Game Developers See Sega As Both Boon And Threat
C. Delorean
--
http://biz.yahoo.com/rf/010207/n02669691.html
By Timna Tanners
LOS ANGELES (Reuters) - Sega Corp.'s (7964.T) long-anticipated decision to
throw its hat in the ring as a full-time game developer sets the Japanese
company up for a battle with confident and entrenched U.S. competitors.
But analysts warn that Sega, the newcomer in this corner of a $20-billion
industry, could prove a tough opponent.
Sega last week said it would cease production of its Dreamcast (news - web
sites) video game console, and shift energies to make games for other
platforms that were previously only available for the Sega system.
That puts Sega on the turf of independent video game publishers -- such as
Electronic Arts, Inc. (NasdaqNM:ERTS - news), THQ Inc. (NasdaqNM:THQI -
news) and Activision, Inc. (NasdaqNM:ATVI - news) -- which make software for
the top gaming systems.
Game makers benefit from Sega's decision to exit the market because they
have one less platform to develop for, which lowers their costs and lets
them concentrate on better-selling systems, analysts said.
[MY COMMENTS: What the hell!? This paragraph once again confirms that the
mass media doesn't get it. Sega dropping the DC *hardware* and going 3rd
party means they have *more* platforms to develop for, not one less. It
lowers cost because they don't have to sell hardware at a loss, and all the
other expenses incurred in console manufacturing. End rant.]
``If there's fewer consoles and less uncertainty I think it makes it easier
for all,'' Justin Post, analyst with Deutsche Banc Alex. Brown, said.
But adding one more experienced gamemaker to the fray could eat into market
shares, and analysts note that industry leader Electronic Arts could be the
most vulnerable.
``Sega has excellent studios and is particularly good at sports games which
haven't in the past competed with Electronic Arts,'' said Wedbush Morgan
analyst Miguel Iribarren. ``EA hasn't really had competition like what Sega
could put up against them.''
EA's traditional strengths have been with products for hard-core sports
enthusiasts, with titles such as ``Madden NFL,'' ''NBA Live'' and ``Tiger
Woods PGA Tour.'' Sega is known for mass-market sports games such as ``NBA
Action,'' snowboarding ''Rippin' Riders'' and racing ``Sega Rally.''
While Post agreed that Sega will provide some competition for the sports
genre that Electronic Arts has traditionally dominated, he said the two
companies have different audiences.
``No doubt on the margin it will mean more competition for EA,'' he said.
``But it won't be as head to head as some people think.''
Sega Faces Old Rivals
Sega's games will take on the sports strengths of market leader Electronic
Arts, which some analysts credit with hammering the deciding nail in
Dreamcast's coffin after EA made the controversial move last year to not
develop games for Sega's Dreamcast console.
Electronic Arts John Riccitiello was confident about his company's
competitive advantage over Sega.
``They're starting from scratch,'' he said in a recent interview, noting
that Sega had no experience making games for other consoles and would have
to wait out the industry's typical 12- to 18-month software development lags
before it would become a serious rival.
Sales of Sega's Dreamcast game console have never been impressive, despite
the fact that the platform was the first in a wave of super-charged,
DVD-playing, Internet-ready hardware expected to dominate the industry in
coming years.
Despite its lower price, the Dreamcast was eclipsed by the roll-out of
Sony's PlayStation 2 (news - web sites) and the upcoming introductions of
Microsoft Corp.'s (NasdaqNM:MSFT - news) Xbox (news - web sites) and
Nintendo (news - web sites) Inc.'s (7974.OS) new GameCube and Game Boy
Advance.
Sega's decision to produce video game software for these new consoles means
it must buy licenses and develop relationships for its old rivals.
``Sega, Nintendo and Sony have all been archrivals, so it won't be easy
culturally for Nintendo and Sony to embrace them and say they want them
(Sega) to be licensees,'' said Activision Chief Executive Bobby Kotick.
