Feature: 'Analyze This: Online Game Services for the Next-Generation Consoles'

In the first 'Analyze This' column, a new monthly Gamasutra feature, leading game industry analysts from the NPD, Wedbush Morgan, Strategy Analytics and DFC Intelligence discuss whether online services like Xbox Live will make a crucial difference to the next-gen console wars. In his answer, David Cole from DFC Intelligence comments: "In the short term, a service like Xbox Live can be viewed as a loss leader that is designed to build an installed base. Microsoft is charging such a low subscription price that, on its own, Xbox Live isn't likely to turn a profit in the short term. However, it is proven in the game industry that building a large hardware-installed base becomes very profitable for the manufacturer on many fronts. Thus, the financial importance of Xbox Live is directly tied to how many hardware units it can help sell." In addition, Michael Pachter from Wedbush Morgan Securities comments of the conundrum: "The biggest differentiator so far is Xbox Live Arcade, which is a great aggregator of casual game content. However, I don't see Microsoft coming close to 50 percent participation, and anticipate that the average will end up around 25 percent. A large niche, but a niche nonetheless." You can read the full Gamasutra feature on the subject, including more strong opinions from the gathered analysts (no registration required, please feel free to link to this feature from external websites).