Biting the Apple

The generation's big battle might not be between Sony and Microsoft after all.

Published as part of our sister-site GamesIndustry.biz' widely-read weekly newsletter, the GamesIndustry.biz Editorial is a weekly dissection of one of the issues weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.

The temptation to portray the games market as a three-way battle between Nintendo, Microsoft and Sony is both obvious and excusable. These, after all, are the firms who would happily admit to being in a race for gaming supremacy. However, in order to paint a fuller picture of the console battle, there are several other players who need to be considered.

There are, of course, the big publishers. Electronic Arts, once seen as a kingmaker and still a powerful force - EA's initial unhappiness with Xbox Live arguably held back the commercial success of the service for years. Activision Blizzard, the newly formed market leader among third party publishers, whose World of Warcraft title is the world's most profitable game - WoW hasn't touched the console race yet (except, perhaps, by locking up as many as eleven million hardcore gamers and keeping them away from other console and software purchases), but when it does, its impact could be profound.

The smaller publishers, too, have a major impact - both individually (consider the influence that franchises like Grand Theft Auto and Final Fantasy - both from what are arguably second tier publishers - have had on this round of the platform holders' battle) and perhaps more importantly, as a group. Publishers nervously eye one another's portfolio and platform decisions to see which way the wind is blowing, and their resulting group decisions are a key measure of the health of each platform - and, of course, something of a self-fulfilling prophecy.

But it's not just games companies who influence the progress of the games market. One company which I've talked about before as having a major impact, despite officially holding no designs on the games business, is Apple. As a manufacturer of consumer electronic devices, its rivalry with the games business as a whole is easy to understand - quite simply, many consumers will find themselves making a simple purchasing decision between a new iPod and a new videogame console.

However, the influence of Apple is far more extensive than is suggested by the simple retail rivalry of iPods, PSPs and Wiis. Last week, as the industry gathered in Los Angeles for E3, a couple of stories stood out as a testament to the widening battle lines between Apple and the major players in videogames.

First, there was the somewhat expected but nonetheless important announcement of both Sony and Microsoft's movie download services. Microsoft has struck a deal with US provider Netflix (how this will scale into other territories isn't yet clear - I hope Microsoft has a clear expansion strategy, but it could be a major stumbling block for the firm), while Sony is using its own clout in the movie business to create a custom service.

These services are, of course, a challenge to one another - but moreover, they are a direct challenge to Apple's iTunes Store, which has expanded from being the world's biggest music download store to being the largest download store for movies and TV episodes. It's a given that Sony and Microsoft's objective in the games business is not simply to own videogames, but to own the primary source of media in the living room and a significant chunk of the distribution and delivery mechanism for that media. That objective may have been clouded in the past few years by their struggle against one another (and by the ascendancy of the Wii, the only games console which doesn't also function as a "Trojan horse" for media), but both firms also know that if Apple develops a stranglehold on distribution, this is a battle they could both lose.

That rather stark situation is one which is fuelled by the widespread use of DRM - Digital Rights Management, a cuddly acronym for restrictive technology which ostensibly protects media companies from piracy, but in reality does little to prevent piracy and a great deal to reduce consumers' ability to use and enjoy their purchased media as they wish. Described by its opponents as "Defective by Design", this description could not be more appropriate.

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