Zach Broderick - Brandeis University



Zach Broderick

Paul Rabinovich

Nakul Sood

BUS10a - Bayone

5/3/07

The Console Wars: Sony’s Competitive Crisis

The March 2007 issue of Electronic Gaming Monthly contained a surprising quote from Sony Computer Entertainment Inc.’s CEO and President Jack Tretton: "If you can find a [Sony Playstation 3] anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." Despite the fact that this was just one of many verbal gaffes that had become typical of Sony’s management, the internet seized on the opportunity to put Sony in its place, finding an abundance of PS3’s in more than half of retail stores and posting pictures of them on their sites1.

What happened? How did Sony, the dominant player in the video game console market for the last two generations, find itself being laughed at by the collective gaming blogosphere over mounds of unsold Playstation 3’s? After all, they had launched the highly anticipated console only four months prior, where it had sold out immediately to long lines and was selling fast on the gray market for over a thousand dollars. Why did sales drop off so quickly while its competitors, the Microsoft Xbox 360 (360) and the Nintendo Wii, continued to sell briskly? Most importantly, what can Sony do to regain its dominant competitive position?

1. Background: Sony Computer Entertainment (SCE)

Sony Computer Entertainment, Inc was founded in 1993 in Tokyo, Japan as a subsidiary of Sony, who wanted to test the waters of the rapidly growing video game market. Originally planned as an add-on to the Super Nintendo, in late 1995 the Sony Playstation was released as a standalone console and was met with enormous success, shipping over 100 million units to date [see Exhibit 1 for all sales data]. The key to the console’s dominance was the wide support from third party game publishers, which distinguished it from its competitors. The Nintendo 64 still used cartridges as opposed to CD-ROMs, which publishers disliked because of their expense, leading to a lackluster selection of games for the system. The Sega Saturn suffered from poor development tools that made it difficult to write games for, besides the fact it was $100 more expensive than the other consoles.

The success of the first Playstation was exceeded by its successor, the Playstation 2 (PS2), which became the highest selling console to date when it was released in 2000, selling over 115 million units as of 2007. The console was backwards compatible and was the first to play DVD movies. The competition was weak: Sega and its Dreamcast had failed and were out of the hardware market. Nintendo had unintentionally built a reputation for appealing to young kids, which caused the growing segment of older gamers to ignore its Gamecube console. The last competitor was Microsoft’s Xbox. While technically a more powerful system, Microsoft was a newcomer to the market and had not established as much customer loyalty and relationships with publishers as Sony had, resulting in a smaller selection of games and fewer sales, totaling 24 million.

These factors, combined with the enormous momentum of the brand made the PS2 one of the most successful consoles of all time. Sony hoped to repeat that performance six years later with its next generation Playstation 3 (PS3). As expected, when it was first announced at the Electronic Entertainment Expo in 2005 there was considerable excitement from the gaming community2. A few months later, the next generation console war officially began with the 2005 holiday release of Microsoft’s Xbox 360. While it experienced shortages and higher than average failure rates, problems that are typical of console launches, it was a critical and commercial success, featuring a rich online play system and high-definition gaming. Microsoft hoped to dethrone Sony by getting a one year head start; after 4 years in the market, MS was a now mature competitor, with a smaller but loyal fan base, strong relationships with third party publishers—many of which also developed games for Sony—and its own collection of exclusive titles.

Sony was not terribly worried about the early success of the 360. By releasing a year later, the PS3 would be polished and technically superior. They also had a very large and loyal fan base that was more than willing to wait for the successor to their favorite system. However, during 2006 there was a series of events that shook fans’ confidence in the company. The most significant was Sony’s announcement that the PS3 would cost $600 for the premium version and $500 for the basic version. This was because games for the console would be on Blu-Ray disc, the next generation hi-def DVD format Sony was pushing3. This required a very expensive Blu-Ray drive in the console, bumping the price up. In contrast, the premium version of the 360 was $400, and the basic only $300. The upcoming Nintendo Wii, which was also generating much excitement during 2006 for its revolutionary motion-controlled gamepad, would retail for only $250.

