Wednesday, December 12, 2012

The Wii U is a Success... Now What?

Earlier this year, I talked a lot about how the success or failure of the Wii U would essentially give us a road map for how the next generation of gaming consoles is going to pan out.

Well, the Wii U is pretty much without question a complete success. However, it's also worth noting that the Wii U's graphical power is about what everyone assumed it would be. While it can certainly stay level with the current generation of games, any games made with next-gen graphics would probably have to be scaled back a bit.

In my previous article, I said that the benchmark for the next generation would likely be Unreal Engine 4. Unreal is one of the more popular commercial tools used for AAA franchises (Arkham Asylum, Gears of War, Borderlands, Mortal Kombat, BioShock, XCOM, just to name a few), and one of the major reasons the Wii failed to garner 3rd party support was because of its inability to run Unreal Engine 3 without some serious sacrifices.

The good news is, the Wii U can play Unreal Engine 3 games with absolutely no problems whatsoever. The bad news is, while the Wii U will be able to play Unreal Engine 4 games, it comes with a lot of caveats. Don't be too misled by the title of the post I just linked which reads, "Unreal Engine 4 confirmed to run on Wii U." The fact is, while Unreal Engine 4 can run on the Wii U, it's only because the engine itself is designed to be scalable. In other words, a game made on Unreal Engine 4 will be portable to the Wii U, but it will probably have to be dumbed down quite a bit.

In fairness, this is still an improvement over the position of the Wii. At least the prospect of Unreal Engine 4 working on a lower powered device isn't almost laughable to Epic Games. But this basically means that if a game is designed with Unreal Engine 4 for a device with more power than the Wii U, the Wii U port would likely require a lot of resources to scale down and the end result would likely be graphically inferior.

So now that we know where the new system stands, let's take a closer look at where we're headed.

Should Microsoft and Sony Rush Out New Systems?

Obviously, Microsoft and Sony haven't announced any new systems yet, but I think everyone knows that they are working on them. If they wanted to, both companies could announce the next Xbox and PlayStation at the next E3 and probably have it ready by Black Friday of 2013.

The question is... do they want to?

The answer may seem obvious, but as I mentioned in my last post about this subject, video game companies stand to lose quite a bit when it comes to hardware. They're basically asking all of their customers to abandon their current systems and switch over to this new one, which is a risky prospect on its own, but to further complicate matters, they typically sell hardware at a loss and make their profits in accessories and software (and also online services like Xbox Live Gold and PlayStation+).

So the truth is, Microsoft and Sony don't have a lot of reason to rush into the next generation. The Wii U isn't going to render their current systems obsolete. Anything the Wii U can do, they can do. Even the whole "second screen" thing. The Xbox can do SmartGlass and the PS3 can do that whole Vita integration thing. Granted, developers haven't really gravitated towards that yet, but it means that they can probably support just about any games developed with a second screen in mind, at least in theory.

There are only two reasons that they would want to release new hardware at this point. Either because developers are planning to stop developing for hardware that can't support the new graphical engines, or because they stand to make a profit from hardware sales.

Because the Wii U is about level in terms of graphics, developers will be unlikely to shun the Xbox 360 or the PS3.

So the only reason that Microsoft and Sony would want to release a new system is because they can sell it at a profit.

In other words, what they SHOULD do is bide their time. Keep focusing on R&D. Make the next system powerful enough to handle Unreal Engine 4, but lean enough to cost the same as the Wii U.

The thing is, being a better system isn't enough. The PS3 showed us that. It has to be affordable and it has to have software support. A rushed system will have none of these things.

Will Microsoft and Sony Rush Out New Systems?

Just because a company SHOULDN'T do something doesn't necessarily mean that they WON'T. After all, reason and common sense dictated that Windows 8 was coming way too soon and would probably flop (and it did), but that didn't stop Microsoft from trying. Everyone insisted that Sony was completely nuts when it tried to sell the PS3 for $600, and as it turned out, they WERE.

Companies (particularly video game companies) do stupid things all the time.

I don't doubt that Microsoft and Sony are currently under a lot of pressure to announce new hardware, regardless of quality or logic. The shareholders want the company to APPEAR strong, not to actually BE strong.

Still, when it comes to Microsoft, I don't think they're going to jump the gun on the next Xbox, mostly because of Kinect. Kinect was their experiment to see if they could extend a product's life-cycle by releasing new accessories for it, and the Kinect was a commercial success. Additionally, Microsoft has said before that they expect the Xbox 360 to stick around until 2015. That doesn't mean that they won't release a new system until 2015, just that the Xbox 360 will likely stop being supported around that time. For example, the Xbox 360 came out in 2005, but games for the Xbox didn't stop coming out until a year or two later. So 2013 or 2014 makes the most sense for the next Xbox to come out.