[MY COMMENTS: Then why has Sony been very public in their approval of Sega
developing for them? Nintendo doesn't seem to have a problem with Sega games
on the GBA either. Mr Kotick, get a clue.]
He acknowledged Sega's history of software strengths, but said its
management would likely be distracted by issues related to terminating its
console business.
Kotick and THQ Chief Executive Brian Farrell agreed that they did not see
Sega's entry into the video game publishing market as a daunting, direct
threat.
HOW MANY IS TOO MANY?
But how many independent video game developers can the market support?
Deutsche Banc Alex. Brown's Post estimates that probably four to five game
publishers can sustain long-term profits.
The estimated $20-billion-a-year industry is seen growing rapidly, with the
speed depending on adoption rates of the new consoles and high-speed
Internet access.
Currently Electronic Arts is the top independent game publisher by far,
followed by THQ and Activision. THQ is second in terms of market
capitalization yet Activision is second in terms of revenue for the first 9
months of the fiscal year.
Smaller players have been trying to carve out a greater market share in the
industry. These include Interplay (NasdaqNM:IPLY - news), which just snagged
the license for the popular Matrix movie title. Infogrames Inc.
(NasdaqNM:IFGM - news), U.S. unit of the French video game maker has been
aggressively buying small publishers.
Sega is also looking to enter markets that the established independent
developers have largely ignored. Last week it said it would develop games
for Palm Inc.'s (NasdaqNM:PALM - news) handheld computers by the end of the
year.
Electronic Arts, for one, has said it will focus on developing games for
consoles and its EA.com Web site, rather than mobile computing devices.
--
C. Delorean
--
They're justified and ancient, and they know what time is love.
Raymond McKeithen II
"C. Delorean" <loll...@scornished.casaar-red> wrote in message
news:bclg6.40746$t94.5...@news1.rdc1.bc.home.com...
> A couple of my own comments in [sqauare brackets].
>
> --
> http://biz.yahoo.com/rf/010207/n02669691.html
>
> By Timna Tanners
>
<snip>
>
> Game makers benefit from Sega's decision to exit the market because they
> have one less platform to develop for, which lowers their costs and lets
> them concentrate on better-selling systems, analysts said.
>
> [MY COMMENTS: What the hell!? This paragraph once again confirms that the
> mass media doesn't get it. Sega dropping the DC *hardware* and going 3rd
> party means they have *more* platforms to develop for, not one less. It
> lowers cost because they don't have to sell hardware at a loss, and all
the
> other expenses incurred in console manufacturing. End rant.]
>
"They" refers to "game makers"; not Sega. They're saying other 3rd parties
benefit because they have one less platform to develop for.
--
Raymond
remove "suchiepai" for email
C. Delorean
news:Hilg6.766$8o4.1...@monger.newsread.com...
Whoops. I feel dumb. You are correct.
C. Delorean
@shidoshi
Delorean" <loll...@scornished.casaar-red> wrote:
> Game makers benefit from Sega's decision to exit the market because they
> have one less platform to develop for, which lowers their costs and lets
> them concentrate on better-selling systems, analysts said.
>
> [MY COMMENTS: What the hell!? This paragraph once again confirms that the
> mass media doesn't get it. Sega dropping the DC *hardware* and going 3rd
> party means they have *more* platforms to develop for, not one less. It
> lowers cost because they don't have to sell hardware at a loss, and all
> the other expenses incurred in console manufacturing. End rant.]
Think you misunderstood. The press release was saying that THIRD PARTY
companies now have one less console to worry about making games for, not
Sega themselves.
> EA's traditional strengths have been with products for hard-core sports
> enthusiasts, with titles such as ``Madden NFL,'' ''NBA Live'' and ``Tiger
> Woods PGA Tour.'' Sega is known for mass-market sports games such as
> ``NBA Action,'' snowboarding ''Rippin' Riders'' and racing ``Sega Rally.''
Now, this part does need a comment. First, Rippin' Riders isn't Sega.
