The Two-System Rule

[Kid Fenris]

Someone (I forget who) once pointed out that there's seldom room in the U.S. market for more than two competing video game systems, and that any interlopers are swiftly pushed aside. From what I can see, history supports this to some extent.

1989 to 1991: The NES and Genesis battle, and the TurboGrafx sits on the sidelines.

1991 to 1995: The SNES and Genesis undergo a bloody console war, weathering not only the Turbografx and TurboDuo, but also the 3DO, the Jaguar, and, in a sense, the Sega CD and 32X.

1995 to 1999: The PlayStation and N64 shut out the Saturn.

1999 to 2001: The PlayStation and N64 do the same to the Dreamcast.

2001 to present: Here's where the theory breaks down, since we now have three viable systems duking it out. Or do we? Some would say that either the Xbox or GameCube isn't a real competitor.

It's also fair to point out that the Two-System Rule doesn't seem to take effect in the NES-dominated period from 1985 to 1989, or in the Atari-Intellivision-Coleco war of the pre-crash days.

I'm interested to hear some thoughts on this. Is the Two-System Rule just a coincidence, or is it a habit of the market that may or may not be coming to an end?

[Alex Kidd]

1999 to 2001: The PlayStation and N64 do the same to the Dreamcast.

A pox on this statement, I know it's true, but I just don't understand it.

A mediocre 32 bit system and a 64 bit system with the shittiest controller ever and even worse games beats out a 128 bit system with internet capabilties and a very innovative and useful (tho it's "use" was rarely made use of) screen ON the controller.

I still don't know HOW that happened.
Then again I don't understand how the N64 ever got as far as it did...

Alex Kidd

Still fighting in the war for Sega's supremecy when even Sega itself surrendered

[Anthony1]

The two system theory is a very popular one. Of course, it goes way beyond video games.


Coca Cola - Pepsi

Visa - Mastercard

McDonalds - Burger King

Ford - Chevy

Target - WalMart

Costco - Sams Club

Toyota - Honda



The reason for this, is because people tend to always gravitate towards two major options.


It's not that everybody else get's completely left in the dust, but it's just easier to focus on two major competitors and to compare and contrast them.

[Anonymous]

For me, I've always been aware of the two system rule, but it never really affected me. I follow the same rules now that I always have: Buy the exclusives for all systems, and buy the best version of the multiplatform stuff. There have always been more than two choices, so when you own all available systems, it's never quite as binary as it seems.

Another thing to consider is that games have recently become much more multi-platform friendly. It used to be that you could only do sonic on the Genesis, or you could only have F-Zero on the SNES, or D on the 3DO. Now, the differences between the systems are so small that they are much more cross compatible. That could contribute to the three-system, uh, system.

[jaydubnb]

Someone (I forget who) once pointed out that there's seldom room in the U.S. market for more than two competing video game systems, and that any interlopers are swiftly pushed aside. From what I can see, history supports this to some extent.

1989 to 1991: The NES and Genesis battle, and the TurboGrafx sits on the sidelines.

1991 to 1995: The SNES and Genesis undergo a bloody console war, weathering not only the Turbografx and TurboDuo, but also the 3DO, the Jaguar, and, in a sense, the Sega CD and 32X.

1995 to 1999: The PlayStation and N64 shut out the Saturn.

1999 to 2001: The PlayStation and N64 do the same to the Dreamcast.

2001 to present: Here's where the theory breaks down, since we now have three viable systems duking it out. Or do we? Some would say that either the Xbox or GameCube isn't a real competitor.

It's also fair to point out that the Two-System Rule doesn't seem to take effect in the NES-dominated period from 1985 to 1989, or in the Atari-Intellivision-Coleco war of the pre-crash days.

I'm interested to hear some thoughts on this. Is the Two-System Rule just a coincidence, or is it a habit of the market that may or may not be coming to an end?

Peronally, i dont believe in the two system rule. The reason why the TG16 and Saturn both failed in the US but were quite strong overseas was due to absolute horrible handling/marketing by their respective US branches.lol I knew someone that believed Bernie Stolar to be the gaming antichrist. Keeping some of the best games in JP and cheesy advertising certain doesnt make a successful machine. Back when the Tg16 first launched, I got one for Xmas and was blown away by the colors, sprite size, etc. But then there were long bouts where nothign but mediocrity was released, despite the promise of "bring only the best of Japan's offerings". So..uh...where were SF2? Dracula X? Outrun? other gems? The system needed some recognizable big names besides the Bonk series...ESPECIALLY when the Genny and SNES had SF2 ports. As for the DC, its not as though it didnt sell....it did! SEGA just took their ball and ran home.

