Abstract
This chapter provides an overview of the home video game console market from the late 1990s through the 2010s. The home video game console market saw the exit of Sega after the failure of the Dreamcast in 1998, but the entry of Microsoft led to continued competition among the three companies. Sony's PlayStation 2, released in 2000, was a further success, with its proprietary CPU and GPU greatly increasing performance. However, in the process of competition, the development cost of CPUs and GPUs used in game consoles skyrocketed, and the cost of manufacturing game consoles exceeded the selling price of the consoles. Sony's PlayStation 3, released in 2006, suffered from backward and sluggish sales of the console, and the company lost enough money to erase all the profits it had built up in the previous two generations of consoles. In addition, during this period, the market size expanded in North America and Europe, and the influence of the Japanese video game industry declined significantly.
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Notes
- 1.
WindowsCE (later renamed Windows Embedded and now renamed Windows 10 IoT) is an OS developed by Microsoft for embedded devices. It is intended for PDAs, car navigation systems, and other computer-based devices, but has also been used in the gaming field in Dreamcast and arcade game boards. There is no OS package, and the OS is shipped embedded in devices.
- 2.
While the size of the standard version of Windows CE at the time was several tens of megabytes, the custom OS for Dreamcast was slimmed down to 1.2 megabytes, including DirectX. However, according to what the author (Koyama) has interviewed from developers at the time, Dragon did not have a hardware emulation layer (HEL), and the details of hardware control (especially 3D processing) were left to individual game companies. The OS and libraries separately prepared by the Sega CS Lab had all of these features, and many companies used the OS prepared by Sega.
- 3.
Commercial ADSL service (broadband Internet access service) started in Japan from the end of 1999–2000, and its full-scale spread began in 2001. Prior to that, home Internet access was provided via modems by calling access points set up in each prefecture. In 1998, when Dreamcast was launched, a V.90 modem with a downlink speed of 56,000 bps (33,600 bps uplink) was available, but it was still too expensive, so a V.34 modem (33,600 bps both uplink and downlink) was adopted, one generation earlier. The modem adapter was detachable from the main unit and could be replaced with another communication adapter. In fact, as high-speed Internet access services became more widespread, a “broadband adapter” that could connect to a LAN at 10Base-T was available but only through mail-order sales.
- 4.
Dreamcast had a very distinctive advertising campaign. Akimoto Yasushi, a well-known composer and producer of female idol groups, was appointed as the advertising manager to create a series of advertisements. In newspaper advertisements, each newspaper carried a front-page advertisement with the shocking copy “Will Sega stay down?”, followed the next day by a front-page advertisement “X Day Nov, to strike back, Dreamcast.” For the TV commercials, a series of commercials were created featuring the then managing director Yukawa, who was an actual board member. The commercials were self-deprecating, with a child actor saying “SEGA is so lame,” but they too ended with the story that the company was fighting back with the development of Dreamcast. These advertisements greatly raised the profile of Dreamcast, which in turn led to a shortage of products at launch.
- 5.
The disk media used was not the DVD-ROM that already existed at the time, but a proprietary 8-inch disk developed by Matsushita. With a capacity of 1.5 GB, it was larger than the Dreamcast GD-ROM, but about one-third the size of a DVD. Matsushita also released the hardware, named Q, which was compatible with the GameCube and could also play DVDs, but sales were sluggish.
- 6.
NEC was responsible for manufacturing the Flipper, for which NEC invested 80 billion yen.
- 7.
Isao Okawa (deceased), then president of Sega, visited Bill Gates, then chairman of Microsoft, to negotiate Xbox compatibility with the Dreamcast. An internet connection function did not exist in the Xbox concept at the time, and the negotiations broke down when Okawa strongly insisted on an internet connection function (see Toru Furukawa, then president of Microsoft Japan, tweeting: https://twitter.com/SamFURUKAWA/status/7612161941).
- 8.
SCE invested a total of 255 billion yen between 1999 and 2000 to manufacture EE and GS (http://www.scei.co.jp/corporate/release/pdf/000601.pdf). In addition, in 2003, Sony announced that the Sony Group would invest 200 billion yen over 3 years to manufacture semiconductors that combine EE and GS into a single chip. (http://www.sony.co.jp/SonyInfo/News/Press_Archive/200304/03-0421/).
- 9.