Second, what the hell is NBA Action? And why, when you are talking about
Sega and their sports games, are you NOT talking stuff like NFL2K and
NBA2K?
> Sales of Sega's Dreamcast game console have never been impressive,
The US launch wasn't impressive? Okay...
> ``Sega, Nintendo and Sony have all been archrivals, so it won't be easy
> culturally for Nintendo and Sony to embrace them and say they want them
> (Sega) to be licensees,'' said Activision Chief Executive Bobby Kotick.
>
> [MY COMMENTS: Then why has Sony been very public in their approval of
> Sega developing for them? Nintendo doesn't seem to have a problem with Sega
> games on the GBA either. Mr Kotick, get a clue.]
I agree. No matter if there was any bad blood between Sega and Sony
(which there is no proof there ever was), Sony would have to be STUPID
to show any sign of not welcoming Sega with open arms to the PS2. Their
comments so far have proven that they aren't stupid. Nintendo, Yamauchi
(sp?) is in his own world, so nothing he says should be taken into
consideration. I'm pretty sure Nintendo is also happy to have another
top developer making games for their system. I mean, why wouldn't you
want a company like Sega making stuff for your hardware?
> Currently Electronic Arts is the top independent game publisher by far,
> followed by THQ and Activision. THQ is second in terms of market
> capitalization yet Activision is second in terms of revenue for the first
> 9 months of the fiscal year.
Activision and THQ are two of the top developers? Boy, does that ever
tell you how sad the video game market currently is.
.............
@shidoshi
Ayu Landale - my PSO character
Changing night to morning to e-mail
http://morningmayo.com
- shidoshi's website
http://www.livejournal.com/users/doshichan/
- shidoshi's happy fun journal
Silent Hill 2 - 07:Months / ??:Days
- shidoshi's lord and saviour
C. Delorean
news:shidoshi-29D150.19250507022001@news...
> In article <bclg6.40746$t94.5...@news1.rdc1.bc.home.com>, "C.
> Delorean" <loll...@scornished.casaar-red> wrote:
>
> > Game makers benefit from Sega's decision to exit the market because they
> > have one less platform to develop for, which lowers their costs and lets
> > them concentrate on better-selling systems, analysts said.
> >
> > [MY COMMENTS: What the hell!? This paragraph once again confirms that
the
> > mass media doesn't get it. Sega dropping the DC *hardware* and going 3rd
> > party means they have *more* platforms to develop for, not one less. It
> > lowers cost because they don't have to sell hardware at a loss, and all
> > the other expenses incurred in console manufacturing. End rant.]
>
> Think you misunderstood. The press release was saying that THIRD PARTY
> companies now have one less console to worry about making games for, not
> Sega themselves.
Indeed I did. Raymond McKeithen II pointed that out to me. My foot don't
taste so good :-)
> > EA's traditional strengths have been with products for hard-core sports
> > enthusiasts, with titles such as ``Madden NFL,'' ''NBA Live'' and
``Tiger
> > Woods PGA Tour.'' Sega is known for mass-market sports games such as
> > ``NBA Action,'' snowboarding ''Rippin' Riders'' and racing ``Sega
Rally.''
>
> Now, this part does need a comment. First, Rippin' Riders isn't Sega.
> Second, what the hell is NBA Action? And why, when you are talking about
> Sega and their sports games, are you NOT talking stuff like NFL2K and
> NBA2K?
Good point. Visual Concept's NFL 2K1 selling a million on an installed base
of 3 million is nothing short of amazing. Sega's Japanese teams can also
put out great sports games. Hitmaker's Virtua Tennis is a *great* game that
straddles the sim and arcade line very well. Their World Series Baseball on
the Saturn proved they could do baseball as well as any American developer.
If they can weed out the WSB2K1's and Virtua Strikers, their sports games
are very competitive on the hardcore sports fan level.
> > Sales of Sega's Dreamcast game console have never been impressive,
>
> The US launch wasn't impressive? Okay...
