March 1, 2024

Game Systems Upgraded at a Dial-Up Speed

Traditionally, console makers have upgraded their machines every five or six years. Nintendo intends to keep to that schedule. It said that it planned to sell a sequel to its five-year-old Wii in 2012.

But Microsoft, the maker of the Xbox 360, and Sony, maker of the PlayStation 3, are taking their time with an update. Video game industry analysts said they expected that it would be 2014 before Microsoft sold a new Xbox and Sony upgraded its PlayStation. If that bears out — the two companies are not publicly discussing their plans — that will mean nine years between upgrades for Microsoft and eight for Sony.

There are several reasons for extending the life of the consoles. But analysts said one reason predominates: cost. Microsoft and Sony invested hundreds of millions of dollars, the analysts said, to create its machines so that they could handle intensive graphics and complex gameplay and survive the furious pace of game development.

“Eight or nine years is longer than usual between cycles, but I think the world is rapidly changing,” said Anita Frazier, an analyst with NPD, a market research firm.

Evan Wilson, a video game financial industry analyst with Pacific Crest Securities, said both Microsoft and Sony were still trying to recoup their investments.

“It’s less of a surprise that Nintendo is sticking to the traditional upgrade cycle than the fact that Microsoft and Sony are not,” Mr. Wilson said. He added: “It speaks to the fact that Microsoft and Sony both lost so much money.”

As those companies were making such big investments, the companies began facing steeply intensifying competition for attention and consumer dollars from casual games. Today, big competition comes from the likes of Zynga’s Farmville on Facebook or Angry Birds on smartphones and tablets.

Nintendo’s Wii, with its motion-control sensor and more basic graphics, is aimed at a more casual gamer — younger children, women and seniors who had not played console games. It exploded in popularity after it was released in 2006. Nintendo has sold 86 million systems worldwide, 41 million in the United States.

Microsoft has sold 50 million Xbox 360s since the console’s release in 2005 and it has sold 10 million Kinect sensors, its own motion-control device.

For its part, Sony has sold 50 million of the PlayStation 3, and eight million of its Move motion controllers.

Dan Race, a spokesman for Sony, said that the company felt its heavy investment in the PlayStation 3, or PS3, technology, which included the Blu-ray movie format, was paying off. He said “the PS3 is now just hitting its stride.”

Industry analysts said game software sales were increasing for Sony and Microsoft, while Nintendo’s sales of Wii games were on a sharp decline. The analysts also say they believe that Nintendo has a chance in redoing the Wii to make a play for the hard-core game crowd, which tends to favor graphics-intensive in-depth games. The greater resolution will also help the display of Netflix movies, which can be streamed from the device to a television. Those movies now look better fed through an Xbox or PlayStation box.

Sony and Microsoft also have built and marketed their systems to be broader entertainment hubs for streaming high-definition movies, television shows and other digital content.

Nintendo declined to comment on what consumers should expect from the new system. It said it would preview the machine at the annual E3 Expo, a gaming trade conference held in June in Los Angeles.

Colin Sebastian, a video game industry analyst with Lazard Capital Markets, said Nintendo, despite having mined a new market of casual gamers, needed to do something innovative with the new system if the console was going to continue to grow.

“If they just add high definition and some better online services and call it Wii 2, that would have a limited audience,” he said. “They need to do something more to innovate.”

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