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Does Online Gaming Matter To Consoles?

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[qi:058] Since 1999, major console makers including Microsoft (MSFT), Sony (SNE), Nintendo, and the now-defunct Sega have been touting online gaming as a mainstay of the industry. And though online console use is rising, mainstream apathy means the initiative has never matured.

Of the 172 million systems sold in the last generation of consoles*, an estimated 5 million gamers ventured online — representing just three percent of the market. But wouldn’t you know it, each and every major console circa the early 2000s was capable of online play (some better than others).

By comparison, there are currently 26 million “next-gen” consoles in households (11M Wiis, 11M 360s, 4M PS3s). As of August, Microsoft’s Xbox Live claimed more than 7 million active users, including paying and free silver account users that aren’t privy to online multiplayer.

Last year April Sony reported some 1.3 million+ online users for its free PS3 platform while Nintendo’s Wii has seen around 1 million online users based on a limited number of supporting games (currently only two titles). Add them up, and online console users currently represent about 34 39 percent of all console owners -– a 31 42 percent rise.

So it appears that online gaming is, in fact, a staple for consoles, just as Microsoft hoped (they are the only console maker charging for online multiplayer) and prevailing Internet-thinking suggests.

Not so fast.

That estimated 34 39 percent will likely decrease with time. Early console adopters are largely made up of tech-savvy, core gamers; the ones that are more prone to game online. Additionally, the system driving the most growth in the console industry (read: Nintendo’s Wii — by a long shot) has the most underdeveloped online system when compared with the soft-selling Xbox 360 and PS3. Seems those Wii gamers don’t mind the absence of a super hi-tech matchmaking system coupled with potty-mouthed VoIP chat.

Need further proof? Take the Xbox 360’s newly released BioShock. In less than a week, it’s become the fourth-highest rated game of all time (96/100 average review score), according to Game Rankings. It will likely go on to sell millions of copies, and yet it doesn’t contain a smidgen of online support. Not a drop. Perhaps online gaming isn’t that important to consoles after all.

Granted, this isn’t to say that online play is undesired by any means (I personally enjoy a good beating online), only blown out of proportion by a myopic group of hardcore journalists, gamers, and select console makers. In short, online gaming is just a value-add, an extra feature, a bonus mode for certain games — nothing more, nothing less. Just ask Nintendo.

* 115M PS2s, 24M Xboxs, 22M GameCubes, and 11M Dreamcasts

22 Responses to “Does Online Gaming Matter To Consoles?”

  1. as high speed internet becomes more available 2 the masses online gaming will go up, and i think online gaming helps ur skill i could say right now without a doubt if anyone challenged me at halo or gears of war or any other game that can be played online and they had no online experience i would stomp them

  2. Thanks for the comments, everyone. Some good points were made that online can be so much more than multiplayer.

    Does online matter to consoles? Yes it does, and I should have stated this more clearly in my original post. Is the feature currently over hyped. I think so.

  3. Blake, your truly getting pounded for this post. You should have done a bit more research and posted actual figures, and not to mention leaving out a third of your post. LOL.

    You forget the masses that have bought a console just because of online play. The main reason I bought the XBOX 360 was because of what it offered with XBOX LIVE. No other console has a comparable online experience. A better title for your post could have been “when will the masses catch on to online play?”. I’m pretty sure there are a lot of factors that your missing as to why the numbers are so low as of right now. For example, broadband availability. How many households of console owners actually have web access? That would have been a great number to feature in your article. Although, you probably would have made that number up too. Then someone would catch you on it and then we would see an update to this post. Just some food for thought. Good luck on your next post.

  4. Jim Greer and Srs Bznis make excellent points. All Xbox 360 games have an online component. It’s required. GH2 is a great example. I prefer it greatly on Xbox 360 because I can compare my achievements and scores to my friends’ online. Is that online gaming in the tradtional fps sense? No. It’s definitely an online component of GH2 though. There are loads of games in the same boat.

  5. Wow, there are now at least 2 venture-backed CEO’s from game related companies who have chimed in on this blog posting.

    Blake, its great that you are interested in the gaming space and its great you express this interest via you blog posting. But, talk to guys like Jim Greer or other figures in the space who have a finger on the pulse. They have a wealth of knowledge about what really goes on ‘inside the walls’.

    To add more evidence of a connected community, look no further then Guitar Hero II on the Xbox 360 system. By reviewing a leaderboard on Live, you will see over 750,000 users in that environment. Each one of those users was “connected” as part of the online game play. Sure, they did not connect with another gamer in the truest definition of ‘online gaming’ but they still benefited from it. And I might add that GH2 launched a mere 5-5.5 months ago.

    Those are some pretty amazing numbers you might want to add your notes.

    Srs Bznis

  6. John Thacker

    My roommate would not have purchased BioShock were it not for the demo, which was only downloadable through XBox Live.

    I’m also enjoying the games that I’ve downloaded through the Wii’s Virtual Console, including Super Metroid.

    Sega clearly bet too early on downloadable content, since it was still too much the modem era when they tried it with the Dreamcast.

  7. “Not a drop of online support?” – that’s a stretch. One of my main motivators for playing single player games on XBL is unlocking achievements that my friends can see. I’m not the only one. And Bioshock supports achievements. It’s such a great game that it would sell well anyway, but if it didn’t have them people would be outraged. (And MSFT wouldn’t allow it on the console anyway).

