Are Consoles Dead ?

The traditional games business is worth around $25 billion a year, so the obvious answer to the question of whether or not consoles are dead, is a resounding 'what the hell are you talking about?'

Not only, but consoles are freakin' awesome. They are built to play games. Certainly, they are ugly brutes, hideous noisy boxes, but by all that is holy, they make life good. This is why talk of their 'death' is so upsetting.

Nevertheless, talk we must.

It's true that consoles move through existence with every sign of vitality, but there are suggestions of an inner sickness, a sense of impending dilapidation. Sorrow awaits.

Things go from hale and hearty to stone cold and underground in a spectacularly short period of time, most especially in the tech and entertainment businesses. 

Ben Cousins' argument from GDC

Between them, the business units at Sony and Microsoft have lost a whacking $10 billion since 2000.

None of this is good. The things that we are supposed to believe will "replace" consoles aren't as good at playing games, aren't designed for this specific, sacred purpose, aren't as emotionally interesting. The death of consoles, if such is their fate, would be a disaster for 'gaming' as we who game understand the term. There is no circle of life crap going on here. It's all bad. 

These notions, and the arguments that follow in this article, will be dominating strategic thinking at Sony and Microsoft, as leaders at these august firms decide how to approach their next generation consoles. 

Incredible Risk

For the people who make the consoles, this play of launching new machines represents the biggest risks on both companies' books. If they get this wrong, it would be catastrophic for them. 

Little wonder they are holding back. (There are no plans for either Sony or Microsoft to show a new machine at E3 this year.) 

Look at it from their point of view. Between them, the business units at Sony and Microsoft have lost a whacking $10 billion since 2000. The opportunity that greeted both companies at the dawn of the century was ownership of the living room, a place at the center of consumer's entertainment lives. It was a noble investment. 

But that opportunity does not look anywhere near as attractive now.

In 2000, the year the world's best-selling console ever was launched, Apple was still 12 months away from launching iPhone's progenitor iPod and thereby changing the history of entertainment. Now it's the most valuable company in the world and the most powerful player in the gaming business. Facebook didn't exist. Free-to-play made zero sense. PC gaming was screwed. The assumptions and the projections Sony and Microsoft were making back then just don't exist anymore. 

The confidence of yesteryear.

When Peter Moore bound onto the stage at various E3s in the middle part of the last decade, he was seriously arguing that consoles would be the devices through which we consumed entertainment and communicated with one another. At the time, it seemed plausible. 

If he tried that shtick today, he' be dragged away by burly nurses, and semi-gently invited to spend some quiet time in a sparsely furnished room. 

It's not just the titanic cost, the gargantuan risk this undertaking represents. Problem is, the opportunity for riches is undoubtedly smaller than it's ever been before. For the first time in many console generations, no-one is seriously predicting that the next generation will be bigger than the last. Not even Jack Tretton. 

Where are the New Consoles?

So the answer to the question about the death of consoles can be found in how the console manufacturers are behaving. And here's the thing. They don't look too keen, do they? If history is any indicator, we are well past due some new machines. 

The console guys are looking at this like the man who, having furtively popped into Burger King on his way back from work, is presented at home with a surprisingly large spaghetti bolognese. 

At the beginning of this year, Nanea Reeves was mocked and derided for suggesting that one company in the current console battle might drop out. Look, it's unlikely but it's really not that crazy. Sony is seriously short of dough. Microsoft is just starting to claw back some of its investments in the games business. 

There are a lot of great business reasons why either of these companies might find an urgently hot thing to fill their attention. The world has changed. 

Will PlayStation 4 look like this?

Sony boss Kaz Hirai loves games, but not enough to bring one of Japan's greatest ever corporations to its knees. Whatever form PlayStation 4 takes, he's got to come up with something genuinely new. A better-graphics box at $400? Not going to work. 

Already we hear stories of an next Xbox that doesn't even have a disk drive. What kinda console is that? Well, maybe it's one that reflects a changing reality - that the future is certainly not about going to the mall and buying a $60 game about shooting people. In England, the country's biggest retailer of games is about to go bust. If that's not a bad sign, then what is? 

And what of Nintendo, the original high priest of console-dom, keeper of the flame? It is a company that has never looked lesslikely to stand astride the Chichen Itza of global entertainment. It is a supplicant, in the thrall of the new gods. We are told that 3DS is a successful handheld gaming device, Compared to what Vita? Sure. Compared to iPhone? Bow down Mario. Grovel in the dirt Donkey Kong. 

Even Wii U, the one and only "next generation" console that we have seen looks a lot like a certain other Apple product. A handheld screen, by golly. So much for disruptive technology. So much for blue sky thinking. 

A box.

Blame the Economy

Everyone in gaming is getting ready for the next generation consoles to arrive. We are able to write off 20% year-on-year declines in game sales as a mere symptom of late-cycle ennui and lower numbers of big game releases. 

But there are other symptoms that are not so easily brushed aside. The stock value of companies like EA and Activision have been steadily dropping for the last few years. You want to blame the economy? Sure, go ahead. 

But PC gaming has been exploding. More people spend more time playing games than ever before. Meanwhile, the top five games companies by value have halved in value, and those that have dropped out of the list- traditional games publishers - have been replaced by free-to-play and social companies. 

Still blaming the economy? 

ngmoco's Ben Cousins pointed all this out at GDC last week. He also showed us a graph comparing the history of the arcade game business to that of the console game business. 

The enemy of consoles?

At some point in 1999, consoles overtook arcades, which have since become almost entirely irrelevant both as a business and as a way to consume interactive entertainment. That same year, consoles officially became as good as arcades, graphics-wise, with the launch of Dreamcast. 

This year, we have seen the launch of the new iPad, a device which, despite its current whizzery, offers future powers we can only imagine. Offer a man from Mars the chance to reach out and grab an iPad or an Xbox 360. Which will it be? 

There is Hope

But consoles are seriously great devices, important, essential. In an interview this week, Epic founder Tim Sweeney, one of the smartest thinkers in this business, described them in the simplest terms, as perfectly formed for the purpose of playing games. They are entirely engineered to output fast-moving graphics. They are connected to handheld controllers which have no other purpose than to control games. Their entire eco-system is about competition, fun, excitement. 

Sweeney added that when the next generation does come - in whatever form - it will provide a graphical leap that the iPads of this world will take eight years or so to match. Eight years! That's 2020.

So, if we leave PC gaming aside, consoles will still be the best way to consume games for a span of time encompassing three more Olympic games and two World Cups and maybe even another Diablo game. 

People talk about the fact that 500 million people have played Angry Birds compared to 25 million players of Call of Duty. But, really, these numbers are like comparing flying pigs with flying helicopters. 

Also, Sony, Microsoft and Nintendo are smart. It isn't beyond the realms of possibility that any of them, possibly all of them, will create something that surprises everyone, even Apple. Perhaps we will see a unified platform, or a cloud system that really works or, hell, who knows. 

The fact is that consoles are under sustained attack from alternative devices and platforms like mobile and social and free-to-play. It's like horde mode. The enemy has the numbers. The console has the firepower. 

Who can predict the outcome with certainty? 

But here's an indisputable idea. Any person of good sense must understand which side to root for.