Sony, on the other hand, has never been known to make smart decisions. They're a very reactive company. The only reason they might do the intelligent thing this time around is because of what they should have learned from the PS3.

When the PS3 came out, they assumed that their brand identity and superior hardware would assure their victory. It did not. The PS3 was undoubtedly the best system in the bunch, but no one was going to pay $600 for a system when they could buy a Wii and a 360 for about the same price. It wasn't until the PS3 was priced competitively that it started catching up in sales.

I had hoped that Sony had learned their lesson, but the Vita suggests otherwise. Even though the 3DS came out for $250 and was a commercial failure until it dropped the price to $170, Sony (for some reason) decided that the Vita would stand a better chance at the $250 price point ($300 for the 3G version). To put that into perspective, you can buy a PS3 for less than that. The Vita is a good system, but if I'm going to throw down $250 for a portable device, I'll just get a tablet.

On top of that, rumors suggest that Sony has already sent out developer kits for the PS4, so all signs point to Sony making some announcement around E3 next year.

So my guess is that Microsoft will hold out and probably talk about Windows 8 integration or something at the next E3, but Sony will probably announce the PS4 against their better judgement. Maybe Microsoft will jump the gun as well, but given how much they've been trying to extend the current generation, I suspect they will keep it up for as long as possible.

So How Will That Play Out?

So let's say that I am right. At E3 2013, Microsoft surprises everyone by not announcing a new Xbox, and Sony appears to get the upper hand by announcing the PS4 as predicted. Here's how I see that playing out.

The PS4 will be everything we expect it to be. Better graphics, better cloud integration, backwards compatibility, maybe even some cool surprises like Steam support or something like that. They'll probably also include tablet integration to stay competitive. However, all these bells and whistles will come at a price, and the new system will likely cost somewhere in the ballpark of $400-500, which Sony will probably assume is low enough.

The system will come out in November, probably along with a new God of War game, a new Metal Gear game, and/or a new Uncharted game. It will likely sell well with the Sony fanboys and the hardcore gamers who want the latest and the greatest. The Wii U, on the other hand, will probably still out-sell the PS4.

This is where Microsoft should start laughing maniacally. While Sony is falling into the same trap as before, Microsoft is working with R&D to make their system so cheap that they will sell it at a profit and still out-perform the Wii U.

Come E3 2014, Microsoft announces the new Xbox. It costs $300. It has the graphics capabilities of the PS4. It has cloud integration. It has better SmartGlass integration. It comes with a better version of the Kinect.

Then on Black Friday 2014, the new Xbox destroys the competition. Within a few years, all the AAA developers are making games with Unreal Engine 4, and at first they include Wii U ports, but consumers and critics notice how the Wii U version is always inferior. The only chance the Wii U has is if developers are taken with the Wii U GamePad and if they feel that the Xbox and PS4's tablet equivalent is in some way inferior. This is plausible considering the GamePad comes with the Wii U, but the Xbox and PS4 will (presumably) not come with a tablet device and simply assume that the consumer already has one (a la SmartGlass). That may be enough, but the inherent fragmentation with mobile devices may cause issues for developers and cause them to be less interested in developing for anyone other than the Wii U. Regardless, once developers make the switch to Unreal Engine 4, the Wii U will slowly stop being ported to, just as it happened with the Wii.

There's no question that developers are tired with the current generation. They've been suffering with the same graphical limitations for close to a decade and they want to be able to stretch their legs. Once Sony and Microsoft provide them with that option, the Wii U will likely fall behind just as the Wii did.

Eventually Sony will do the same thing as before and slowly lower the price of the PS4, eventually bringing up its market share.

Here's why I think it will play out this way.

Let's take a look at the current generation. It started with the Xbox 360. It set the bar in terms of price and graphics. Then the Wii and the PS3 were announced around the same time. Nintendo decided to favor innovation and conservation over raw power and it saved them. Sony decided to compete 1-to-1 with the Xbox 360. They lost, mostly because of the price tag.

Here's the thing though. Imagine if Sony delayed a year. Imagine if in 2007, they announced the PS3 and it was identical to the current model? If you went back in time and swapped out the gigantic $600 PS3 for the $300 PS3 Slim, imagine how different that would have been. It would have been no contest. Sony could have dictated the terms of the competition and Microsoft and Nintendo wouldn't have been able to do anything about it. Instead, Sony decided to play on Microsoft's terms and they lost big time.

What If They Both Take Their Time?

