In a recent interview with Gamasutra, once and former Xbox 360 big-wig Peter Moore identified the lack of mainstream appeal as the number one thing that Microsoft needs to improve with its game division. “As much as we love our hardcore guys — they’re going to love Halo 3 and Grand Theft Auto IV and all of the incredible games that we’ve got — at the same time, we’ve got to get fun back in the living room on our platform,” he said. “We need to accelerate that reach. That’s the only thing we’re looking at, in terms of what our competitors are doing. I think Nintendo is doing a phenomenal job in providing that fun, unexpected experience, to their credit.”

It’s a mantra that seems all the rage these days, as Nintendo is accelerating towards a position of market dominance, despite continued hardware shortages. And it’s not without a solid foundation in truth and observable fact. In a business like the games industry, where companies have traditionally had to battle for a share of the limited pool of hardcore game sales, the simplest solution to the problem over the past several generations has been to simply expand the market. And expand it has.

But for all this talk about non-gamers, new markets, and unfamiliar demographics, it seems like one group that is continuously left out of the discussion are hardcore gamers. Companies like Nintendo seem to be taking for granted the fact that the people who have, for the last two decades, put them in the position they are today will continue to stay with them forever. And while their continued voracity for titles like Super Smash Bros. Brawl and Super Mario Galaxy is unquestionable, Nintendo has shown little indication that they’re doing anything to expand their IPs aimed at gamers.

While offerings like Wii Fit and Brain Age are ingenious ways to introduce older audiences to the concept of holding a controller, truthfully I think they do little or nothing to actually expand the market for anybody besides Nintendo. It’s a problem that has plagued the company in the past, even before this shift to focusing on the casual market, and it will likely only become more pronounced if Nintendo becomes the industry leader in installed userbase. I can’t help but feel like this is a mistake. During the last generation of consoles, many third-party developers had to limit or halt altogether production of games for the GameCube because users rarely purchased games without Mario’s mustached moniker on them. This trend seems poised to repeat itself on the Wii, perhaps to an even greater degree due to the complexity of integrating the Wii controls into the design process.

The result? The Wii will probably have among the smallest attach rates of any console in recent memory, perhaps ever. Are we really to presume that once Grandma is done exercising on Wii Fit and playing tennis with the grandkids in Wii Sports, she’s going to throw down in some Metroid Prime 3? Casual gamers play casual games. Despite what the PR says, they are not some mythical gateway drugs that are going to make converts out of the elderly. The money is still with the hardcore.

There’s data to support this. A report by the NPD Group found that “heavy gamers,” while making up only 2% of the individuals polled, purchased more than eight times as many games as the average gamer. In the past three months, avid gamers purchased over 13 titles on average, compared with 2 games over the same period for “mass market gamers.” Heavy gamers not only spend more time playing games, but are more likely to play online and take advantage of digital downloads, which open new revenue streams for savvy publishers.

And that doesn’t factor in the fact that hardcore gamers are usually a crucial first step for innovative ideas to make it to the mainstream. Games like Guitar Hero, which over time have come to be highly successful mainstream products, would never have gotten off the ground had the hardcore community not embraced them so enthusiastically at its onset. An $80 game with its own peripheral would have been a hard sell to John Q. Public had it not garnered approval from the gaming community. Now Guitar Hero and its cousin Rock Band are poised to be major sellers in all segments this holiday season, to hardcore and casual alike.

Market segmentation isn’t the end of the world, I know that. The game industry is full of enough creativity, drive, and capital to support games directed at every market. At the same time, I feel like executives are doing themselves a disservice by pushing the casual games pitch as hard as they have, often to the detriment of traditional games. Many long-time fans of Nintendo found their E3 presentation, where Wii Fit took preeminence to Super Mario Galaxy, lacking. And then to hear that Peter Moore say, “We love our hardcore guys but…” It doesn’t feel right.

Another E3 has come and gone, and gamers everywhere have another super-sized helping of news and impressions to digest. But with all the Wii Fit surprises and Halo 3 impressions, there was a little something missing this year. And I’m not talking about the booth babes. There wasn’t a true price drop announced. This isn’t just a crushing blow to cheapskates. Price drops are a natural part of a console’s life cycle, and something that helps convince those on the fence, tempted by the latest big names, to finally take the plunge.

Typically, price drops usually start once the newest entrant in the latest generation has been out a year. E3 2002 brought a cascade of cuts for all three systems. But this year, for whatever reason, the big three decided to sit things out. This could very well be the longest a generation has lasted without any consoles pulling the trigger. What gives? What are the executives thinking? While it’s easy to come up with all kinds of knee-jerk reactions to the non-news, there’s quite a bit of logic behind the decision. The effectiveness of their logic is another question entirely. Let’s take it system by system.

Sony

Technically, Sony did announce a price drop – the 60GB model went from $600 to $500. At first, this seemed like a step in the right direction. The high price singlehandedly transformed the PlayStation brand from a raging 900-lb. gorilla to a slightly grumpy chimp. And while $500 is still on the steep side, it was a step in the right direction. Monthly sales of the console have dropped off so much that the move could only help.

