| Video Game Console Library

The Perfect Storm
Author : Marriott_Guy Date : 27-Nov-10

For nearly two generations, the console world has been dominated by the big three – Nintendo, Sony and Microsoft. All have produced fine systems in their own right, introducing new technology and innovations to our gaming universe. That being said, the availability of viable alternatives has been virtually nonexistent for the past decade. Outside of a few niche systems (XaviXPORT, EVO Smart Console, et. al.), the Big Three have reaped the benefits of conducting business within a pseudo monopolistic environment. If history truly repeats itself, this technological bottleneck may be nearing the end of its cycle.

Throughout the video gaming era, console wars tend to erupt when a significant breakthrough occurs in a complimentary industry. Whether it is the development of a new microprocessor or the introduction of an enhanced media format, competition increases as manufacturers look to capitalize on emerging technologies. Many of these ventures have been less than successful, but every now and again a new face can rise to prominence. Microsoft and Sony are prime examples of this. Current advancements in autostereoscopy (3D display without use of peripherals) and motion/voice controlled interaction may provide the requisite window of opportunity for the next video gaming juggernaut.

For any company to take advantage of this potential opening, a perfect storm must occur with the convergence of the following attributes: Financial Wherewithal, Technological Expertise, Brand Recognition and Visionary Leadership.

Financial Wherewithal
Needless to say, entry into the video game hardware market is an extremely expensive endeavor. In addition to the assumed R&D, marketing, manufacturing and associated overhead expense of producing a new system (which in and of itself is staggering), any prospective company must be able to withstand significant losses during the initial product launch and those incurred throughout its developmental phase. Such investment necessitates a long term fiscal commitment, coupled with the experience to successfully develop and execute the base economic model.
Technological Expertise
The ability to take advantage of existing in-house resources is almost a necessity. Companies able to redeploy and/or repurpose established assets gain significant financial flexibility due to lowered expenses in those synergistic areas. The core competencies of an organization must not only be complimentary in nature, but be realized directly within the hardware of any prospective new system.
Brand Recognition
This past decade has been economically challenging to say the least. The general public is discerning as ever regarding discretionary purchases. Price will always play a significant role in these buying decisions, but trust in the brand has become equally, if not more, important. This would be especially true for a new product entry in a market not normally associated with said company. Consumers, along with shareholders, need to have confidence in a corporation prior to supporting any new venture, especially one that might be viewed as risky.
Visionary Leadership
Obviously, this is an absolute necessity for any entity to be successful. The ability to not only meet, but more importantly to anticipate the long-term demand of the consumer is critical in obtaining superiority over the competition. The leadership team must have excellent foresight, but also the mettle to follow through and effectively sell their vision to all vested parties.
The following lists a few companies, all of which have varied historical ties to the video game console industry, which fit this speculative profile. While research was conducted in compiling the prospective candidates, by no means should this be viewed as anything but an educated conjecture.

	This giant is no stranger to the video game market. In addition to releasing their moderately successful CD-i line of consoles during the 1990s, Philips was the official distributor and manufacturer of the Magnavox Odyssey 2 video game system in Europe (VideoPac). Philips has long been an innovator within the electronics industry, creating the Laser Disc format and then subsequently developing, in conjunction with Sony and others, the optical disc formats we enjoy today (CD, DVD, Blu-ray). Their portfolio is extremely diversified, with almost 45% of total annual sales derived from their Healthcare division, which in fact specializes in Imaging Systems and Devices (potential 3D gaming applications).
	Another industry behemoth, Toshiba has long been a leader in the manufacturing and development of electronic devices and systems. They have been known to invest in emerging technologies, such as the NUON and their patented HD-DVD disc format. Their purchase of Westinghouse Electric Company, one of the world’s largest producers of nuclear energy, in 2006 is a prime example of their visionary culture. They are currently at the forefront of 3D-TV evolution, unveiling the first peripheral-free sets in October, 2010.
	If there is one company that truly excels in building, and maintaining, consumer loyalty, look no further than Apple, Inc. Since their inception in 1976, Apple has continually introduced new products that challenge the traditional offerings of its competitors. This spirit of change, coupled with excellent manufacturing, marketing and support, has garnered them an extremely devoted customer base. Though their last venture into the video game market was disastrous (the Pippin, licensed to Bandai), this company is not afraid to step outside the proverbial box.
	The entertainment world has changed considerably over the past decade. Video games are no longer the red headed step child of their box office counterpart(s) – they are now partners. Continued advancements in CGI (computer-generated imagery) and further integration within each medium provides excellent leveraging opportunities. Time Warner’s diversified portfolio provides them the ability to maximize the productivity of existing, internal resources. Let’s not forget that Warner also has a little history in the video game hardware market – they owned Atari from 1976-1984.
	Yes, this is the dark horse, sentimental entry in this company list. After a successful run throughout the 1980s and 1990s, Sega bowed out of the console war after their release of the Dreamcast system in 1999 due to significant company debt. They have since rebounded as a third party, multi-platform software distributor. Rumors of a new, propriety handheld system have recently surfaced, resulting in a flurry of internet chatter as to the possibility of Sega reentering the hardware arena.
The above list is purely theoretical in nature, but as market conditions change successful companies have the ability to adapt and shift focus to meet consumer demand and maintain profitability. But the truth is, the next household name may come from a complete unknown, as has been demonstrated in the past. At the end of the day, new competition only enhances our video gaming experience and advances technology. In today’s age, a true perfect storm must occur for this to happen. Who will surprise us? For all we know, the next juggernaut console may be named one of the following…