expected to release their next systems later this year, but there's already one big knock on what Microsoft may have in store for what enthusiasts are calling Xbox 720.
Sources have been reporting over the past year that games for Microsoft's next system will come with activation codes on software installations that can only be used once. This may sound similar to the way that Microsoft ships its flagship Windows and Microsoft Office software, but it won't be popular with gamers.
The inability to trade in used Xbox 720 games or even rent prospective future purchases will crush Microsoft as a gaming company. It's not just that the move will obliterate rentals through Gamefly, Blockbuster and Redbox. It's not just the impact that the move will have at video game retailer GameStop (GME) which derives its highest margins from the resale of used games and gear.
Gamers simply won't be as willing to fork over $60 for a new game that they can't loan or pass on to a friend, or sell after they're done. Unless Microsoft plans to sharply lower the price of new releases -- and that's highly unlikely -- the Xbox 720 will be toast before it even hits the market.
Sony to the Rescue
Sony dominated the console wars through the original PlayStation and the PS2 that followed, but it got greedy when it launched the PS3 at a much higher price than the competition. Sure, the box had great specs and it was the only system that also played Blu-ray movies. But Sony priced itself out of the market -- a mistake that Nintendo may have made with the Wii U late last year.
Now the company has a chance to get it right with the PS4, especially if the Wii U fails to gain momentum or if the PS4 beats Microsoft to the market this year.
Sony itself is in trouble. Its bread-and-butter TV business has been losing money for years. People are moving on from optical discs as they consume music and video, stinging its consumer electronics stronghold.
Sony needs this system to be a hit at a time when casual gamers are no longer buying systems or full-priced games.
Right now, Xbox 360 is on top. It's been the best-selling console in this country for roughly two years. The Wii U's rollout didn't stop that. If Sony aims well, it can stop that.
The industry doesn't have a choice now. It has to root for Sony to save the day and make sure that it doesn't price itself out of the market or follow Microsoft into the rumored restrictive software measures.
Motley Fool contributor Rick Aristotle Munarriz has no position in any stocks mentioned. The Motley Fool recommends Nintendo. The Motley Fool owns shares of GameStop and Microsoft. Try any of our Motley Fool newsletter services free for 30 days.
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