The Christmas console wars

The end of the year is always an hectic time for Australia’s video game retailers but given the recent moves by the international gaming giants this year could be hotter.

Christmas has always been a hectic time for Australia’s video game retailers but given the recent moves by the international gaming giants this year could be even hotter.

A cocktail of record-breaking discounting and a new console launch is set to put a spring in this year’s console war. Microsoft and Sony are pinning their hopes on discounting older consoles, with both arguing that there’s still plenty of life left in the current technology. Meanwhile, Nintendo is betting on the success of its new Wii U console – a machine that attempts to harness the best element of mobile and traditional console gaming.

The battle lines have been drawn – but which tactic will win out? And what does it all mean for the wider industry?

Microsoft and Sony’s price war

Microsoft came out guns blazing this month announcing what they called the ‘largest ever’ price drop to their Australian consoles and accessories. 

The tech giant took between $50 to $150 off of its consoles, placing its cheapest console, the Xbox 360 4GB at a recommended retail price of $199. It has also cut the price of its base 250GB Xbox 360 console pack from $449 to $299.

Microsoft’s pricing manoeuvre gives it significant breathing space from its key competitor Sony. It's a prudent move given that a lot of the games for the Xbox 360 are also available on Sony’s Playstation 3.

A week before Microsoft took an axe to its prices, Sony released a new version of its PS3 console. The PS3 Super Slim – following on from the aptly named PS3 Slim – is Sony’s latest attempt to breathe one last breath of life into this six year old machine. Despite its slim down, Sony’s PS3 still flaunts that one advantage that its had over its Microsoft competitor - it still doubles as a blu-ray player. 

Unusually, Sony has applied a strategy that until now had been unique to Microsoft – it’s released a cheaper version of its console with a limited internal memory. Sony’s base $299 PS3 Super Slim console only comes with a 12GB flash memory. Sony offers additional memory if they need it - for a price of course. 

Tech savvy consumers will more than likely opt to pay an extra $100 for a 500GB version of the console. But the Christmas console war isn’t as much about capturing gamer’s funds as it is about drawing in new customers. More often than not parents – who often know little about either data or gaming.

The Wii U

On the other side of the spectrum you have Nintendo’s Wii U console - a new addition to the market will make its debut on November 30. The most distinguishing factor of the Wii U console is its controller which has a touch screen built into it.

Nintendo has learnt from the mistakes of its last console launch and is offering up a decent selection of games at launch. While many of these titles are simply re-works of existing Xbox 360 and PS3 games, there are a few originals that might convince seasoned gamers to purchase the console at launch.

Nintendo’s also trying a new retail strategy this Christmas – its offering consumer’s choice. In the past Nintendo has only offered offer one version of its console, this time its offering two:  a white 8GB basic pack at $349 and a black 32GB ‘premium’ console at $429.

Both price points are interestingly low when you consider the entry prices of the PS3 and Xbox 360 when they launched in 2006. The Wii U’s price is a far cry from Sony $899 PS3 launch price tag and still lower than Xbox 360 release cost of $499. Curiously, its even lower than the original Wii’s launch price of $399

Regardless of price, the success of Nintendo’s new console will really depend on whether the company can convince the masses that it's worth the investment. Expect to see a wave of advertising in November pushing the touch screen functionality of the Wii U.

If Nintendo’s Wii U launch can generate the same kind of hype that was seen during the Wii’s debut in 2007, then Nintendo may be set to dominate the Christmas console wars.

The iPad Mini wildcard

While the gaming giants have been heavily spruiking their console efforts, little attention has been put towards their portable range.

This Christmas it’s only a two company race between Nintendo’s 3DS range and Sony’s PS Vita, both of which are relatively new to the market – so there’s little discounting there. The real drama of this year’s Christmas sales will be in the console market, but there is one wild card that could possibly shake things up.

If Apple does actually release an iPad Mini before Christmas it could pose a significant risk to the gaming giant’s portable sales. A $300 - $350 tablet from Apple would put the device in direct competition with Nintendo’s $250 3DS XL and Sony’s $350 PS Vita. Many are already use Apple’s devices for gaming and the company’s focus on gaming during its recent iPhone 5 product launch seems to hint at an ambition to tap into the market.

Given that gaming apps are generally cheaper than portable games, and that tablets are more multi-purpose than gaming consoles, it may become a favorable option for those wanting to dabble in portable gaming.

The importance of this Christmas

This Christmas console war may offer some insight into how the sector will fare next year. The overall health of the gaming industry is currently a contentious topic. There’s talk of the games sector hitting a lull - with US commentators saying that it may even be heading for a full blown recession

While there’s hope that the launch of the Wii U will stimulate the sector, there’s confusion as to what’s causing the downturn. It been pinned on the wider economy, a lack of blockbuster new release tiles, digital downloads that aren’t being counted as part of retail sales, mobile gaming, Angry Birds... The list goes on.

Australia isn’t immune from this downturn. According to MCV we reported a year-on-year 19 per cent decrease of in video game retail in June. Though it also revealed that a drop console sales are being buffeted by heavy discounting. Though the long-term sustainability of a strategy revolving around heavy price cutting is questionable. 

Perhaps the real winner in all this doom and gloom are consumers, who are getting access to some of the cheapest current generation consoles deals in history. This may tempt some to invest in a second console, or even entice those who wouldn’t normally play games into the market.

Though, it could turn out to be a bittersweet Christmas present - as there may be no point owning a console if there’s no industry behind it to support it.

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