Currently, there are alot of factors which come into play here besides simply being three systems in the market contributing to success/failure of certain consoles. In order to be very successful, a console needs of course, versions of hit games which appear on other systems, plus a MONSTER system exclusive (like PS2's GTA III and VIce City). Nintendo has plenty of exclusives, put many may perceive them to be for children. XBox has lots of cross platform titles, but does it have the one mega exclusive besides the success of Xbox live which alienates those without broadband and non-online gamers?

Name brand is also an issue. Playstation 2=follow up to one of the most popular consoles ever. Microsoft..alot of ppl associate the name with shoddy software. Nintendo....mixed blessing. Its very familiar and has been around forever and as such, the name may be positively associated with "quailty gaming" or wrongly viewed as "Fisher Price's My First Video Game System".
Lots of variables....

[hydr0x]

The two system theory is a very popular one. Of course, it goes way beyond video games.

imho this theory often is correct but your examples are not really well chosen at all as they mostly only show that the theory is correct for the inner-us-market and even those are not all correct


Coca Cola - Pepsi: these are the only two big ones world-wide, but every country has HUGE competitors which have equal market shares in that country (e.g. sinalco and afri in germany)

Visa - Mastercard: there are a lot other credit card companies, of course mostly not THAT big

McDonalds - Burger King: mh i don't know what about pizza hut? or kentucky fried chicken? (in germany we also have fish-fast-food Nordsee)

Ford - Chevy
Toyota - Honda: You can't divide those AND it's still missing a lot of companies, you can't really say that automobile-industry has only 2 big companies!!

Target - WalMart: ok, i don't know if that's true in the us, in germany there are more competitors in this "industry"

Costco - Sams Club, sorry don't know these

[zmeston]

1999 to 2001: The PlayStation and N64 do the same to the Dreamcast.

A pox on this statement, I know it's true, but I just don't understand it.

A mediocre 32 bit system and a 64 bit system with the shittiest controller ever and even worse games beats out a 128 bit system with internet capabilties and a very innovative and useful (tho it's "use" was rarely made use of) screen ON the controller.

I still don't know HOW that happened.
Then again I don't understand how the N64 ever got as far as it did...

Alex Kidd

Still fighting in the war for Sega's supremecy when even Sega itself surrendered

You remind me of the Japanese soldier on a South Pacific island who "fought" World War II for several decades after it ended. He was eventually persuaded that the war was over, and returned home as a hero. If an insane soldier can learn to accept reality, surely you can, too. (And while I won't call you a hero, you'll have my respect for spitting out the sour grapes.)

-- Z.

[kevincure]

As far as market share is concerned, hydroX is right: There are very, very few duopolies in the US (that is, two companies who have a market share in a specific industry of, say, 70%). Even Coke and Pepsi, which are huge, have nowhere near that kind of market share in the US (and certainly not internationally) even if you count the brands that they own.

(I just checked the numbers: Coca-Cola Inc., meaning all of Coke's soda products, have 36% US Share. Pepsi-Cola has 31%.)

Further, these numbers are static. When you look at market share over time, the numbers are mighty different - Walmart and Target were much, much smaller ten years ago, and Costco barely existed! The same is true in videogames - Sony has been remarkably successful to be an industry leader for, say, seven years (97-03). Consumers are very fickle in the game market.

Back to regularly scheduled videogame comments....

[Daltone]

1999 to 2001: The PlayStation and N64 do the same to the Dreamcast.

A pox on this statement, I know it's true, but I just don't understand it.

A mediocre 32 bit system and a 64 bit system with the shittiest controller ever and even worse games beats out a 128 bit system with internet capabilties and a very innovative and useful (tho it's "use" was rarely made use of) screen ON the controller.

I still don't know HOW that happened.
Then again I don't understand how the N64 ever got as far as it did...

Alex Kidd

Still fighting in the war for Sega's supremecy when even Sega itself surrendered

You remind me of the Japanese soldier on a South Pacific island who "fought" World War II for several decades after it ended. He was eventually persuaded that the war was over, and returned home as a hero. If an insane soldier can learn to accept reality, surely you can, too. (And while I won't call you a hero, you'll have my respect for spitting out the sour grapes.)

