Xbox vs Playstation (REMIX) | The Console Conundrum | 5

0:06I'm David Brown and this is Business Wars.

0:30Can you remember your first video game console? Were you an Atari OG or a Sega loyalist? Perhaps you pledged your allegiance to Nintendo and all the absurd yet totally awesome gadgets to go with it. Bonus points if you got your hands on the short-lived Power Glove. I loved the Power Glove. It's so bad. And then there's the folks who made the jump to a PlayStation or Xbox and never looked back. But behind these consoles are some pretty tense battles to the top. Of course, there was the fight between Sony's PlayStation and Microsoft's Xbox. But there was another console king that Sony had to face in order for PlayStation to exist in the first place.

1:09And that titan of gaming would go on to leave their partner hanging in a big way. Here to tell us all about it is our longstanding and prolific Business Wars writer Tristan Donovan. He's the author of the book Replay, The History of Video Games. He also wrote our most recent Xbox vs. PlayStation series. Tristan's dishing on what went down before PlayStation hit the market, when Nintendo was secretly teaming up with Sony, in a partnership that would ultimately end in betrayal. We'll talk about Nintendo's designation as the dark horse of the gaming business, and later, dive into where gaming consoles will fall in a future that's going mobile.

1:50All that's coming up.

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4:01Tristan Donovan, welcome to Business Wars. Hi, David. How are you doing? I'm doing all right. It's lovely to talk with you. You've been the brains behind so many Business Wars episodes over the past many years. In fact, you actually wrote our original Xbox versus PlayStation series of business wars that first went live back in 2018. Hard to believe. Before we dive into our conversation today, though, I want to know, how did you get started in video game journalism? You wrote a whole book about it, right? Yeah, my story of video game journalism started maybe 10 years before the book came out. um basically i was a journalist working on a 30 doll magazine about um training it people and i started doing freelance work and one of the things i did was video game journalism and if i'm honest it was mainly because i wanted to play more video games so it was kind of a way to feed the habit i'm i'm just thinking here something tells me you're a nintendo kid or no no so this is the thing about being British um I didn't actually get a games console until the PlayStation 2 um even though my I was definitely an adult by then um so I was playing on home computers um we didn't really have kind of Nintendo and Sega they took a while to get big over here so I kind of missed out on the whole Super Mario um kind of NES kind of period wow it's just that the games weren't that available or people just weren't excited about them so they weren't buying them or what um people weren't that excited about it so it took it came to europe quite late so it was more late 80s the mid 80s and by then people in europe were kind of getting the commodore media and atari st computers which were much more advanced visually so people were like well we've been playing games on computers for a while and you know this thing seems like a little bit of a step backwards and and the games are very expensive i mean kind of in the uk we're used to paying like one pound 99 for a cheap video game and then you get nintendo it's like wow this is 40 pounds i'll be able to afford one game every two years kind of thing so um we didn't really go into consoles in a big way you know when you think about the video gaming industry i suppose the big three names that come to mind are Sony and Microsoft, clearly, but also Nintendo.

6:32But I also remember some of those consoles like Panasonic's 3DO, right? And there was Neo Geo. And I guess Apple tried to get in the game, right? What can you tell us about these, dare I say, also-rans? Oh, there's a long history of also-rans, especially from big companies that kind of have a look at the gaming market and go oh there's a lot of money there we should be able to make some of that so you've had people like philips and panasonic and hasbro and google and apple's pippin is a good example um and every now and again they've come along gone oh we can get into that market and they go in they release a console of fail google with its stadia streaming platforms kind of the most recent example and i think it's because they're never fully committed to video games.

7:25A lot of these companies, they just see it as, oh, we can pick up some of that money. And they don't understand that it's actually pretty hard work getting a console out and making money from it. What does it mean to be fully committed in this context, though? I mean, you think about a company like Apple or Google, you know, two major tech players. You would think Apple could rule this space, but clearly they haven't been successful. So I guess I'm wondering, How do you figure it when it comes to being all in on games? Well, Apple's doing quite well with its Apple Arcade thing now. But I think the problem is that these companies have to get the entire games industry on side.

8:07Sony and Microsoft didn't break in just by doing their own thing and putting out a box. they had to get electronic arts and activision and 2k and all the other game companies that make games and persuade them to support their platform and those companies then want to spend 100 million dollars making a game for a console that doesn't sell so they're quite picky about who they support so they have to kind of you know coax the industry if you like into supporting their platform because otherwise they are just dead in the water from the beginning. And that was really the case with the Philips CD-i and the Apple Pippin.

