Let's imagine for a moment that Sony don't come out on top in the PS3 generation due to hardware problems and not making it on to the shelves by christmas. What then?
On a superficial level, lots of people instead buy 360s and Revs, leading to a general shift in developer support since the devs are loosing money buy not being able to shift their ip on a regular basis. MS even manage to persuade Capcom to make games for them with exclusivity for 3 months before release on other formats. The Japanese start buying 360s. Rev gets a slightly above Gamecube level smattering of 3rd party support
On a higher level, the shift from Sony dominance to a MS/Sony level playing field creates a knife edge in the industry - no longer is it obvious which platform to get first (the average person would have benefitted most from getting a PS2 first in the current gen) and consumers hesitate before purchasing. Sales drop overall and things start to look interesting - whichever platform releases the most interesting looking games will start to gain a foothold. MS and Sony fall over themselves in attempts to woo dev exclusivity. Money pours into devs Sony themselves. MS realise they have a real chance to make an impact and start to do the same thing. Game quality rises.
Nintendo gain a weird level of support from non-gamers and means that they actually get shelf space
This has a knock on effect to normal gamers who suddenly feel that Nintendo might be an option. And it's so cheap, they can afford a Rev as well as their first console.
So the market ends at 40/40/20 split (MS/Sony/Nin).
The PC market remains unaffected and continues to pump out high quality games over a limited number of genres.
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I've tried to go for a non-doom and gloom post. I could easily have gone down the industry is doomed route, but I'll leave that to someone else.
Your turn
On a superficial level, lots of people instead buy 360s and Revs, leading to a general shift in developer support since the devs are loosing money buy not being able to shift their ip on a regular basis. MS even manage to persuade Capcom to make games for them with exclusivity for 3 months before release on other formats. The Japanese start buying 360s. Rev gets a slightly above Gamecube level smattering of 3rd party support

On a higher level, the shift from Sony dominance to a MS/Sony level playing field creates a knife edge in the industry - no longer is it obvious which platform to get first (the average person would have benefitted most from getting a PS2 first in the current gen) and consumers hesitate before purchasing. Sales drop overall and things start to look interesting - whichever platform releases the most interesting looking games will start to gain a foothold. MS and Sony fall over themselves in attempts to woo dev exclusivity. Money pours into devs Sony themselves. MS realise they have a real chance to make an impact and start to do the same thing. Game quality rises.
Nintendo gain a weird level of support from non-gamers and means that they actually get shelf space

So the market ends at 40/40/20 split (MS/Sony/Nin).
The PC market remains unaffected and continues to pump out high quality games over a limited number of genres.
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I've tried to go for a non-doom and gloom post. I could easily have gone down the industry is doomed route, but I'll leave that to someone else.
Your turn

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