The world’s first DVD (Digital Video Disk, later called Digital Versatile Disk because of its various uses) player was released by Matsushita Electric (Panasonic) in November 1996.
The penetration rate in Japan was only 21.9 out of 100 households in 2002, the first year that optical disk players (excluding PCs and game consoles) were included in the Cabinet Office’s Survey of Consumption Trends.
- 10.
At the time of the launch of PlayStation 2, SCE did not provide graphics drivers and other libraries (“Hiroshige Goto’s Weekly Overseas News,” May 10, 2000, http://pc.watch.impress.co.jp/.../20000510/kaigai01.htm).
- 11.
From the Japan Electronics and Information Technology Industries Association’s statistics on domestic shipments of consumer electronic equipment.
http://www.jeita.or.jp/japanese/stat/shipment/pdf/minsei2000.pdf
- 12.
For example, the RV40, the least expensive of the DVD players released by Matsushita on March 10, 2000, cost 49,800 yen. Note that Matsushita was aiming for a monthly production of 5000 units together with two portable DVD players (Nikkei Sangyo Shimbun, January 19, 2000).
- 13.
The price of the DESR-5000, released in December 2003. The strage capacity of the HDD in the DESR-5000 was 160 GB, while the DESR-7000 with a 250 GB HDD was priced at 99800 yen.
- 14.
By the time the PS3 was released in 2006, the increase in CPU operating frequency was sluggish, and companies were trying to improve processing power by parallel processing through the use of multiple cores in the CPU. However, CPUs for PCs and servers used homogeneous multi-cores with multiple identical cores, and heterogeneous multi-cores such as Cell were rare; Cell’s performance was overwhelming at the time, and IBM’s supercomputer (Roadrunner), which is equipped with an enhanced version of the Cell CPU was ranked the best supercomputer in the world in June 2008.
- 15.
In PS3, only 7 out of 8 PPEs can actually be used, in order to improve the CPU yield rate, so that even if one of the 8 PPEs is defective, the system can still operate (designed with PPE redundancy).
- 16.
The first model was also capable of playing back SACD (Super Audio CD), although its successor was not equipped with this feature.
- 17.
Because the games supplied on Blu-Ray disks are too large, only PSP titles, Game Archives (past PlayStation 1 and PC Engine titles), and download-only games were available when the PS3 was first released.
- 18.
The TV program recording function was realized with the peripheral TORNE (2010), which was well received for its simplicity of operation and comfortable interface that took advantage of the high performance of the PS3, and achieved sales of 1 million units, which was unprecedented for a peripheral device. The TORNE for PS3 was a tuner box that connected to the PS3 system via USB + software for the PS3. Later, in 2012, nasne, a network recorder and media storage device, was released, and TORNE became the software used to schedule recordings and view recorded videos on nasne. In 2015, Android and iOS versions for smartphones were also released. Nasne was discontinued in 2019, but the business was sold and released by Buffalo in 2021.
- 19.
According to the iSuppli report, the cost of the second-generation PS3 is $336.27, which means that there is still about $30 of reverse cost.
- 20.
Ultimately, HD DVD lost out to Blu-Ray by an overwhelming margin in terms of widespread adoption and was withdrawn in 2008, just 2 years after the first HD DVD player was released in 2006. If the Xbox360 had included HD DVD, enthusiasts would have had to hunt around for a workable drive after its release, as they did with Dreamcast’s GD-ROM.
- 21.
Kinect has been analyzed by users since its initial release, and drivers for Windows were distributed by volunteers. This led to many cases where Kinect was connected to PCs and used for various applications, and in response, Microsoft developed an SDK for Windows, which was released in 2011 as a beta version and in 2012 as the official version. Although Kinect was not very successful as an interface for games, its technical capabilities have allowed it to be used in a larger range of applications.
- 22.
The internal memory is also used by the Wii system, so users do not have access to all 512 MB. Also, when the system was first released, games that were to be launched required data to be stored in the system’s internal memory, and storage on SD cards was only a supplementary method. However, download sales through the Virtual Console were stronger than expected, and many more users wanted to store more games, so the system was updated so that games on the SD card could also be launched.
- 23.
However, in the market downturn following the financial crisis, Japanese firms did not suffer so much noticeable damage, while Western firms suffered significant losses. In this respect, the small market share of Japanese firms in overseas markets and their cautious attitude toward risk were positive factors.