This announcement was followed by many arrogant comments from Sony’s upper management, especially Ken Katarugi, known as the “father of the Playstation” 4. He made several unfortunate remarks, including his belief that gamers would buy the PS3 no matter how much it cost, that further alienated fans who were still dumbstruck by the price. Even worse, news started pouring in that Sony had lost many of its exclusive titles to Microsoft, such as Grand Theft Auto, one of Sony’s flagship games that was now coming to both consoles. Fans were disappointed—they were appalled to learn, however, that many publishers had approached Sony about exclusive title arrangements, only to be ignored and snubbed by management5.

Despite these setbacks, the PS3 sold out immediately when it was launched in November 2006 with a total of 400,000 units6. This was partially due to an extreme shortage of available units, which further put off fans who could not get their hands on one, and whose only option was to buy one on the gray market for over $1,000. The shortage was the result of the scarcity of blue-laser diodes, which were required for the PS3’s Blu-Ray drive but were also in high demand by manufacturers of high definition DVD players. A buying frenzy ensued, with scalpers, remembering the 360 launch, buying as many consoles as they could and selling them at ridiculous markup to desperate parents whose kids wanted them for Christmas.

Only a few months later, however, scalpers found themselves unable to sell their PS3s even at retail price7. Many retailers had plenty in stock, but no one was buying. Meanwhile the Nintendo Wii, which had launched a few weeks after the PS3 with ample supply, was impossible to find8, and the 360 was still selling briskly. Many former Playstation fans, frustrated with the price of the PS3 and its earlier shortage, had bought a 360 or Wii instead. After all, it had lost most of its exclusives, why pay $200 more for a console that plays the same games as the others? The internet gaming community was already declaring the PS3 the losing console, and ridiculing Sony over its seeming disconnect with the reality of the situation9, as demonstrated by Jack Tretton’s statement. Sony was losing its dominance, and senior management was being purged, including Ken Katarugi himself10. What was the company to do?

In order to arrive at an answer to such a complex question, we must analyze Sony’s competitive position and using that information, arrive at a solution to improve it. We will use Michael Porter’s classic 5-point strategic analysis to find out how Sony relates in power to its suppliers, its customers, its substitutes, possibly new entrants, and the other major players. We will find which areas Sony is weakest and form a strategy to strengthen its competitive position within those segments, with the end result being Sony’s reemergence as the dominant player in the highly competitive video game hardware market.

2. Threat of New Entrants and Substitutes: The Video Game Industry

The video game industry has seen explosive growth throughout the last decade that continues to this day. Games are becoming more and more sophisticated, appealing to a broader demographic than ever before. An entire generation that grew up playing video games is now in adulthood, and many have not left there beloved childhood pastime behind. According to the NPD market research group, retail sales of video games and related hardware totaled $13.5 billion in 2006, an 18% increase over the previous year11. Gaming has become one of the dominant forms of entertainment among kids and young adults, especially males.

Video gaming does not face much of a threat from substitutes; rather, it tends to be the threat to other forms of entertainment, such as movies and especially watching TV, as well as playing outdoors. PC gaming, which has always been an alternative to consoles, has been in steady decline12. Facing increasing development costs, game publishers release titles for the platforms with the largest market share, and the PC gaming community is shrinking. Thus, the threat of substitute activities is almost nonexistent. One could argue that the most threatening substitute to the PS3 is the PS2, which due to the price and shortage of Sony’s next-gen console still boasts the largest sales and market share of all the consoles13. The PS2’s extensive library of games and continued support by publishers, combined with its reduced cost make it an attractive option for gamers on a tight budget. As always, support will eventually fade and this will cease to be a problem; however right now, the PS2 could very much be slowing sales of the PS3.

The threat of new entrants is also a minimal one, though it gives us extensive insight into the competitive factors of the video game industry. Certainly, it should not be ignored—after all, Sony was a new competitor when the Playstation was released and immediately became the dominant player in the industry. Microsoft was a new entrant with its Xbox, and is now an entrenched player. However, it should be noted that at any given time there are generally only three or less competitors in the console market, which is an amazingly small number for such a fast growing industry. Observe too that Sony and Microsoft were no small startups when they entered. Microsoft had to endure billions in losses in order to stay in the game and has only recently started turning a profit.

