The king is dead! Long live the king!
History has shown us that no empire lasts forever. Translating that history to video games there seems to have been a similar pattern. A system dominates, and then the market is disrupted and that ruler is toppled.
Sega got killed (as a system builder) in the 90s, Atari, 3D0, Magnavox, NEC (Turbo Graphics) all went before it, and the Phantom died before it ever even had a chance to say "Hey I want to be king!"
But in this war there is the once and future king. The company who has managed to survive despite being dethroned by Sony, and who happens to still be making money hand over fist, mostly due to their dominance in handhelds. The handheld market has been Nintendo's impenetrable fortress where they have been rebuilding, restructuring, and reforming their sword, and they are about to unleash an army which looks weak on paper, but could very well topple the Juggernaut empire which has been Sony.
"Through small and simple things, great things shall come to pass."
The concept is simple. One of the reasons that 3D0 and Atari, and even Sega failed back in the day was because the systems were being sold at around $500-$700 a unit. This was simply too much for the average gamer. It's too much for a lot of people now, except that Sony did manage to get games into the mainstream. PS3 and the Xbox 360 won't suffer the fate of the previous powerful but mega expensive consoles simply because most people in America play games, and there are enough of us so enamored with games that we'll pay whatever the manufacturer asks, even if that means putting ourselves in severe debt. More significantly more wealthier people are playing games than there were in the early 90s.
However once people get the fancier high priced systems on thier normal TV so far they are hard pressed to see much of an improvement over the previous generation. (I thankfully do have an HDTV and am basking in the glory that is Oblivion.) This may be an edge for Nintendo as well. Why pay $400-600 for a new system that really doesn't do much more unless you buy a $2,000 + TV, when you can get a new system for $200 or less that looks just fine on what you already have?
There is, a brooding consumer backlash for the high prices of the next gen systems. Many 360 owners I know are complaining that now that they have the system they cannot afford additional games. Some I've talked to about the PS3 nearly died of sticker shock and have even boldly declared that there won't be a PS3 for Christmas, despite the crying on thier kids.
But then we look at the little Nintendo. They've always been well loved for thier great games, and it seems that they'll be putting out an inexpensive console with inexpensive games, and truth be told with the difference between the Xbox and the 360 so marginal on a normal TV it's possible, even likely that the Revolution could stand up pretty well against the competition so long as its on a standard TV.
Not to mention the innovative controller, and the virtual console feature. All of this at a price at least half of what the competition is asking for, if not less.
Throughout most markets there is always a low end, medium, and high end product. Products priced to attract different income brackets. Houses, cars, bathtubs, sinks, MP3 players, DVD players, and so on.
Sony carved a market for itself with the PSP targeted toward the "high end" gadget guys and gals who don’t mind paying a premium price. Sadly the games have been mediocre at best, but they did establish a new market there.
Why the PSP is failing to keep up with the DS is because Nintendo put out a device with modest, but still acceptable capabilities, and then upped the anti by introducing a new way to approach handheld games. This has lead to some amazing innovations in the games themselves. Everyone expected the PSP to trump Nintendo, but that did not happen because Nintendo realized that not every gamer out there is super wealthy. Most of us, in fact, are not. My gamming habits cost me thousands every year that were I a responsible 26 year old I would be putting toward bills instead. I am at the point that I can no longer afford the prices Sony, and to a lesser extent, Microsoft are asking for.
Nintendo has capitalized on a market that no one realized was there, and created a poor man's handheld. It's been a run away success. Odd considering how every other consumer electronics have realized that market, and have been capitalizing on it for years.
People who are looking at the PS3's price tag this Christmas may have a bad reaction to it. The PS3 will sell (to those who can find it and are willing to pay the mega-premium price) but many may find themselves drawn to the more conservative pricing of Nintendo, and I think that a lot of people underestimate how many of us there are who simply cannot afford $70 games, and $500-600 systems.
By capitalizing on the not-so rich gamer Nintendo could very well find a back door to once again claim the throne. Just as they managed to maintain their impenetrable handheld fortress by focusing on those of us near or below the poverty line.