- 24.
Furthermore, while turn-based combat is the norm in Japanese RPGs, most RPGs overseas are games in which the combat is also action oriented. Overseas, Japanese RPGs are called JRPGs, which are treated as a separate genre from the general RPGs.
- 25.
Shooters in Japan (called “shump” outside of Japan) and Shooters outside of Japan are completely different genres. The type in which the player’s viewpoint is the same as that of the character being controlled (i.e., the main character is not on the game screen) is called FPS (First Person Shooter), and the type in which the player is looking at the back of the character (i.e., third person viewpoint) is called TPS (Third Person Shooter). The game genres are almost the same.
- 26.
Furthermore, even in soccer games, Konami’s eFootBall (Winning Eleven) series is strong in Japan, while EA’s FIFA series is strong overseas.
- 27.
In counting the number of people, Special Thanks are excluded. In the classification, heads of departments, such as graphic directors, were placed in their respective departments (in this case, the graphics department). Directors with no specific title were included in the “Other Staff” category, and producers were included in the “Sales Activities” category. As a result, some works have no staff at all. Dragon Quest did not add voices to the characters, but many games after the popularization of disc media added voices to the characters, so the names of voice actors are added to the staff roll at the end of the game. In addition to the number of people’s names counted, DQ7 has four company names in the graphics system (TOSE, TAMTAM, TINY ART, and ARTE PIAZZA), and DQ8 has one company name in sound (TOSE). in DQ8, in addition to that, the end of the QA staff rolls “... and All QA Staff” at the end of the QA staff role in DQ8, suggesting that more people were actually involved in QA than in the table.
- 28.
Remarks made by Motomu Toriyama, Director of FF 13, in his speech at GDC Taipei in Taiwan in 2012.
- 29.
Game Developer’s Magazine, a trade publication for game developers (now defunct), published a postmortem on Final Fantasy (an article in which the developers give a retrospective of the development process after development was completed), in which it is stated that in the early stages of development there was a “Lack Of A Shared Vision” in the early stages of development. http://www.gamasutra.com/view/news/121381/Exclusive_Behind_The_Scenes_Of_Square_Enixs_Final_Fantasy_XIII.php
- 30.
Since the launch of PS4, the situation is different again, as there are more cases of simultaneous development and release of the same title for both console and handheld devices.
- 31.
An example of a smaller video game company, and one that concentrated on handheld video game consoles, is Nihon Falcom. Another example of a company that counted after a long time after the launch of console games is Atlus, which released Catherine for PS3 and Xbox360 for the first time in 2011. However, Catherine is also a puzzle game rather than an RPG, which would have been not expensive to develop.
- 32.
In reality, the reverse spread is even larger when shipping and other costs are taken into account, as well as the fact that hardware shipments to retailers are approximately 90% of the retail price.
- 33.
Normally, the revenue received by a game company for each console game is about half the price of the package. In the case of a platform holder, this includes a license fee plus a package production fee. Since the package price is about 7000 yen, Sony earns less than 4000 yen per game developed in-house. Naturally, the remainder of the profit after development costs are recovered is the profit, which is 15 games at 2000 yen per game.
- 34.
According to some reports, the amount of the reverse spread itself has declined, but the reverse spread was still in place at the end of 2009.
- 35.
Sony renamed SCE as SNE Platform and separated the network business and game-related business. The network business was then merged into Sony Corporation, eliminating its debt, and the game division was transferred to a new company (company name: Sony Computer Entertainment). Therefore, strictly speaking, the current SEE (Sony Interactive Entertainment; changed its name from SCE in 2016) is a different company from the SCE of the PlayStation 1 and 2 days.
- 36.
Microsoft’s gaming business is listed in the Entertainment and Device Division in the financial results. This Division once included the Zune music player and now the Surface tablet, so the details of the situation are unclear. However, total profit since 2008 have not exceeded $5 billion, and the accumulated losses in the gaming business do not appear to have been eliminated.
- 37.
More to the point, eco-points, which were given as part of the recovery from the Great East Japan Earthquake, helped popularize TVs.
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Koyama, Y. (2023). Console Games (3) Japan’s Declining Position. In: History of the Japanese Video Game Industry. Translational Systems Sciences, vol 35. Springer, Singapore. https://doi.org/10.1007/978-981-99-1342-8_12
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