Why is the video game market so difficult to break into? Let’s take a look at Mr. Porter’s 6 factors that affect a firm’s ability to enter an industry:

1. Economies of Scale: Video game consoles are typically sold at a significant loss initially in order to establish market share14. Profits are made on the sale of games; any publisher that wants to release a console game must pay the console’s developer a royalty on every game manufactured, often about $10 on each $60 game15. As the cost of the hardware decreases and game sales increase, these losses are turned to profits, but in order to get to this point the company must be able to sustain billions in losses, especially if it is not an entrenched player (for example, Sony lost 369 million in just one quarter16). Critical market share must be established—a console maker cannot survive as a small or “niche” player.

2. Product Differentiation: Gamers are legendary for their rabid loyalty to a particular console, which makes establishing oneself difficult. Consumers are also reluctant to invest in an expensive newcomer that is likely to fail. Most gamers are aware that each console is essentially the same, and that their success will come down to available software. This makes acquiring exclusive titles particularly important, which is difficult for a newcomer; development costs are skyrocketing, and few publishers are willing to take such risk on an unproven platform.

3. Capital Requirements: As we mentioned earlier, consoles are sold under cost, and therefore a firm must be able to sustain heavy initial losses. Research and development costs for hardware are also extensive, such as Sony’s $2 billion expenditure on the Cell processor17. First party titles must also be developed to support the console at launch. Most importantly, an extensive advertising campaign is needed to overcome customer loyalty and make consumers aware of the firm’s entry into the market. Small companies have little hope of succeeding.

4. Cost Disadvantages Independent of Size: The success of a console is completely dependent on its games, and new firms traditionally struggle with getting third party support because they do not have established relationships and have not proven their success. Microsoft was an extremely large company when it introduced the first Xbox, but it still did not have the widespread support of publishers that Sony did.

5. Access to Distribution Channels: The overwhelming majority of game sales are through large retailers, and without their support, the chance of a new firm succeeding is highly unlikely. This is especially true with Wal-Mart, whose power over the games industry is astonishing18. While hardcore gamers may shop at specialty stores, the general public does not, and they make up the majority of sales. Shelf space is very limited and extremely valuable, and a new, especially small company is less likely to obtain that space.

6. Government Policy: Government policy has no significant impact on new entrants, even though the games industry is constantly threatened by politicians over allegedly objectionable content.

Overall, Sony’s downfall is not likely to be the result of substitutes or new entrants. The entrenched competition, however, is a different story.

3. Customer Power: The Competition

In the video game industry especially, a customer’s power lies in his ability to choose his console. Their high cost prohibits most consumers from owning more than one next generation system, and as we mentioned previously, it is not possible for a console maker to be a “small player”. Thus in order to take away consumer power, each console maker has to make their gaming experience unique, forcing the consumer to purchase their particular product in order to obtain that experience. This is often difficult to achieve—as we mentioned, the difference in hardware power between same generation consoles tends to have little effect on the gaming experience19. Software titles are key, and if they are all cross platform (that is, the titles are released for all consoles, not just one), then the consumer’s choice is irrelevant, and the firms must instead compete on price. Hence, exclusive titles are very important20. Let us analyze how the PS3 stacks up against its competitors, the Xbox 360 and the Nintendo Wii.

Hardware wise, the only console that offers a unique experience is the Nintendo Wii, which sports an innovative motion sensing controller. The Wii is far less powerful and expensive than its competitors, and thus far is the best selling next generation console. However, Nintendo has shifted its strategy, targeting the Wii at the “casual” gaming demographic, and therefore it does not compete as directly as the 360 and PS321. In terms of technical power, the PS3 is more advanced than the 36022; however, as we mentioned, small differences in power between same generation consoles generally do not matter. The PS3 also sports a Blu-Ray DVD drive that can play high definition DVDs, but so far its appeal to gamers has been minimal23.

