Introducing the Two Console Household

It seems that one of the defining attributes of the current generation of consoles will be the very large number of homes that have two of them. Mainly because the Wii does a completely different job compared to the HD consoles.

The Nintendo (NTDOY.PK) Wii is very much family fun, so it sits in the lounge where the whole family can use it. The main use it will get will be for things that the other consoles just don’t do. Wii Sports is the prime example of this family fun and Wii Fit will be similarly successful.

People will also use it to play the great Nintendo first party games such as Galaxy, which just aren’t available on anything else. Third party developers are going to have a hard time of it no matter how big the installed base, unless they can learn how to produce Nintendo like products.

The Microsoft (MSFT) 360 and the Sony (SNE) PS3 are traditional consoles that the whole industry understands. A single person or a couple will have it in their lounge, but in a family it will be in the main user's bedroom. The big games will be the Halos, Metal Gear Solids, GTAs etc that did well in the previous generations with a smattering of new IP such as Assassin’s Creed. Third party developers will do very well and make a lot of money out of these games on these consoles.

This huge dichotomy between the Wii and the HD consoles has come about because the manufacturers have followed different strategic routes. Nintendo have concentrated on their gesture interface and the new fun possibilities that it brings. (Though remember that Sony could have done the same with Eyetoy and they messed up.) The HD consoles mainly offer more of the same features that their previous generations did.

Hence the rapid uptake of Wii. It offers something completely new whilst the HD consoles are just evolutionary. This makes the HD consoles slow burners. People will only buy them when they are forced to by the weight of must have games. 2008 looks like being the year when that weight will reach critical mass. I can see a situation where Sony and Microsoft are unable to meet demand as 130 million previous generation owners try to upgrade. Nearly simultaneously.

The fun will come with the next generation of consoles. Nintendo will obviously be forced to go HD, so they will become more like Sony and Microsoft. These two, meanwhile, will have added gesture interfaces and family fun, so they will be more like Nintendo. We could go back to all three platform holders producing similar machines, and households going back to having just one platform. Or maybe more than one of the same platform networked together.

If this is the case, how will people choose which one? Nintendo will have the advantage of their first party titles and the range of compatible peripherals that people already own. But I don’t see this as being the great decider.

The biggest differentiation between the three next generation platforms will be their online offerings. Here it will be between Microsoft Xbox Live, which has the momentum, Sony Home which offers (as things currently stand) a far better social networking capability and Nintendo, whose Wii Online is still a very lightweight offering. So the key to the future of console gaming is what happens to these online platforms over the next three years.