Xbox vs. GameCube vs. PS2

Baldwin Louie — Wed, 16 May 2001 15:00:00 -0700

The battle in the videogame console market has gotten as intense as the fighting games that are all the rage with hardcore gamers.

On Wednesday, Microsoft and Nintendo announced their widely anticipated console launches that aim to carve out a chunk of the market held by Sony's popular PlayStation 2 box while simultaneously giving them an edge against each other. Microsoft said its Xbox, perhaps the most eagerly awaited videogame product launch since Sony's PS2 hit stores last year, will debut Nov. 8, while Nintendo said its GameCube system will be on U.S. shelves three days earlier.

The announcements, made at the Electronics Entertainment Expo in Los Angeles, followed a series of alliances by Sony to bring interactivity to its popular box. The three companies are locked in a battle for the nearly $6 billion U.S. videogame market, which is almost the same size as Hollywood's domestic box office take.

Microsoft is pricing the Xbox at $299. Nintendo, which attracts a younger audience than Microsoft is targeting, said it will announce pricing details at an investor meeting next week.

Microsoft's pricing is competitive with Sony's PlayStation 2, which also costs $299. Moreover, Microsoft plans to have 600,000 to 800,000 units ready at launch time and hopes to sell 1 million to 1.5 million units by the end of the holiday shopping season. The software giant is putting a half billion dollars into its worldwide marketing campaign and aims to dethrone Sony.

Redmond, Wash.-based Microsoft said it wants to avoid console shortages, which plagued PlayStation 2's launch last fall in North America. The shortage left shoppers scrambling for scant supply of last year's favorite stocking stuffer.

"Xbox is going to change videogames the way MTV changed music," said Robbie Bach, chief Xbox officer at Microsoft. "Your games are never going to be the same."

Joining Microsoft on stage at the E3 conference were developers and publishers, including Capcom, one of the dominant Japanese games makers, and Sega, which recently discontinued hardware production after it couldn't find a market for its Dreamcast box. Capcom, which publishes the popular Resident Evil franchise of games, committed to releasing three games at Xbox's launch. The games include two that will be exclusive to the Microsoft platform: Dino Crisis 3 and BRAIN-BOX. It also will translate the Onimusha title for the PS2 to the Xbox.

Sega plans to create Xbox versions of its Dreamcast games, including its Sega Sports 2K2 games and Crazy Taxi, a driving game.

More dramatically, Microsoft announced a licensing deal with AOL Time Warner's Warner Bros. Studio to develop games for Steven Spielberg’s upcoming A.I. movie. Microsoft also signed an alliance with Universal Vivendi-owned Universal Interactive to develop games based on martial arts icon Bruce Lee.

Nintendo only showed two games at the show but said more games will be demonstrated by August. Nintendo plans to launch GameCube in Japan by Sept. 14.

Despite the hoopla, at least one analyst remained cautious about Microsoft's game overtures. "Microsoft has yet to provide financial targets for Xbox, other than to say that gross margins will be negative," wrote Merrill Lynch analyst Henry Blodget. "This means that the more units Microsoft sells, the more money the company will lose on Xbox."

Long term, however, Blodget believes that Microsoft's foray into games will be profitable, though it will account for no more than 5 percent of Microsoft's total operating income within the next four to five years.

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Xbox vs. GameCube vs. PS2