As for games, Sony and Microsoft are both entrenched players and both appeal to the same demographic; thus, most games that are released by third parties are done so on both consoles. The difference lies in their exclusives. Microsoft’s strongest asset is its Halo franchise, which almost single-handedly saved the original Xbox. Developed in-house by Bungie, Halo 3 is slated for release later in 2007, and is one of the most anticipated games of all time. Epic’s Gears of War also sold a considerable amount of consoles when it was released in fall of 2006, and two sequels have already been confirmed. For the Japanese market, which is traditionally averse to shooters, Microsoft is working with several top Japanese developers on exclusive role playing titles to boost the 360’s poor sales in Asia.

In contrast, Sony has lost many of its most important exclusives, such as Guitar Hero, Grand Theft Auto IV, and Assassin’s Creed24. PS2 owners had an abundance of top rated titles that were exclusive to their system, one of the major factors of its success. The PS3 has had a few new titles, but no “killer apps” in the sense of Halo or GTA25. This leaves Sony to compete on price, which it clearly cannot, being $200 more expensive than the 360. The excess cost can be directly attributable to the Blu-Ray drive, which gamers have found to be a feature unworthy of the cost. While the price of the drive should decrease drastically in the future and become an asset to Sony as games become too large for DVDs, at the moment many gamers feel it is an attempt by Sony to push its hi-def DVD format at their expense26.

Needless to say, customer power is currently a serious problem for Sony, one that needs to be remedied immediately if they are to survive. We will address possible strategies shortly, but first we must take a look at one more group—the suppliers.

4. Power of Suppliers: The Game Publishers

We have already discussed many of the important effects software has on a console’s success, but not from the publisher’s perspective. The relationship and power balance between hardware firms and game developers is a complex one, which we will briefly analyze here. First however, let’s take a look at the game publishing industry.

Software publishers such as Electronic Arts and Ubisoft are engaged in a risky industry, and are facing tough times. Developing games for increasingly sophisticated hardware is becoming more expensive, often costing tens of millions of dollars for big titles27. Because of this, they need to sell as many copies as possible to the largest market. Publishers lose money on most titles they release, and regain these losses on their hits. This inevitably leads to an aversion to risk and further drives up game budgets in an effort to release the “big hit”.

Naturally, publishers want to reach the largest audience possible, which is why most third party games are released for multiple consoles28. However, this can be expensive, as all platforms are different and maintaining the quality of the game through the porting process can be difficult. Smaller publishers and games that do not license expensive IP are often released on only one console to save costs. If such a title looks promising or has developed considerable buzz, console makers will often offer special incentives to the publisher to make the title exclusive to their system29. These incentives can become even larger if the franchise is already well established.

How does this relate to the power balance between publishers and console makers? Because of the economies of scale involved in game development, publishers will choose a console that has significant market share, or more than one. If one console is dominant, as was the case with the PS2, publishers have little power. However if there is no clear winner, they can wield considerable influence, as hardware manufacturers must compete to attract exclusive games to their platform30. This is especially important because exclusives build market share, which leads to more exclusives. Sony clearly thought that they would maintain their dominance into the next generation, which would explain their poor treatment of publishers. Such was not the case, and the lack of a clear winner currently gives publishers enormous power over Sony.

5. Jockeying for Position: Recommendations

We now present our strategic recommendations for Sony, in order to reestablish their competitive dominance in the console market. Our strategy focuses on the competitive areas in which Sony is weakest; namely, correcting the imbalance of customer and supplier power over Sony. This will improve Sony’s competitive position, and will be achieved through two major strategic actions: cutting the price of the PS3 and reclaiming their exclusive titles.

Sony has so far refused the immense pressure to drop the price of the PS3. The console is already being sold for hundreds below cost31. Sony fears that a price cut is an admission of defeat, an acknowledgement that their product is overpriced and inferior. They want the PS3 to maintain its position of “the premium console”. These concerns are certainly founded, but thus far this strategy has clearly not been working.