8:46Yeah, well, now I want to go back just a little bit. You also wrote our Nintendo versus Sony season, which included a major backstabbing that we alluded to in our intro. I want to play a clip here because you paint the drama of this moment so well, Tristan. This clip brings us to the 1991 Consumer Electronics Show, where Sony and Nintendo were supposed to announce PlayStation. Now here's what actually went down instead. At Nintendo's press conference the next morning, reporters are eager to hear more about this PlayStation. But Nintendo says nothing about its alliance with Sony or the PlayStation.

9:26Instead, Nintendo trumpets its new partnership with Philips. There's not even a mention of the PlayStation. Journalists demand to know why Nintendo has said nothing about the PlayStation. One Sony executive offers a blunt summary. We've been stabbed in the back by Nintendo. That's what happened here. It's less than 24 hours since Sony unveiled the PlayStation, and it looks like it's already dead.

9:56Wow. Describe the backstabbing and why that fell apart. so it all fell apart because of money the playstation was originally supposed to be a joint nintendo sony project um it was conceived as basically a super nintendo with a cd-rom drive attached to it and they were going to be partners not competitors and then they really hit this moment where okay how are we dividing up the money and sony was like well you know we're doing the cd side we want that money nintendo's like well you know it's our machine and they just couldn't see eye to eye and essentially nintendo publicly kind of dumped sony but basically as a surprise and a big trade conference just said oh we're not working with them anymore and on top of that nintendo was starting to get a little bit paranoid about sony's interest in video games um and quite rightly given what ken guitari's master plan was um but nintendo was just starting to feel like are we helping sony learn about video games so they can kind of break in and try and out compete us so there was this kind of paranoia within nintendo about sony's true intentions going on as well well did nintendo ever talk about this openly after the fact was there some kind of resolution there nintendo's are always much less chatty they've kind of talked a bit about it i think there was a level of denial for a while within nintendo certainly in the kind of late 90s period nintendo's actually just like okay playstations are selling but you know they're more like toyotas and we're building rolls royces there was a little bit of kind of we can't quite admit that we're losing this battle um and i think nintendo just got kind of arrogant and conceited it who would eat sony people they don't understand and i think it took nintendo a bit of adjustment period to kind of get back in the fight yeah yeah but was it clear why sony wanted to get into video games in the first place just a pot of money that they felt like they they could tap here so many as a company wasn't that into getting into video games um ken kutaragi who was the founder kind of grandfather of the playstation he was the person who wanted to take sony into video games so he he just kept pushing um he set up the deal with nintendo and basically after that fell apart he just kind of goaded the president of sony into going well you know they've humiliated you.

12:28You can't let this happen with Sony. We should go and compete with them. So essentially, it was this one guy just needling this multi-billion dollar company into doing this revenge project, which is now the biggest business inside Sony. But why do you think the PlayStation concept was so groundbreaking when it came out? Because it was aimed at adults and it felt like consumer electronics. I think a lot of that came from the Sony brand. Nintendo and Sega kind of had a more toy-like image and Sony is the people who make your hi-fis and the warp burn and it's kind of adult and cool but there's also an element of it that was about timing so mid-90s the first generation that really grown up playing video games was entering adulthood finally started having some money of their own to spent um and they didn't stop playing i think there was a bit of an expectation that people would just stop playing once they became adults sort of back in the 80s um but it didn't happen people carried on playing video games and i think sony hit at the sweet spot it was like oh it feels adult so it's okay to carry on playing and also you know i'm generation x i grew up on games i want to carry on playing and so i i think those two factors came together and sony was in the right place at the right time with it.

13:53Well, let's play some revisionist history if we can. What if, what if Nintendo had gone through with this PlayStation partnership? Everything had gone as planned. Do you think Sony would have still become the major player that it became in this space or no? How do you think things might have been different? Oh, that's an interesting question. i i actually think sony would have become a major player i think by the time sony had kind of done its partnership with nintendo it would have probably lost momentum and probably lost its own interest in video games there was a lot of resistance within sony to the idea you know kind of games didn't have a good image then you know it's kind of embarrassing if you're sony it's like oh, we're making these toys for kids.

14:45You know, people thought about video games very differently in the 90s. You know, the idea of Microsoft being really big into games back then was kind of weird. So I think Sony would have probably gone, we're not too sure this industry is all that and, you know what, we'll just leave it. So I think they probably would have given up. Wow. So things worked out for the best in the end, for Sony at least. Yeah, not for Nintendo. Not for Nintendo. I think it's time for a short break. We're going to explore more on the Nintendo empire when Business Wars returns.