Then, Sony announced a new model that removes the backwards compatibility chip, ups the hard drive to 80GB and throws in a copy of Motorstorm. Oh, and bumps the price up to $600. If gamers weren’t too impressed with the $600 model as it was, would the inclusion of an old game and a 33 percent increase in memory really get people excited? This seemed like a strange move, but at least one model got cheaper.

At least, for a day or so. Shortly after the new arrangements were announced, Kaz Hirai, president and CEO of Sony’s gaming segment, said the 60 GB model is no longer being produced. Once current supplies are gone, that’s all she wrote for that model. The $600 model will be the only choice.

What the?! Why the hell would Sony embrace $600? Since that price point has become market poison, shouldn’t the company run away from it as fast as humanly possible?

Strange as it sounds, the plan probably sounded like sweet music to harried Sony execs. According to research house iSupply, launch PS3 consoles sold for a loss of well over $200, much higher than any other launch console. That caused the company as a whole to lose over $500 million in their last quarter – more than erasing profits from its other divisions. So, since hardware costs drop over time, hard drive memory is dirt-cheap and the removal of hardware-based backwards compatibility saves some dough, the 80GB model almost assuredly loses much less money. Plus the new, more expensive Elite 360 model sold pretty well for Microsoft. Good plan, right?

Aside from the tiny detail that customers hate the $600 price. And the Elite added much more value (HDMI and a 500 percent hard drive increase) than the 80GB PS3 does. And since two different PS3 models (including the near-mythical 20GB model) have sold for $500 already, the inevitable drop of the 80GB model to that level will generate almost zero excitement.

Sure, Sony will get some sales from its E3 moves, but likely not nearly enough to regain ground lost to the 360 and Wii. It may even annoy and confuse customers who are used to one game system model with steady price drops on the market at one time. What a king whopper of a bad move.

Microsoft

If Sony’s issue is one of amount, Microsoft’s is one of time. Simply put, we’re closing in on two years without a price drop for the 360. And that’s a record. Everyone blinked at E3 2002. Pretty much every console ever released shaved at least a few bucks off the price tag by the 1.5 year mark, but not the elder statesman of this generation.

So why is the system being so stubborn? See above. The PS3’s pricing, at least for the “permanent” model, puts it $120-$300 above the 360. Sure, the 60GB’s fire sale shaves $100 off that, but that’s only temporary.

That’s only part of the picture. There’s also the legacy of the original Xbox. Think back to when it first came out – Microsoft decided to make a name for its system by giving it the most advanced tech possible for the time, with a reasonable price to boot. It worked, and the system came in a respectable second for its generation. But it came at a price. The company lost literally billions of dollars getting it off the ground. True, Microsoft made tons of money with that little thing called Windows, but officials always said the Xbox’s successor would use the ground laid by the original to make a profit.

The 360’s original pricing was a bit aggressive. Games, accessories, and even the system went for higher than gamers had ever seen before. And, with no effective competition, the 360 can sell, sell, sell and rake in the bucks, especially now that manufacturing costs have dropped.

Or can it? Sales of the 360 haven’t been bad, but they haven’t exactly been stellar, either. So far, it’s only matched what the Xbox did during the same time period, and the original system was still the unproven newbie. Microsoft now has a good reputation, with great games down the pipe. With the PS3 hobbled, the 360 should be cleaning up with the wide-open market. Unfortunately, $400 is a bit too high for a massive segment of the market too, and the cheaper core system is widely seen as crippled. To really grow, Microsoft’s going to have to reach out to more casual players who want to play Halo 3 online but don’t want to shell out $300 to do it.

Will Microsoft make that move? The year’s still young, but things could go either way. Microsoft could well hope to coast through on the strength of its very strong holiday lineup. Or the company could decide to take the financial hit and push Sony even further behind, locking in future profits.

Nintendo

Well, this one’s easy. The Wii isn’t just selling well, it’s still completely sold out nearly everywhere, eight months after release. No other console has come close to pulling that off, and even Nintendo seemed surprised by its runaway success. A few months ago, the company apologized for the limited supplies and agreed to increase Wii production. Still, the more that get pumped out, the more that get snapped up.

If this keeps up, there’s absolutely no reason for the company to cut the price. Sales could slow, but with the system’s continued popularity and big guns like Super Mario Galaxy and Super Smash Bros. Brawl coming later this year, that’s not likely to happen.

The last two years of gaming have surprised nearly everyone, so the crystal ball is especially hazy. Predictions on price drops are a complete crapshoot at this point. Still, there’s a very real possibility that picking up a console will stay an expensive move for quite some time.

Due to a manufacturing error with the Persona 3 Art Book, Atlus has had to slightly delay the release of their newest PS2 title, Shin Megami Tensei: Persona 3.

An Atlus representative had this to say:

“Presented with the choice of compromising on the quality of the art book, or shipping the game without said extra, we decided to have the art book redone with a higher quality binding, which will cause a very short delay in the ship date of the title. While all other materials and packaging related to the game are complete, we were unwilling to sacrifice the art book, and as such will expedite the manufacturing process to the best of our ability in order to release the title as soon as is possible.”

I am sure that Persona 3 fans will appreciate what Atlus is doing, after they get over their initial anger that is.

UPDATE: Atlus just notified us that the new ship date for Persona 3 will be August 14th.

“This is the very soonest that manufacturing of the Persona 3 art book can be completed, and also takes into account the time required for assembly of the final package.”