The price cut serves to improve Sony’s power position in both the supplier and customer segments. As we mentioned earlier, because of the current similarity between the games available for the PS3 and 360, gamers are hard pressed to find a reason to pay the extra $200 for the PS3, no matter how much of a fan they are. With a lack of killer exclusives, there is no unique experience the PS3 can provide that the 360 currently can’t, and less expensively.

Now let’s analyze the theoretical market situation if Sony dropped the price of its premium PS3 to $400, the same price as the premium 360. This allows loyalty to come into play, an aspect of video gaming that should not be underestimated. Faced with the decision of an Xbox 360 or an equally priced PS3, a Playstation fan is going to have a much easier time purchasing the PS3 than when it was $200 more. As the PS2 was the dominant console of the past generation, the percentage of gamers that are Sony fans is larger than any other segment (70%32). They likely have large collections of beloved PS2 games that they can continue to play on the PS3, but not the 360. Being Playstation fans, they are also unlikely to be Halo fans, having passed it over last generation on the Xbox and thus won’t be lured by the prospect of Halo 3 and other exclusives on the 360.

If past loyalty is not a factor, the PS3’s other merits become much stronger at a lower price point. For the same price as the 360, a consumer can get a technically superior machine; the blu-ray drive transforms from a detriment to an important selling point now that it does not add $200 to the price. Microsoft would undoubtedly drop the price of the 360 in response; however, this would reestablish the PS3 as the premium console, and $400 is past the threshold where further differences in price will not have as strong an effect. Sony will have to take unbelievable losses, but the market share gained will put them back in the game, and a company of Sony’s size can absorb such losses for a period of time. Within a year, the actual cost of the hardware, especially the blu-ray drive, will have shrunk drastically, and thus the heavy losses will ease up significantly.

The added market share that would result from the price drop would have a beneficial side effect on supplier power as well. As we mentioned earlier, the dominant console in the market, such as the PS2, is more immune to supplier power than in a highly competitive market. This brings us to our next major strategic point: regaining lost exclusives. We cannot return to the past and undo Sony’s unfortunate treatment of publishers, and it is unlikely that they will be offered the same arrangements as before. At that time, when analysts had expected Sony to again dominate the console wars33 and the PS2 was king, they were in a much better bargaining position. Now they will have to lure the publishers back in—not an impossible task, but one that will require much more than sitting back while exclusives are handed to them on a silver platter.

Sony’s first task is to win back the titles that made the PS2 a must have system; most importantly, it needs Grand Theft Auto IV. Though it is currently scheduled for release on both the PS3 and the 360, it is not releasing for many months, and Sony still has time to make the PS3 the most attractive platform to release best selling titles on. We would recommend that Sony offer Take Two, the game’s publisher, exemption from licensing fees—that is, the $10 on every game manufactured publishers must pay the maker of the console the game is to be released on. This may sound like an odd move; after all, that fee is Sony’s only source of revenue, meaning it will not make any money on its best selling title. But just like the costs associated with a price drop, this is irrelevant. The market share gained from just this one game and other major titles is far more valuable than those lost revenues. With a larger installed base, Sony will sell more copies of later games. For the reasons mentioned earlier, it will also have a better balance of power with publishers, meaning more hit games; it is a positive spiral. Sony may even want to offer to pay Take Two’s marketing costs for the game as well.

There are several other small but important ways to attract publishers. Sony’s development tools are notoriously hard to work with34, compared with MS’s industry standard Visual Studio .NET, and could be improved to help developers harness the superior power of the PS3. Also, like the Nintendo 64’s cartridges, blu-ray discs are expensive, and at the moment are unnecessary as games do not yet need the excess capacity. They also slow down load times. Sony could easily allow publishers to release games on less expensive DVD’s, which currently they do not allow, to further lure in publishers.

We firmly believe that if Sony takes these steps to improve their competitive position, they will regain their lost market share and gain further power with their customers and suppliers. They need to strategically place themselves in this upward spiral, rather than the downward one they are in now. Otherwise, Sony could find itself like Sega: not only dethroned, but cast out entirely from the market they once dominated.

Works Cited/End Notes

1. “Sony's Jack Tretton and the $1200 quote”.

