The Phantom Menace

May 20, 2004

I will admit that the title was a bit cheesy, but you can draw a nice parallel between the movie that many Star Wars fans considered poorly done and the console that many people expect to flop in an equally impressive manner.

Over the next few weeks, you will no doubt come across a half dozen articles written about the Phantom and Infinium Labs. Most of these will be written by someone who just had the luxury of attending E3 and got a chance to speak with someone at Infinium Labs. I personally do not think that talking to a PR rep is going to make a lick of difference in terms of discussing the Phantom for one very key reason. The Phantom itself is a great idea, but it is doomed to fail because we as an industry are not ready for on demand gaming.

Gamers as a whole are a very cynical and critical group of people. To be accepted as a newcomer in this industry, you have to show us beyond a shadow of a doubt that you are a serious player. Sony made a tremendous effort to move into this market and went from newcomer to gaming giant due to the mistakes of a veteran company. Microsoft broke into this market using its almost unlimited monetary resources to claim its share of the gaming pie. Now you have Infinium Labs trying to squeeze themselves into an already tight market at the peak of its competition. None of the established companies are going to make a huge market shifting mistake and Infinium lacks the resources to take a brute force approach. How exactly do they expect to get their slice of the pie?

While I welcome more competition since it undoubtedly results in the consumer winning in the long run, I think trying to introduce something as revolutionary as on-demand gaming is a mistake. Early adopters of consumer technology ate up the PVR/DVR/Tivo technology. They loved it and it is slowly starting to trickle into mainstream homes as Time Warner and other cable giants offer these services for very cheap. Satellite companies give away the equipment and undercut cable companies in order grow their user base. I consider myself a very technological person. I keep up with bleeding edge technology and vow to make the purchase upon release, but it still took me until recently to equip my house with a hard disk recorder. The cost can be high for anything not being given away as a promotion and I wasn’t sure if I would use it enough to justify the cost.

IL is aiming the Phantom at casual gamers that might not have a top of the line PC and don’t want to shell out for consoles, but what I think they fail to realize is those people are the most hesitant to jump on new technology. Those are the people using non-digital basic cable and dial-up internet (people still do use dial up I think). Even so, how will the price tag on the Phantom compare with the widely available consoles already on the market?

Everyone has heard the new pricing scheme for the service, but in case you haven’t, it goes like this. You have 2 options when purchasing the Phantom. You can pay for it up front ($199) and sign no contract or you can sign a 2 year contract and get the unit for free. The basic service is $29.99/month and if you opt out of a contract, but stay subscribed for 2 years you will get your $199 back. So for 2 years of basic gaming, since this is before spending $20+ on new games and any premium content, you are looking at $29.99 * 24 = $719.96. Compare that with the cost of a $99 Gamecube or a $150 PS2 and Xbox. Even if you spent $100 on extra controllers and memory cards, that would leave you an additional $500 to spend on games. With games being priced between $20 and $50 you could potentially end up with as many as 25 games and as few as 10 games. I personally own all 3 current generation consoles and I don’t think I have many more than 25 games for all 3 systems combined and many of those are best selling titles for $20. $20 games are purchased with a little less thought, but something has to be really good for me to shell out a full $50 on it.

The pricing curve gets even worse if you don’t remain a subscriber for 2 years since that $199 up front cost gets added back in. Let’s assume you stay subscribed with only basic content for 15 months. $199 + ($29.99 * 15) = $648.85. It ends up costing a mere $70 less than a full 2 year contract for 9 months less gameplay. Needless to say, the optimal timeframe for anyone considering the Phantom would be 24 months on the nose.

Let us ignore the cost issue for a moment and pretend that you won’t be overpaying for this type of entertainment or that you don’t take that money and invest it into your computer to play the games you would be playing on the Phantom. How comfortable are you with purchasing games in this manner? I think this is the point where the Phantom hits a roadblock. People like to purchase things they can hold and see, not things that are intangible. Online music stores are doing well, but the casual music listener is still buying CDs at the store. I honestly believe casual gamers would be even less likely to pay for an intangible game that is stored on a machine they have no access to. A machine that can’t be upgraded. How many middle of the road computers built 2 years ago run games coming out today without turning down the graphical details and resolution? I know my machine is just barely older than that and I have relegated it to playing older games since it would no doubt have trouble running new games like Far Cry and Painkiller, not to mention being impossible to run Doom 3 and Half Life 2.

I have ripped on Infinium Labs quite a bit in the past and I know I come off pretty harsh, but I am not ripping on them as much as I am the idea that they are trying to sell. After much consideration, I think the idea is good but a tad bit ahead of its time. I personally don’t think the industry is ready for a move to media-less games. Gamers are too weary of things they can’t put in their hands.

I want you to know that I am not naA