-- Z.



No! Don't do it, that's just how they want you to think!

[orrimarrko]

While I give some credit to this theory, I still feel that there are extenuating circumstances that allow for this to become a reality.

First of all, the third party support and exclusivity to specific systems for big name titles has much to do with the success of a system.

Typically, there isn't enough of this to spread out over three systems at the same time, and thus you have a lot of cross-platforming (ie. GC, PS2 and XBOX.)

SONY has enough power across the entire company to handle the cost of production and marketing these systems. A loss on the systems or games in some instances can be absorbed by the other departments. If Nintendo or Sega take a loss, it affects everything - there simply isn't enough revenue from other sources to balance it out. With the XBOX, it's very similar to SONY's situation. Microsoft can afford to "weather the storm" because, well, it's Microsoft.

The Gamecube is suffering right now, because of a few reasons, but the main one is that people can typically afford to own and support 1 system at a time. When games cost $40-$50, and the system costs $180, most casual gamers pick the system with the biggest bang for their buck and the biggest library. That is, at this point, the PS2. With it's backwards compatibility and DVD capabilities, most don't give a crap that it doesn't have Mario, or as good of graphics as the XBOX.

The Gamecube only offers a handful of titles that are exclusive to the system. At this point in time, there are not enough "must-haves" to draw business away from the PS2. XBOX is kind of a niche market anyway.

Does this mean that there is only room in the market for 2 systems? I don't think so, but Nintendo is closely following the path of Sega - they simply aren't leading the industry anymore.

Just my thoughts...

[Anonymous]

SONY has enough power across the entire company to handle the cost of production and marketing these systems. A loss on the systems or games in some instances can be absorbed by the other departments. If Nintendo or Sega take a loss, it affects everything - there simply isn't enough revenue from other sources to balance it out. With the XBOX, it's very similar to SONY's situation. Microsoft can afford to "weather the storm" because, well, it's Microsoft.
This is true to a certain extent, but as Zmeston has pointed out in the past, Sony is relying on SCE to support the rest of it's flagging markets. Also, Nintendo does have several other companies, NMI, Pokemon (a separate branch from the game franchise), SiRas, etc. to keep it afloat, not to mention a 6 Billion dollar cash reserve should it ever post a loss (something Nintendo has never done). No, Nintendo's failure is due to it's inabillity to lead the market. And now it is being forced to follow, something it apparently also is not good at.

[orrimarrko]

SONY has enough power across the entire company to handle the cost of production and marketing these systems. A loss on the systems or games in some instances can be absorbed by the other departments. If Nintendo or Sega take a loss, it affects everything - there simply isn't enough revenue from other sources to balance it out. With the XBOX, it's very similar to SONY's situation. Microsoft can afford to "weather the storm" because, well, it's Microsoft.
This is true to a certain extent, but as Zmeston has pointed out in the past, Sony is relying on SCE to support the rest of it's flagging markets. Also, Nintendo does have several other companies, NMI, Pokemon (a separate branch from the game franchise), SiRas, etc. to keep it afloat, not to mention a 6 Billion dollar cash reserve should it ever post a loss (something Nintendo has never done). No, Nintendo's failure is due to it's inabillity to lead the market. And now it is being forced to follow, something it apparently also is not good at.

This last point was also the last point I made in my post above. :)

[Anonymous]

Sorry, yeah. I didn't mean to make it sound like that was your only point, I just wanted to point out that cash flow doesn't have as much to do with it. I totally agree with you about Nintendo. The problem is, they keep trying to lead the market, but it never quite comes off that way.

[NoahsMyBro]

I just have to point out one thing I found fault with in the original post.

As I recall from the time, there wasn't really a 3-way battle between Atari-Intellivision-Colecovision.

My recollection is that Atari was out there first. Seeing such huge success, Mattel soon released the Intellivision, which was a respectable competitor, and the two duked it out for a while. Sometime later, Coleco released the Colecovision & Atari released the 5200 (And GCE the Vectrex), systems that were sort-of a new generation.

That's all I needed to say.

Carry on.

[BenT]

A mediocre 32 bit system and a 64 bit system with the shittiest controller ever and even worse games beats out a 128 bit system with internet capabilties and a very innovative and useful (tho it's "use" was rarely made use of) screen ON the controller.
Fanboy, much?