In 2012, Yusuf Mehdi -- the man in charge of Microsoft's
) interactive entertainment business -- told the
Los Angeles Times
that the average Xbox-owning household spends an average of 84
hours a month using Xbox Live.
While gaming continues to be a popular draw for the console,
it has not become the primary reason why people turn it on.
"What we're seeing is that people are turning on the Xbox to
play games and then keeping it on afterwards to get other types
of entertainment," Mehdi told the Los Angeles Times.
In fact, the publication reported that consumers now spend
more of their time using Xbox 360 for online video than for
There have not been any studies confirming that the same has
happened with Wii or PlayStation 3, but Sony (NYSE:
) proudly announced that its console had become the
number-one living room device
for Netflix (NASDAQ:
) subscribers last December.
The console has been so successful in this regard that there
have been times when more people turned to PS3 for Netflix than
for any other platform -- including PCs and tablets.
reported that game consoles lead the pack among TV devices that
can connect to the Internet.
This is great for overall hardware appeal -- but is it good
for the gaming industry?
Mehdi's statement seems to be fairly accurate. Game consoles
have always been sold first to consumers who want to play games.
If they only cared about non-interactive entertainment, consumers
would simply subscribe to cable or buy a set-top box.
By offering a greater variety of entertainment options, the
assumption is that consoles can appeal to a greater number of
consumers. This is also true -- but it is not without risk.
When Sony unveiled PlayStation 4, it chose to ignore
non-gaming entertainment and focus exclusively on why this is a
console that gamers should buy.
In an interview with
, Sony Computer Entertainment America President and CEO Jack
Tretton explained why.
"If you wanna have an event to talk about multimedia
capabilities, we'll proudly stand up and list all the media
partners that we have, and the fact that we're the number one
most used Netflix device around the world," said Tretton. "But
the 3.1 million that streamed [Wednesday's event] and that stayed
up at all hours depending on what country they were in, they were
there to see games."
The 3.1 million viewers that he referred to were only in the
United States. Worldwide, Sony's event drew
more than eight million viewers
This is the same strategy that Sony took with PSone (which
104 million units
) and PS2 (which sold 153 million units).
When promoting PlayStation 3, Sony shifted to other things.
While gaming was still a big part of the console, Sony heavily
pushed the Blu-ray player that was built into every unit.
As many investors are aware, PS3 only sold 74 million
Similarly, Nintendo (OTC:
) tried to make up for the lack of new Wii U games by promoting a
number of promising TV services. While the console sold very well
last fall, Wii U ultimately flopped during the first quarter when
plummeted more than 85 percent
Thus, while it is acceptable (and perhaps wise) for console
manufacturers to offer services beyond video games, it is best to
start by satisfying the core gaming audience. If nothing else,
that guarantees that at least some people will buy the
If the aforementioned trend continues, however -- if games are
the initial draw but TV and movies keep users coming back -- it
could be a problem for those who only develop games.
), Electronic Arts (NASDAQ:
), Konami (NYSE:
), Take-Two Interactive (NASDAQ:
) and other game companies heavily rely on the success of new
Sony, Microsoft and Nintendo may get consumers in the door,
but if the aforementioned developers can't keep them coming back,
the industry is in trouble.
Over the past 10 years, several high-profile game publishers
have fallen, including THQ, Acclaim and Midway. While it does not
appear that another one is about to file for bankruptcy, there is
one whose future is in question: Electronic Arts.
Between the troubled launch of the new Sim City, the closure
of several Facebook (NASDAQ:
) games, the award for '
Worst Company in America
' (for the second year in a row), and the
, things are not looking good for EA.
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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