The Big Three Offer Small Change

E3 has been interesting viewed from afar. It's clear the classic electronic gaming industry (console games with a dash of PC gaming, though non-MMO/social/Flash PC gaming has been waning) is in trouble; sales were down 8% in 2009, and sales this year look to be in similar dire straits without a booster shot. So aside from a slew of sequels, what is being offered by the Big Three (Microsoft, Sony, Nintendo) that represents a possible sales jump?

Microsoft is offering Kinect, its motion-control peripheral, for $149, and a dozen titles that look very similar to the Wii's greatest hits -- simple sports. The Achilles Heel of the Kinect is not just the high price point; it's the fact that it sucks up a large part of the 360's processing power, to the point of causing noticeable lag even in the simple games being shown. This means the Kinect will not be of much use to the power gamer, which represents most of the current 360 audience. So Kinect must be aimed at the casual gamer... who's already got a Wii, or for about the price of a Kinect alone could get a Wii (I expect to see the Wii at $149 by Christmas, unless Nintendo wants to continue losing share). The Kinect's price point means it won't get a large installed base any time soon, if ever, which means we won't see any games that require the Kinect... which means even less reason to buy one. Net result: No big industry impact.

Sony is trying a similar tactic with the Move, though at least it's only $49... well, of course, you need to add the Navigation controller for $29.99... and that's only for one player, so you need to double that to $160... and you probably want a Playstation Eye, which is $39.99... so you're looking at $200. Which makes it even more expensive than Kinect and not as cool. And again it's unlikely to be appealing to hardcore gamers -- certainly not from the types of games they are showing for the Move. Sony is also pushing 3D display technology, which has a possibility of appealing to the hardcore... but it's hampered by the cost of the display, which currently runs at $2,000 or more. Sure, Sony will try to push for 3D-capable TV sales, but no one would expect that to be a significant market share for many years. Again, no big industry impact.

Nintendo is throwing all of its weight into the 3DS, which is their new DS-style handheld with a no-glasses-needed 3D display. Nice, but how useful will the gimmick be in actual gameplay? That remains to be seen. Meanwhile, no attention to the Wii's price point or its aging technology, and no hint of any innovation in business models. I think the 3DS may stop the hemorrhaging of DS sales, but it's not going to ignite a revolution. The iPhone 4's and iPads will be busy leading that charge.

The problem for all of the Big Three is that they're seeking to appeal to casual gamers, yet those who are the most likely targets for that have either already purchased a Wii, or are busy playing Farmville or iPhone games. Once Google TV and Apple TV bring inexpensive or free-to-play gaming to the family room, the ability of the Big Three to gain significant numbers of casual players will be next to nil.

Meanwhile, executives at third-party publishers are busy saying nice things about the new hardware offerings and how great it will all be for the industry. Which is the best they can say, given the situation. Meanwhile, they are looking for ways to grow that don't require reliance on the Big Three. Because it looks from here like the console era is drawing to a close.