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16:58Welcome back to Business Wars. Our guest is Tristan Donovan. He's the author of Replay, the history of video games. And he's the writer behind this latest season of Business Wars, among many, many other seasons. So Tristan, I'm curious. I still have to ask. I'm going to press you on this. Did you ever get to go through a Nintendo phase of your own later in life once it was more accessible? I mean, how can you miss Super Mario Brothers or Mario Kart or one of those? Oh, yeah. I've gone back to those games and I've had every Nintendo console since the GameCube. so i i even had the wii gu i was one of the the people who picked that up um i can't quite imagine not having a nintendo console if one's available now it's like it'd be too much missing out on those nintendo games well now since the early 80s nintendo's been really a a major force in the video game design space and i understand they had some pretty high standards that helped their product stand out from the competition can you tell us about that commitment to quality especially in those early days when really the field was still being sort of worked out it wasn't clear what this video game space would ultimately look like yeah so nintendo came in a period of mid 80s just after the atari boom had turned to this big bust and atari basically died because the games were pretty poor and they were just rushed out for a quick profit and i was saying earlier about the£1.99 games we used to buy as a kid well they were rubbish too I mean you know it's kind of they're okay when you're kind of that age but they were not good games um Nintendo set standards you know your game couldn't be released with bugs in it um it had to meet certain quality level to appear on Nintendo console and Nintendo itself was making games with an attention to detail and skillful development that really no one else was doing and i think that comes from their background as a toy maker um they were always very good on the mechanics of how games work and feel in a way that lots of other game developers back then weren't interested in you know they came from a computing background and it's like oh this will look really good um but it's awful to play whereas so nintendo was like no one must feel good to play so they had a very different mentality that changed the whole industry for the better so it was like zero bugs we're just not going to let any defects be a part of the user experience this has got to we got to get it right on the functionality side yeah um certainly in the 80s i mean they've relaxed this now because it a you can update games and b it became impossible as games got more advanced but certainly in the 80s they would go oh we found this like tiny bug that could happen once in a hundred thousand turns of this game um so you've got to fix that before we let you go put it into production um and they would pull that last minute i mean they exerted so much power they could kind of tell developers that's what's going to happen but i mean it was very strict and that was different from what other video game companies were doing at the time right yeah um i mean back in the early 80s i mean tari was just i mean it kind of lost control of its console but it it was just like oh that would be shoved out the door um and that was kind of a lot of the attitude i think sega was you know consoles kind of work on strictness to a certain extent but others were certainly more relaxed sony was more relaxed when it came out with the playstation it was less wary of kind of more adult content and a bit more forgiving whereas nintendo is like no we believe in quality over quantity so it's kind of a different mindset they are in but you mentioned before that nintendo is something of a dark horse in the video games industry explain what you mean by that well nintendo is very hard to strategize against I mean, I feel sorry for whoever's job it is in PlayStation and Xbox, and their job is to work out what Nintendo is going to do next and how to counter that.

21:20Because they are a company that just does left field like every single time. And you can't just kind of go, oh, we'll copy what they do because Xbox and PlayStation tried that with the Wii, didn't work. And they would have copied the Wii U, which would have been a disaster. So you can't just copy what Nintendo does. Really, Nintendo is kind of undefeatable in that way because you can't predict where they're going to go. They're a very hard company to fight against. I mean, sometimes they make a mistake. And, you know, they're kind of almost their own worst enemy in some ways. When they screw up, it's usually their own fault.

21:58But it sounds like what you're suggesting is a certain calculated inscrutability. Do you think that's an intentional strategy on the part of Nintendo? yeah i think they've realized there's no point producing a console that's you know competing on power like the xbox and playstation do against each other there isn't room for a third player just offering that and it's the smallest company in this fight so if it's just a case of our box is the same but it's got a nintendo logo it's going to be out marketed so basically its approach which is to, I don't know, create novelty. I mean, novelty kind of sounds slightly dismissive, but I don't mean it to be.

22:38But it's kind of, we make something unusual, new experiences that you won't get on your PlayStation, that you won't get on your Xbox, like the Switch. Where else are you going to get the kind of multiplayer experiences, the portability that can also plug into your TV? But it's things like that that kind of keep Nintendo feeling fresh and different and always a threat to Sony and Microsoft. You know, they kind of thought Nintendo was going to be dead in the mid-noughties. And then it comes out with the Wii and it's the biggest selling console of the generation. Wii would like to play. How interesting.