As much as Sony has historically shown its inability to learn from its mistakes, there's always the possibility that they will intelligently hold off until 2014.

If both Sony and Microsoft decide to wait and come out with affordable next-gen systems, I still think that Microsoft will come out ahead, mostly because the Kinect is a pretty solid advantage in attracting casual gamers, but Sony will at least manage to stay in the game.

In this scenario, Nintendo is the clear loser. It will essentially be the Wii all over again.

"But wait," I hear you say, "I thought the Wii was a success?"

Well, the Wii itself was a success. The system itself sold like hotcakes, and since Nintendo sold it at a profit, that was enough to essentially revive them.

The Wii U (as a console) is definitely a success, but unlike the Wii, it isn't being sold at a profit. Nintendo will only be able to stay commercially successful if the people who bought the Wii U actually keep using it over the next decade or so.

If Sony and Microsoft come out swinging, it won't matter that Nintendo had a two year head start. If third parties jump ship again, Nintendo won't be able to float on hardware sales alone.

In this (unlikely) scenario, Nintendo is Sega and the Wii U is the Dreamcast. Unless they have some trick up their sleeves, it's game over for them.

What If They Both Jump the Gun?

OK, let's say I'm completely wrong and Sony and Microsoft are both eager to jump into the next generation at the same time. They both announce half-baked and ludicrously expensive hardware that will go on sale Black Friday 2013.

If that happens, the Wii U just may win the current generation.

Let me explain. While developers are certainly interested in making games for the next generation, that doesn't necessarily mean that the gamers will follow.

One reason that the current generation has lasted as long as it did is because we've hit the Uncanny Valley of graphics. We're just close enough to photo-realistic that if we get any closer, it will start to appear "unreal" and might even come off as ugly. To go beyond the current point is to create graphics that are indistinguishable from reality, and I'm afraid we won't be there for quite a long time.

In other words, the only solid benefit that the new generation has to offer developers is behind the scenes stuff. Faster loading times, better AI, smoother framerates, that sort of thing. And those things are great, don't get me wrong, but they tend to be the sort of things we don't notice.

Another thing is that the games that come out early on in a new generation don't tend to be very good representations of the full potential of the new systems. For example, both "God of War" and "God of War II" came out for the PS2. If you play both of those games, one after the other, you can see how much of a difference a few years can make, even on the same system.

On top of that, while the Wii U may not be able to keep up in terms of graphical fidelity, it can probably hold its own in terms of a lot of the behind-the-scenes stuff. It has four times the RAM of the Xbox 360, though it should be noted that half of that RAM is dedicated to the OS. Even though the graphics card isn't remotely next-gen, it's good enough to produce the sort of graphics we've gotten used to during this generation.

So if the Wii U's graphics aren't that much of a visible step down from its competition, but it costs less and builds a decent software library in the next year, then consumers may find it difficult to justify upgrading their Xbox or PlayStation.

So then developers might say, "Well, we can use the new gaming engines to improve game performance, but we don't have to care so much about the graphics," at which point the Wii U's ports might be able to keep up with the competition.

What does all this mean? Well think about it. If you have to choose from three systems and you are not loyal to any brand in particular, which would you choose? The $300 system with the built-in tablet, the $400+ with that full-body motion control thing that doesn't work that well and makes you use your own tablet, or the $400+ system that makes you buy a Vita to use a second screen and has no decent motion controls? All three have the same library of 3rd party games, and sure maybe the more expensive ones look a little prettier, but if that's the only drawback, it might be difficult to justify buying the pricier systems unless they have a vastly superior library of games.

It's true that a lot of hardcore gamers care about graphics and technical performance, but a lot of those gamers do most of their gaming on Steam these days. Steam resurrected PC gaming in a big way and honestly, no matter what Sony and Microsoft come out with, a PC will always be able to outperform it at about the same price tag. If a console is going to try to win over customers on hardware specs alone, they're going to be sorely disappointed when they realize the demographic they're after is already perfectly content with their new PC.

The only reason people will buy an overpriced new console is if they really want the exclusive titles. It's true that Halo and Uncharted are popular series and they will probably convince a decent number of hardcore gamers to upgrade. But the biggest titles currently out there are 3rd party titles. Assassin's Creed, Call of Duty, GTA, Madden... the list goes on. If the Wii U can support those titles in the future, then Nintendo will likely be able to hang onto enough gamers to maintain their lead over Microsoft and Sony.

If Microsoft and Sony want to win, they can't just play catch-up to the Wii U and put a product on the market as quickly as possible. They have to surpass the Wii U in every area so that developers and consumers alike will find no reason to invest in it.