2. "Is Sony fighting a losing battle?"

3. "Is Sony fighting a losing battle?"

4. "Is Sony fighting a losing battle?"

5. “Loot: Dispatches From the Console Wars, Part III”.



6. "PlayStation 3 on Rescue Mission" November 11, 2006. NY Times by MARTIN

FACKLER

7. "Some Scalpers Give Up, Return PS3s To Stores".

8. "PlayStation 3 is down 2-to-1 to Nintendo's Wii" by Mike Snider, USA Today

9. "Is Sony fighting a losing battle?"

10. “Sony breaks the mold” by David Becker, CNET.

11. NPD Press Release 1/19/07

12. NPD Press Release 1/19/07

13. "Hobbled by Disappointing Sales and a Loss at the Game Unit, Sony's Profit Drops

5%" NY Times. January 31, 2007 by MARTIN FACKLER

14. "PlayStation 3 on Rescue Mission" November 11, 2006. NY Times by MARTIN

FACKLER

15. "Sony is scoring low at its own game" Financial Times. November 5, 2006 by John

Gapper

16. "PlayStation 3 on Rescue Mission" November 11, 2006. NY Times by MARTIN

FACKLER

17. "PlayStation 3 on Rescue Mission" November 11, 2006. NY Times by MARTIN

FACKLER

18. "Wal Mart Rules" by Allen Varney. The Escapist.

19. "Sony is scoring low at its own game" Financial Times. November 5, 2006 by John

Gapper

20. "Analyze This: How Exclusive Will Exclusive Games Be in This Generation?" by

Howard Wen. Gamasutra:

21. "Sony is scoring low at its own game" Financial Times. November 5, 2006 by John

Gapper

22. "Hobbled by Disappointing Sales and a Loss at the Game Unit, Sony's Profit Drops

5%" NY Times. January 31, 2007 by MARTIN FACKLER

23. "Sony is scoring low at its own game" Financial Times. November 5, 2006 by John

Gapper

24. “Loot: Dispatches From the Console Wars, Part III”.



25. "Sony's Playstation 3 is Not Worth the Hype" by LEV GROSSMAN, Time



26. "Sony is scoring low at its own game" Financial Times. November 5, 2006 by John

Gapper

27. "Is Sony fighting a losing battle?"

28. "Analyze This: How Exclusive Will Exclusive Games Be in This Generation?" by

Howard Wen. Gamasutra:

29. "Analyze This: How Exclusive Will Exclusive Games Be in This Generation?" by

Howard Wen. Gamasutra:

30. "Analyze This: How Exclusive Will Exclusive Games Be in This Generation?" by

Howard Wen. Gamasutra:

31. "PlayStation 3 on Rescue Mission" November 11, 2006. NY Times by MARTIN

FACKLER

32. "Sony is scoring low at its own game" Financial Times. November 5, 2006 by John

Gapper

33. "Is Sony fighting a losing battle?"

34. . "Is Sony fighting a losing battle?"

Exhibit 1: Sales Figures

Sony Playstation (1995)

Total Units Sold to Date: 100+ million

Launch Price: $299

Source: Sony Computer Entertainment



Sony Playstation 2 (2000)

Total Units Sold to Date: 115+ million

Launch Price: $299

Source: Sony Computer Entertainment



Microsoft Xbox (2001)

Total Units Sold to Date: 24 million*

Launch Price: $299

Source: Microsoft



*Last data available, Q2 2006

Nintendo Gamecube (2001)

Total Units Sold to Date: 21 million

Launch Price: $199

Source: Nintendo



Microsoft Xbox 360 (2005)

Total Units Sold to Date: 11 million

Launch Price: Premium - $399 / Core - $299

Source: Microsoft



Nintendo Wii (2006)

Total Units Sold to Date: 5.8 million

Launch Price: $249

Source: Nintendo



Sony Playstation 3 (2006)

Total Units Sold to Date: 1.84 million*

Launch Price: Premium - $599 / Basic - $499

Source: Sony Computer Entertainment



*Units shipped as of 12/31/06. Reliable sales data for the

PS3 is not available as of yet from Sony.