23:18What do you think made the Wii this overnight success, Tristan? The Wii was just different and it was instantly understandable. You have to remember, I remember kind of giving my partner kind of, he was interested in playing Grabbed Ferdalto, gave him a controller, tries to play it, cannot figure out the controller, it's just this mess. There's too many busts of what's going on. The Wii, it's just like, here's this stick, wave it. Instantly, everyone who's ever thought, anyone who's ever thought, I want to play a video game, can play it. No problem at all. Well, now you mentioned you had a Wii U, even though those didn't do as well overall.

23:59Why couldn't that catch on, do you think? Oh, I think that console was a bit of a mistake all around. First of all, the naming, I think, confused people. It's like, is this a new Wii or is this like the Wii, but slightly upgraded? um it had that kind of weird fisher price ipad attached to it which was probably quite an advanced idea when they decided to do it but by the time the wii u came out it looked a bit dated so i think it was just a bit of a mistake all around i mean you can see it as a kind of evolutionary step towards the switch but it definitely wasn't the finished article i mean It had some nice games on it, which you're always guaranteed with Nintendo.

24:45But this kind of strange, big, uncomfortable Fisher-Price tablet was really not going to cut it for many gamers. You know, it seems like Nintendo, you mentioned the Switch, they sort of seem to go all in on handheld games with, you know, Nintendo Switch, that console handheld hybrid, if anyone hasn't seen it by now. Now, Sony tried to jump into handhelds with the PlayStation Portable, but that paled in comparison to the Game Boys. Why was that? Nintendo had just always kind of owned the portable market. So Sony was a challenger, if you like. And it was marketed very differently. It was like trying to be the high-end portable gaming machine, almost like a PlayStation that you could take on the bus.

25:30um nintendo didn't really kind of go in for that very high end stuff it was more mass market it had games that had broader appeal like professor layton or brain training um so it was just better at having that mass market and it also had pokemon which was always a portable game designed to be that and i think that's pretty core to its success in portable video games um it's really something that works very well on the move. Yeah, well, I think that that brings us to the next obvious question, which, you know, Pokemon, we're talking about a brand with a lot of intellectual property weight. And you think about a lot of their other games, character-driven games like Super Mario Brothers, The Legend of Zelda, just to name a couple.

26:19These characters are beloved in ways that go beyond the games themselves. I mean, there's a Nintendo world at Universal Studios in Japan and Hollywood. And I wonder where all this factors into Nintendo's larger business strategy. Oh, absolutely. You have to think now there's like three, no, probably four, if you think of really young children today. So four generations have grown up now with Mario and Donkey Kong and Zelda and all the rest of it. And I think that's really important. It's kind of, there's something, you know, I suppose a little bit like Disney or Barbie in a way, that it's something handed down through the generations now.

27:01It's been going that long that it's kind of part of the cultural fabric. And its IP is very cross-cultural. It's quite easy for Nintendo characters to sell in lots of different markets in the world. Whereas something like Call of Duty is going to appeal slightly less kind of outside, say, the West or America. So where do you think Nintendo falls in the console wars today? Is there a certain kind of gamer who's more likely to buy a Switch over a PlayStation? And are there a lot of gamers who buy both? Or how do you read how this is played out? I think there's a lot who buy both. um i think kind of people tend to choose more between playstation or xbox um that's more of a direct choice nintendo's consoles kind of get released in the middle of the sony microsoft console kind of life cycle so you know xbox and playstation come out a few years later nintendo releases the console so financially it's not like they have to buy them all at once um so i i think that's part of the appeal i think it appeals to it it scratches a different itch right i mean when i'm at home on my tv i'd probably go to my playstation rather than my switch but if i just want to kind of play on the move somewhere i'll pick up the switch or if someone's watching something on tv that i don't want to watch maybe i'll pick up the switch instead so i think they're kind of games for different scenarios different moments in the same way that you wouldn't always play a game on your phone if you've got a console.

28:39Yeah, I totally get that. Well, now it's time for another short break. Our guest is writer and journalist Tristan Donovan. And when we come back, we're going to be talking about what's next for video game consoles. Stick with us.

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30:56Welcome back to Business Wars. Tristan Donovan's book, Replay, The History of Video Games, takes a deep dive into the stories behind everyone's favorite form of interactive entertainment. But not everyone would prefer to play on an actual console. Tristan, how's the console market doing these days? console market is doing well it's probably bigger than it's ever been but it's growing slow so it's kind of a mature market that's a big slice of what's become a much bigger market today most video games are mobile tablet games they're on android or ios um pc games are also another kind of big section so consoles have gone from really being the whole industry in some ways to being one part of a much bigger industry huh well now who's playing the most video games these days i mean at this point games are pretty much global um phone games have kind of really kind of opened it up to be something that you know is truly international um back in the 80s 90s video games were very expensive they were consoles you had to buy or a pc you had to buy and this was stuff that if you were outside Japan, Australia, Europe, North America, was pretty much unaffordable.

