Why Sega should release a new console
Posted by Don Reisinger
Sega is in trouble. According to its latest filing in Japan, the
company incurred a loss $501 million during its 2008 fiscal year and
its video games division lost about $56.3 million. And as the company
was quick to point out, something needs to be done on the video game
front.
"As rebuilding our consumer video game business is crucial, we now
need to review our game title strategy more flexibly to adapt
ourselves to changes in the trend of the market," said Koichiro Ueda,
head of Sega's public relations department.
Of course, Sega did what it could to downplay the news of its
impending failure on the video game front and said that it thinks it
can turn things around, but I just don't see how that's possible with
just games. Let's face it -- the company's once proud Sonic franchise
is floundering and there's no indication that it's really that
valuable on Microsoft, Sony, or Nintendo platforms. Beyond that, the
company has done poorly with other titles it has released and aside
from a lingering desire for the return of the Shenmue series, few
people even think about the developer any more.
With that in mind, Sega needs to change its strategy and turn things
around. And the only way it can do that is to release its own video
game console.
As soon as you read that, I'm sure it immediately conjured up thoughts
about the Saturn and Dreamcast and the failure that both of those
consoles were. And while you may be right in having doubts about
Sega's ability to create an extremely popular console, I'm starting to
think that we're ready for it.
Depending on the study you read, the average gamer is anywhere between
30-35 years old. Because of that, it's safe to assume that the vast
majority of gamers remember the days of Sega console gaming and there
is still a huge group of Sega zealots in the wild that long for
another Dreamcast.
Realizing that, I think it's safe to assume that Sega should be able
to capitalize on those that are still keen on using a Sega-branded
console and through the use of some serious hype and a far better
hardware strategy than it formally employed, it could become a major
hit.
Of course, the plan doesn't quite end there.
There's no debating the fact that Sega has been a relative failure in
the software space. Since its decision to drop out of the hardware
game, the company has had a few minor hits, but nothing has been
developed that we can classify as a blockbuster. And in an environment
where we're seeing a significant push towards consolidation, the
company really only has two options: sell the company to the highest
bidder or develop a console.
And considering the fact that there are a slew of more attractive
developers out there with better franchises, I just don't see too many
large firms going after Sega. And it's for that reason that it needs
to find a way to differentiate itself and take a stab at the hardware
market.
In order for Sega to truly keep its game division afloat, it'll need
to develop hardware that's both forward-thinking and inexorably tied
to the online space. Beyond that, it'll need to repair the issues it
may still have with retailers and some other developers and endeavor
to build a console that can compete on the same level with the Xbox
360 and the Playstation 3.
But it's the relationships with developers that will truly matter to
Sega. Due to the expected high price of the hardware, Sega will need
to sell the console at a loss and (hopefully) make up for it through
deals with third-parties. In order to do that, it'll need to establish
itself as the "real third console" that developers should expect to
sell games on. After all, third-parties are having trouble selling
games on the Wii and if they believe that they can turn an even
greater profit by selling games on three consoles, the deals should
start to build up.
After forming the deals with developers, Sega will need to build the
hype machine up as much as possible. Instead of following the faulty
plan of years ago, it needs to show off a console that's both more
powerful than anything available, offers a Blu-ray drive, and has the
kind of online component we're only seeing in the Xbox 360. The
company also needs to play by the rules: it shouldn't announce the
console and release it on the same day and it should take as much time
as it needs to ensure all of its ducks are in a row before it launches
it.
More than anything though, the return of Sega should be the
centerpiece of its entire campaign. I truly believe that there are
millions across the globe that would invite Sega back into the
hardware business and as long as the games were plentiful, even those
who have never played a game on a Sega console may want to get in on
the action.
Although it's risky, I simply don't see any other way Sega can revive
its business. With slow growth and losses each year, how can the
company truly expect to compete in this increasingly competitive
market without some sort of action?
Sega should be a hardware company. It's as simple as that.
http://www.cnet.com/8301-13506_1-9945007-17.html?tag=cnetfd.mt
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