If they rush it, even if their new systems are great, so long as the difference in price doesn't justify the difference in software support, they will probably lose.

Possible Game-Changers

All this is obviously speculation and it doesn't account for possible unexpected twists. Maybe Sony and Microsoft have crazy new ideas that could revolutionize gaming. For example, cloud-based game-streaming (a la OnLive) could have a major impact if they can implement it and make it work. The biggest handicap of downloadable gaming on consoles is limited hard drive space. AAA titles usually take up about 8GB (sometimes more) and that adds up quickly. If they could stream gaming content in the same way that we stream movies through Netflix or Hulu, that could change everything. Of course, with bandwidth concerns already hitting a fever pitch, implementing such a service would be unbelievably difficult.

Another possible dark horse could be Ouya. The Ouya could be poised to beat Nintendo at its own game. If graphics do end up making almost no difference to developers and low-cost hardware ends up winning, the Ouya could out-sell the Wii U simply because it costs less. The lack of bells and whistles like motion controls etc. may hamstring it, but it could at the very least make things interesting.

As for the Wii U, I wrote this post assuming that the GamePad will ultimately prove to be a gimmick. I could be wrong about that. One interesting possibility is that the Wii U could attract RPG developers in a big way. If that were the case, the Wii U's strengths could extend beyond simply having the cheapest next-gen console on the market.

I also didn't bother to account for how Microsoft Surface will pan out. As of now, Windows 8 and the Windows RT version of the Microsoft Surface haven't been selling very well, but if the higher-end version of the Surface finds success, it could give Microsoft enough momentum to steal the spotlight at E3 next year, especially if they play up the SmartGlass stuff.

Lastly, maybe Sony deserves more credit. Despite the fact that I give them a hard time, I genuinely believe that the PS3 is the best console on the market right now. If I could go back in time, I would tell myself to buy it instead of the Xbox 360. Sure the Xbox 360 was cheaper, but the PS3 was truly backwards compatible (at least it was at the time), its online service was free, it had built-in WiFi (the Xbox 360 at that point did not), the controllers had built-in rechargeable batteries and worked over Bluetooth instead of some weird proprietary thing... honestly, I regret buying the Xbox 360 and I also regret buying the Wii to a certain extent. So in any case, I will probably hold off on buying a new console until Sony reveals their intentions. Maybe they'll surprise us.

Why the Wii U Should Lose

At the end of the day, I can't predict the future. What I do know is that Sony and Microsoft are in a better position than they might think. They have the advantage of being able to define the terms on which the Wii U will be forced to compete. If they play it smart, they could destroy the Wii U completely. And frankly, all of gaming would be better for it.

Look, I love Nintendo. They're great. But I'm sorry, the Wii U was a rushed product. I can understand what Nintendo was thinking, especially when you look at the possible scenarios. They're hoping that Sony and Microsoft are going to rush their products and ultimately fail to compete. The problem with that is that they're essentially betting on the continued stagnation of console gaming. Forgive me, but I'd much prefer that Sony and Microsoft take their time to send out the best consoles ever and truly launch gaming into the future.

I like that Nintendo decided to think outside the box in terms of controls because it forced the industry to start thinking more about game design and less about the number of polygons. But the GamePad is not revolutionary. At best, it's clever. At worst, it's just another gimmick.

I hate that the Wii U has less storage space than an iPad. I hate that they still haven't figured out how to do online gaming in an intelligent way. I hate that the GamePad has terrible battery life and doesn't come with a cable that connects it to the system to charge it. I hate that you can only use up to two GamePads, and even that is only theoretical at the moment. I hate that the first model that was shipped requires an enormous firmware update that can destroy the system if interrupted.

Honestly, I think that SmartGlass is a decent substitute for the GamePad. I tried it out around Thanksgiving and I kinda liked it. It's nowhere near ready, but it's a good start. And it's true that just about everybody has access to a tablet, so there's really no reason why SmartGlass wouldn't be able to do the same things as a GamePad. And heck, there's no reason why Sony or Microsoft shouldn't be able to create their own GamePads and simply offer things like SmartGlass as alternatives if people don't want to buy GamePads. That would be great! Unlike the motion controls, the GamePad is not a control gimmick that is difficult to imitate.

By all accounts, the Wii U should NOT win this next generation. The Wii U is Leeroy Jenkins. The question that remains is whether or not Sony and Microsoft will rush in after it and meet their doom. If they're smart, they'll be patient.

So if E3 rolls around next year and Sony and/or Microsoft STILL doesn't announce a new console, do not despair. If that happens, it would be the greatest possible news that could come out of E3.