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System link play is not as ludicrious as it seems. I can vouch for this personally since I've played three-Xbox Halo and Unreal Championship at Adam's house, and he's got a 61" HDTV and two 27" TVs. Really, the only problem you're going to have when linking up GameCubes is to make sure you have enough of a length of ethernet cable. When I go to link up my GameCubes (if I ever do it at my house), all I'll need is 40' worth, and it wouldn't be a problem.
There are still few households in the US that have more than one television, and even less that have more than one that are big enough to give a decent gaming experience. And regardless of what anyone might suggest, lugging TVs to your friends house just isn't a realistic option except for the most diehard gamers. Adam is quite fortunate to have not just that many decent sized TVs, but a home network as well. But he's on the high-end of the scale, it certainly isn't the norm. Fact of the matter is, for MOST people, System Link play IS ludicrous. You are fortunate to have a friend with the equipment. Most people don't.
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For anyone that plays PC games regularly, you would know that LAN parties are a lot more fun than online games. Why? If those people are in the same room (or house) as you, they're going to hear your shout as you kill them, and vice versa. It's just more fun when you can see or hear the other person react to what you did (hence, mantatory voice in Xbox Live games), which is why LAN gaming is so popular.
Right, it's absolutely more fun. But still a relative rarity for most gamers. I've been in one LAN party in my life where I brought my own computer, and that was at Microsoft. All the others had the computers provided (LAN parties on the corporate network, etc). But your reasoning is sound ... the fun factor of hearing the other guy celebrating a kill or bemoaning a death is a big part of the reason why Xbox Live is getting such great reviews. But when it comes right down to is, all Online play is LAN gaming without the "Local". There are voice over IP options that give you the same LAN feeling, even if you can't see the other person.
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And as for LCD screens, they're totally optional. Like I said, if you have another TV anywhere in the house, you can use it. If you have a smaller 13" or 19" around that's easily moveable, use that. Trust me, I know from experience that linking systems, no matter how cumbersome or akward it is, is well worth the effort to setup once you start playing it.
Maybe for you. Remember who Nintendo's target market is. Most of those people (i.e. Kids) would get thier asses kicked if they even suggested moving the TVs, or running cables all over the house. Home networks are still relatively new. Plus, there's the cost of all the cables, hub/switch, TV/LCD screen, etc. ... it's a significant barrier to entry.
All that said, I still applaud Nintendo's adding the feature rather than ignoring the market completely. And as I said before, I'm convinced that the GameCube's portability and the availability of inexpensive (relatively) LCD screens is what's pushing this forward. If you have the means to have multiple TVs and a home network, great. If not, you can still have a "LAN Party" in the middle of a single room, and with a minimum of fuss. It's an option that will give hardcore gamers their "LAN" fix, and still gives kids the same fun on a smaller scale as well. Brilliant.
Regardless, I still think that ignoring Internet play is a mistake ... because regardless of how easy it is to hook up a LAN game, you still have to coordinate with people, get the hardware to one location, hook everything up, etc. The beauty of Internet play is being able to log on at any time, and finding someone to play with. Hopefully, GameSpy will create a tunnelling software like they did for the Xbox so that these networkable games will be playable over the Internet.
Either that, or maybe our little birdy heard "networking" when they were talking about TCP/IP, which is used both locally, and for the Internet!