>
> > ``Sega, Nintendo and Sony have all been archrivals, so it won't be easy
> > culturally for Nintendo and Sony to embrace them and say they want them
> > (Sega) to be licensees,'' said Activision Chief Executive Bobby Kotick.
> >
> > [MY COMMENTS: Then why has Sony been very public in their approval of
> > Sega developing for them? Nintendo doesn't seem to have a problem with
Sega
> > games on the GBA either. Mr Kotick, get a clue.]
>
> I agree. No matter if there was any bad blood between Sega and Sony
> (which there is no proof there ever was), Sony would have to be STUPID
> to show any sign of not welcoming Sega with open arms to the PS2. Their
> comments so far have proven that they aren't stupid. Nintendo, Yamauchi
> (sp?) is in his own world, so nothing he says should be taken into
> consideration. I'm pretty sure Nintendo is also happy to have another
> top developer making games for their system. I mean, why wouldn't you
> want a company like Sega making stuff for your hardware?
Magicbox has Nintendo's comments, and they are very favourable.
"We hope Sega will make full use of the Nintendo hardware to develop quality
games for the system. "
C. Delorean
--
But I am un chien andalusian.
Jerry Jones
>
> > > ``Sega, Nintendo and Sony have all been archrivals, so it won't be easy
> > > culturally for Nintendo and Sony to embrace them and say they want them
> > > (Sega) to be licensees,'' said Activision Chief Executive Bobby Kotick.
> > >
> > > [MY COMMENTS: Then why has Sony been very public in their approval of
> > > Sega developing for them? Nintendo doesn't seem to have a problem with
> Sega
> > > games on the GBA either. Mr Kotick, get a clue.]
> >
> > I agree. No matter if there was any bad blood between Sega and Sony
> > (which there is no proof there ever was), Sony would have to be STUPID
> > to show any sign of not welcoming Sega with open arms to the PS2. Their
> > comments so far have proven that they aren't stupid. Nintendo, Yamauchi
> > (sp?) is in his own world, so nothing he says should be taken into
> > consideration. I'm pretty sure Nintendo is also happy to have another
> > top developer making games for their system. I mean, why wouldn't you
> > want a company like Sega making stuff for your hardware?
>
> Magicbox has Nintendo's comments, and they are very favourable.
> "We hope Sega will make full use of the Nintendo hardware to develop quality
> games for the system. "
>
Sony, Nintendo, and Microsoft will all be trying to gain
the majority of sega's games, they'll say anything, it would
make a major difference to each companies system, especially
in Japan. Companies like Activision and EA say such things
for one reason, fear.
Jerry Jones
Jerry Jones
> > Sales of Sega's Dreamcast game console have never been impressive,
>
> The US launch wasn't impressive? Okay...
>
And even after the launch, the Dreamcast has done better then
anyone thought it would, I still say it was a mistake to pull
out of the US market, especially with more and more companies
expressing their displeasure with Sony.
Jerry Jones
richar...@hotmail.com
In article <bclg6.40746$t94.5...@news1.rdc1.bc.home.com>,
"C. Delorean" <loll...@scornished.casaar-red> wrote:
> A couple of my own comments in [sqauare brackets].
>
> --
> http://biz.yahoo.com/rf/010207/n02669691.html
... SNIP ...
> Game makers benefit from Sega's decision to exit the market because
they
> have one less platform to develop for, which lowers their costs and
lets
> them concentrate on better-selling systems, analysts said.
>
> [MY COMMENTS: What the hell!? This paragraph once again confirms that
the
> mass media doesn't get it. Sega dropping the DC *hardware* and going
3rd
> party means they have *more* platforms to develop for, not one less.
It
> lowers cost because they don't have to sell hardware at a loss, and
all the
> other expenses incurred in console manufacturing. End rant.]
The "they" in the article doesn't refer to Sega, it refers to other
third party companies who no longer have to develop for the Dreamcast,
which drives their costs down.
- Richard Hutnik
... SNIP ...
--
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