32:18So, you know, that playing field's kind of leveled out now. And most of the market is kind of around the world. It's not just kind of concentrated in the West. I guess in a way, this sort of adds up because of the rise of the smartphone and tablets, of course, that mobile gaming would be so big. Does that really account for its rise in popularity, the fact that these tablets and phones have become so ubiquitous that they're with us all the time, just convenience factor? It's that and also the change of business model to having free-to-play games that you can just pick up and play. You don't have to pay anything to play them, but you can kind of buy extras and go along like that whereas the traditional video game model is first i spend four hundred dollars on a console then i spend sixty dollars on a game and you know it adds up pretty fast and this is really big financial hurdle for people to get over to get into games whereas people have a phone for lots of utter reasons so they just happen to have a gaming device and games on it are free and you know you may be playing kind of increasingly similar types of games because the phones are getting more powerful suddenly kind of you already have a gaming device that's your phone and it's probably a bit more handy than having a game console so it just makes sense to play your games on effect yeah for sure well now so what about gaming companies how are they adjusting to adapt to these trends are any companies adjusting their strategies to anticipate this mobile gaming boom or to capitalize on it better than others?

34:01Oh, everyone's changed their strategy. They've had to to survive. So all the big players to differing degrees have kind of got into mobile games. There's lots of different ways in that, but that's become a very big driver and focus for companies like Electronic Arts, etc. The biggest video game company in the world by revenue is Tencent, the Chinese tech company. It doesn't even make console games. And it wasn't really a factor in gaming until probably 15 years ago. So there are new companies that are springing up out of nowhere. There are old companies that are moving into it. And then you have the console makers, which are adjusting their approach.

34:47So you have Sony releasing PC versions of their games now. And they've now done a deal with NCSoft to start getting into mobile more. Nintendo is releasing mobile games with some partners. Microsoft has bought Activision largely to get into mobile games. So everyone's having to adapt. Unless you're very small and specialists in the video game industry, you have to be big in mobile to be successful. Now, if Microsoft were to lean further into the mobile gaming space, what would that look like for the company? my Microsoft strategy is kind of it's still very early days I think it's very much based around the idea of creating a subscription service how far they go with that is hard to tell but they are spending huge sums on it um I mean Game Pass costs them something like a billion dollars a year to run and they need twice the number of subscribers really just to break even on that um so you know they are definitely investing for the future they've paid an awful lot of money for activision um so they are definitely betting on a future where this subscription kind of service um their entry into mobile becomes big enough to earn back all those hundreds of billions they're spending where would microsoft's entry into mobile gaming leave sony do you think i think microsoft's entry into mobile does put sony at a bit of a disadvantage is probably now of the three console players probably the weakest in mobile and it probably needs to catch up um quite how it's going to do that um is unclear the the problem for sony is it's got playstation it's got the biggest console platform you don't want to erode that platform it's kind of what your business is built on having kind of this captive audience of players mobile they're not necessarily going to have that strength so it's a difficult place for them microsoft's got less to lose in a way um you know xbox is struggling a bit so it's like well you know if we do well mobile and it doesn't really matter if we're kind of number three in consoles you know i've been noticing a kind of a trend and maybe this is in part because uh i was a real fan of the last of us on hbo But I'm curious if you've been picking up on this as well.

37:11Are we or are we not seeing more video games get adapted for TV and movies? Is that a thing that's really sort of taken off? Yeah, I think so too. I think it's really an interesting turnaround. I mean, go back 15 years. The traffic of IP was really one way. It was from Hollywood to video games. You know, video game companies were there to make Hollywood movies into games. Now it's pretty much reversed. It's kind of Hollywood's now buying game licenses and kind of feeding your video game IP. So it's an interesting turnaround. And I think it's not really been exploited as well as it should have been.

37:53You know, there's some very big games out there, yet not much has been done on TV or in film with games. it's been you know there's no call of duty movie um i'm not saying you necessarily result in a great movie but it's surprising that this hugely popular game has never been made into a movie whatsoever but i think that's starting to turn i think you know hollywood's attitude to games has changed remarkably yeah well sonic the hedgehog right five nights at freddy's came out uh uncharted i mean there have been it seems to be picking up and that that's just in the past couple of years yeah absolutely and i think we're going to see much more of that because now we've had successful video game adaptations i think this is the thing before there had been a few but they were no budgets or they were unpopular and that doesn't really give uh tv or film making much confidence that this is going to be very popular but now that you're having hits off the back of video game ip there's probably going to be a lot more video game movies coming your way.