  8. Online gaming is to gaming what the Internet is the computing. It’s the future. While it may be small now it is becoming increasingly intertwined. Even those gamers who do no “GO ONLINE to play against other gamers” are at least in-advertently using online gaming capabilities. Some of the games now place SPOT ADDS on your computer gaming opponoents race vehicles (for example) and download new content for your existing games. In addition there are rankings/leader boards, etc. The possibilties are amazing and will continue.

    It’s a new technology that relies on always-on broadband. The adaption rate is slow. It doesn’t help that some residential broadband operators are actually blocking some of the functionality …. (like Toredo IPv6 over UDP over IPv4 tunneling for the Wii….


  9. “Entrepreneur,” I’m not sure how my above article was bigotry, though I’d appreciate it if you cited specifics.

    Eric, about 33% of the games I play are online and rising. I’m not convinced, however, that makes online play a vital part to games. Also, you’re right about the Bioshock themes, gamerscore, and demo downloads, but I wouldn’t call that online or vital to the BioShock experience.

  10. 9 of 10 games I play are online enabled.

    Also, Bioshock does have online features. For instance, you must be online to add points to your gamerscore, download Bioshock themes, gamerpics, etc. The only way to get the Bioshock demo was to download it from XBOX Live.

    There’s an online marketplace for all games. Sure you can get by without being connected, but you aren’t getting the full experience.

  11. I think you are overlooking some pretty big related factors in terms of broadband access, the cost of getting wifi to gaming systems etc. Consider that the Xbox 360 – the system with the most advanced online ecosystem – doesn’t ship with a wireless card. Then consider a 12 year old kid having to convince his parents to let him run a LAN cable from the household router into his living room or bed room and/or spend even more money on gaming peripherals (not games mind you, which was the whole point to being with).

    Seems to me that your analysis is pretty superficial.

  12. entrepreneur

    nothing else, nothing more.

    that’s why you’re a journalist and we are entrepreneurs.

    we see stuff happening before you do, you just report news of the past.

    that’s okay if that’s what you want to do and you get paid for it, good for you !

    what makes it intolerable is the degree of know-it-all bigotry you excercise.

  13. As mentioned in the final paragraph, the article isn’t suggesting that online gaming will decline. Overall online use can actually increase over time (which I believe it will) even though initial adoption rate will likely fall as stated above.

    The real point of the post merely challenges the prevailing wisdom that online is the end all be all of gaming. Does anyone have data showing that online is more than just a value-add to the much larger (and profitable) goal of interactive entertainment?

    Not trying to knock online play at all, just tempering the hype.

  14. Is this post for real? First off, I’d check some of your facts by checking the online capabilities first and foremost. You are correct in the fact that the Wii has sold a boat load of units. But, the Wii’s “online system” is far from complete and far from the slightest adoption. Nintendo wasn’t going after a “connected strategy” when they launched the Wii. Instead, they have only captured market share by being the cheaper, more fun console. Their killer app is not connectivity at this point. But let me ask you this: what happens when I can log on and play you in Wii Tennis from my living room? Will that count as “connected” by your definition?

    Next, may I please point this out: “Last year Sony reported some 3 million+ online users for its free PS3 platform..”
    – Sony didn’t have 3 million PS3 consoles sold “last year”. In fact, if you were to contact Sony about their online platform, they would likely tell you it hasn’t launched yet. At least what they are referring to as “Home”.

    I like that this topic is interesting enough to garner a post but I firmly believe the examples used are suspect at best.


  15. I don’t understand how anyone can think online console gaming will decline. People are doing more and more with their consoles online all the time. While there aren’t many Wii games to play online, there’s a lot of online functionality in the Wii. The online gaming will come–no doubt.

    The whole premise of this article seems silly to me. Personally, I prefer traditional, offline games. That doesn’t mean that my head is in the sand and I don’t see online gaming as anything other than burgeoning.

  16. It depends on the users and it depends on the games. I do most of my console gaming online because I like to compete (sports usually) against real opponents with varying degrees of skills and intelligence. As of now, artificial intelligence has yet to surpass good old fashioned people. lol

  17. PerryCollective

    While I guess that’s a fair, accurate assessment of the current state of things, it’s only a matter of time before online becomes an absolute necessity.

    Recently, many people were still trivializing HD (oh wait, some still are) but sales of HDTVs are dwarfing LDTVs. And higher margins, while finally coming down, have reinvigorated the TV business.

    You aren’t comparing apples to apples. Bioshock is a great game, and people will play it. But when online goes beyond hardcore, it can be a way to connect with families and friends – over casual games, sports games, or whatever. Online gaming is just scratching the surface. Heck gaming is still such a young industry, yet so many people think they have it figured out.

    You say, “online has always been over-hyped and over-sold”, and I hear, “OMFG who is so lazy they need electical ignition, when a hand crank works just fine!” It’s earlier in the gaming industry than the electronic ignition was in the horseless carriage industry, so stop trying to pretend that you know anything. I don’t know where it’s going to end up, but I know there are several waves of innovation past where we are now. We might always have a chill-out, single player experience mode. But if you think people don’t want to be connected, you’re nuts.

  18. As a gamer with both a Wii and a 360 I totally agree that online gaming is just an add-on.

    While I don enjoy Gears of War and Rainbow Six Vegas online a whole lot, I have just as much if not more fun playing Zelda Twilight Princess or testing my skills against friends in Wii Sports Bowling.

    Online has always been over-hyped and over-sold, glad to see someone in the media hasn’t fallen into the trap.