Nintendo broke away from competition with Sony and, new arrival, Microsoft with what some call the “Blue Ocean” business strategy. The Blue Ocean strategy is the metaphor of leaving a “red ocean” (one dyed by the blood of competition) for unclaimed waters filled with the potential for creating new demand. From a business stand point this brave (or stupid) move has paid off and now Xbox 360 and Playstation 3 are competing for second place.

Nintendo managed to succeed because they did something more than incrementally improve and repurpose old features. Yes, Gentle Reader, I’m talking about the “I” word, innovation. It’s debatable if the Wii controller is a true innovation as some gamers will still belittle it and mock it, but from a business standpoint it’s a successful change that’s brought in tremendous profit. Nintendo is as guilty as everyone else of giving us sequels by the truck load, most games in each series offer something new every one or two games. In truth, sequels are not really a bad thing as long as they are different enough that it stands on its own or adds to the previous experience.

This is the potential folly faced by Microsoft and Sony. If both companies continue to try and outdo the other, this means they have to rely on the other to show them where it is they are going. As mentioned before, it’s a tradition in the game industry to play copy cat with your opponents and then sell what they made for a lower price or with something more appealing attached. The game Sony and Microsoft are playing is the equivalent of trying to race someone you’re following to an unknown finish line.

If the two titans do not exercise some real creative muscle and insight, they run the risk of choking their audiences’ current interest. History has shown that strokes of genius like Katamari Damacy are not that common and while they may be risky or appear too weird, it’s that their quirkiness that aid to its success. The first GTA games offered sandbox gameplay, but GTA 3 took the top down world and made it more accessible by giving the player more dimensions to see everything. This reinvention (or innovation) has made the name Grand Theft Auto globally known.

Rehashed games, or those that don’t provide much of a new gaming experience, can poison a series or genre. If the games they make for the “core” gamer are not more than uninventive sequels the interest will dissolve and the audience will vanish or develop new preferences. The market has become swamped with First Person Shooters and while some may feel that’s not bad, it clearly demonstrates that developers are vying for the attention of a certain niche while alienating possibilities. As mentioned before, even if Nintendo did not stir up this casual boom, the publishers seemed to become more focused on producing games they KNOW will sell then those that can expand the market.

When we consider that the Xbox 360 has introduced its Mii-like “Avatars” and has begun promoting its “family friendly games” and that the Playstation 3 has its “six axis” controller and demonstrated a recent swelling of fresh but casual Playstation Store games their actions foreshadow that the duo are once again trying to outdo the other as they look for the path Nintendo made. Sony and Microsoft could just stick with the audience that has carried them to their current success, but like I proposed in part 1, only a fool (or altruistic gamer) would turn down the easy money casual games bring in.

I’d expect the next Microsoft console to utilize some sort of Wii remote like peripheral and the Playstation 3 to get it’s own version of the Wii remote. If Microsoft wishes to make the most money possible, their Wii remote copy will be a peripheral rather than a brand new system.

You might think “The End is Nigh” if you’re a core gamer that detests those happy, care free casual gamers. In the event that Sony and Microsoft act like a business and chase the money, a core gamer’s won’t be lost in a changing industry if the new audience leans how to discern between crap games and software worth its price tag. If all else fails there’s always indie games.

So as of now, these are the ominous black clouds that loom over the game industry. Nintendo is getting flogged with junk casual games and Xbox 360 and Playstation 3 run the risk of tiring their comparatively small (compared to the number of casuals) core audience with incremental improvements of current software.

During the Great Depression, American movie theaters saw steady business as the consumer hungered for an escape from the troubled economy. In today’s global economic recession, it seems that people still want that escape and video games are the medium that provide it even better than a mere 2 hour movie for 20 some dollars (if you get popcorn and a drink.) The road that lies before the game industry is not likely to disappear, no matter how cluttered it becomes with obstacles. That way ahead may be uncertain, but it is not lost when there are companies that will forge new paths and people that pine for the experience.