Why the Industry Needs Exclusives

Last week at Gamescom, BioWare surprised the world by announcing that Mass Effect 2 is coming to PS3. The series was previously an Xbox 360 and PC exclusive, something that Microsoft fans were quick to point out. And they had a reason to proud, since Mass Effect is one of the most successful and critically acclaimed RPG series ever. PS3 owners who previously missed out on the series are no doubt pleased with the move. But it represents a growing trend that might not be healthy for the industry as a whole.
In the current console generation we have seen a multitude of traditionally-exclusive franchises go multiplatform. Tekken appeared on Xbox 360, while Ninja Gaiden and its sequel came to PS3. Final Fantasy, which had been Sony-exclusive for about 7 iterations (not counting the spin-off Crystal Chronicles and MMO games), went multiplatform. Dead Rising, Lost Planet, BioShock, all started on a single console, but didn't stay that way. For game consumers, it might seem like a golden age, with so many choices available.
But there is a downside to the trend. As there are less and less exclusive games on each console, the reason to own both is dwindling. If nine out of year's top ten titles are on both systems, is it worth a couple hundred dollars to gain access to that last game?

The heart of the problem is product differentiation. In any market or industry, each individual competitor needs to mark out their territory, build their brand name, or show the consumers what makes them different. Wal-Mart prides itself on the lowest prices, Target tries to have the best organized and cleanest stores, Best Buy wants the most informed and helpful employees. Each focuses on different aspects of the experience, so that even though all three offer the same games and electronics, there is a reason to shop at all three.
This is just one example, but pick any industry and you'll find the same trend. Musicians try and develop unique styles, car companies have their own flair and features, restaurants specialize in certain foods. If you don't differentiate yourself from your competitor, you become redundant. Look at the failure of K-Mart as a national chain, partially due to its vague standing between Wal-Mart and Target.