Exhibit 2: CNET’s Most Anticipated Games of 2007

.com

1. BioShock (360, PC)

This is the spiritual successor to System Shock 2 I've been waiting for. It takes place underwater and SHODAN (Sentient Hyper-Optimized Data Access Network) is nowhere to be seen, but the art deco style, the bizarre premise, and the truly creepy atmosphere make up for it. Any game in which you can get genetic augmentations from vending machines is one I'm going to be playing. --Will Greenwald, assistant editor

2. Halo 3 (360)

This one is obvious: Halo 3 is easily one of the must-have games of 2007. In addition to seeing Master Chief in high-def for the first time, I'm hoping that Bungie makes good on its promise to one-up Halo 2's single-player campaign and online multiplayer support.

--John Falcone, senior editor

3. Metal Gear Solid 4 (PS3, 360?)

Metal Gear Solid 2 was the sort of title that convinced people they just had to buy a PlayStation 2. Sony is hoping the latest sequel, MGS4, will do the same thing for the PS3, which is seriously short on compelling exclusives. If it looks as good as the trailers suggest, we're willing to look past the typically surreal and convoluted Metal Gear plot.

--John Falcone, senior editor

4. Spore (PC)

If you're one of the many millions of people who've enjoyed Will Wright's SimCity or The Sims, odds are high that you will like his next title, Spore. A game of evolutionary progress, Spore starts you off with a single-celled life form. From there, you progress through multiple stages of development until you've built an advanced civilization capable of space flight, at which point you take off into a galaxy inhabited by the planets of other Spore players around the world. Sounds like emergent gameplay at its finest.

--Rich Brown, senior editor

5. Crysis (PC)

Previews of this 3D shooter, the poster child for next-gen graphics, have blown audiences away since E3 2006. Our hope is that Crysis will deliver not only a bigger, better tropical island sandbox of destruction than Far Cry (developer Crytek's first title), but that it will also reinvigorate enthusiasm for PC gaming's visuals.

--Rich Brown, senior editor

Exhibit 2 cont…

6. Super Mario Galaxy (Wii)

Nintendo's Mario games for the GameCube didn't quite satisfy my appetite for the next classic Mario game, so I'm hoping Super Mario Galaxy pulls though. Early reports indicate it's one of the better-looking Wii titles and that the control scheme is solid. It cannot be released soon enough.

--Matthew Moskovciak, assistant editor

7. NBA Street Homecourt (360, PS3)

The fourth installment of EA's over-the-top arcade basketball franchise, NBA Street Homecourt has been totally redesigned from the ground up for next-gen consoles (XBox 360, PS3). While jacking up the graphics, the producers have also imbued the game with a retro feel, so you get that whole new-meets-old feeling while unleashing your arsenal of freak skills on your opponents.

--David Carnoy, executive editor

8. Super Smash Bros. Brawl (Wii)

This will be the ultimate fanboy party game. The original Super Smash Bros. and Super Smash Bros. Melee were awesome, and SSBB will only be better with Solid Snake and Pit from Kid Icarus in the mix. The fighting system isn't the most complex one out there, but who cares? It's fun!

--Will Greenwald, assistant editor

9. Hellgate: London (PC)

The early versions I've played of this game just screamed "Diablo-esque action-RPG clickfest," and that's just fine for me. Online gameplay, magic spells, guns, all brought together by the makers of Diablo and Diablo 2? I'm sold.

--Will Greenwald, assistant editor

10. Tiger Woods PGA Tour (Wii)

11. The Elder Scrolls 4: Oblivion: Shivering Isles (PC, 360)

12. Major League Baseball 2K7 (PS3, 360)

13. Supreme Commander (PC)

14. The Legend of Zelda: Phantom Hourglass (DS)

15. Motorstorm (PS3)

16. Virtua Tennis 3 (PS3, 360, PC)

17. The Bigs (PS3, 360, Wii, PSP)

18. Alan Wake (PC, 360)

19. Mass Effect (360)

20. World in Conflict (PC)

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