There’s certainly a huge shift going on in gaming. I previously contemplated the possibility of a gaming apocalypse. I’ll refine what I said and state that I don’t think the gaming apocalypse is upon us. I do, however, think that there is a very real possibility that this could indeed be the last generation of consoles. I’ll cite Dan Magaha’s excellent post that details the reason for Microsoft’s shift in focus from games, to entertainment:
…by 2008, the “New Xbox Experience”, or NXE, introduced customizable user avatars in direct response to Nintendo’s Mii system. This was the birth of the virtual goods market for the Xbox, and also introduced Netflix to millions of Xbox owners. Shortly thereafter, the (poorly branded) Zune Marketplace, which was essentially Xbox’s answer to iTunes, debuted. These were the seeds of profit that would eventually grow to threaten game developers’ hegemony over the platform.
Furthermore, if you look at some of the data in regards to trends in gaming, mobile is clearly winning here. Per Games Industry last month:
The annual spending on games in the USA for new retail games in 2012 was $7.1 billion, which represented about 48 percent of the total of $14.8 billion spent on games. That’s right, the retail market for new games is now less than the combination of other revenue. The other revenue, according to NPD estimates, includes used games at $1.59 billion, digital games and DLC at $2.22 billion, subscriptions at $1.05 billion, social network gaming at $544 million, game rentals at $198 million, and $2.11 billion in mobile game sales. New retail game sales dropped over 22 percent from 2011, and used games dropped 17.1 percent. Digital full games and DLC combined grew 33.9 percent for the year, with subscriptions gaining 12.9 percent and mobile games growing 10.4 percent.
Clearly, digital sales are growing and will continue to do so. It’s a move that cuts out or reduces the costs associated with the middleman (i.e., the retailer) and leads to increased profit for the developer or publisher. And, in nefarious cases, when a developer or publisher wants to force their player-base to adopt a new title, they can shut off access to a game. Will all companies do this? Certainly not. But we’re facing a very real possibility that you will be “renting” access to a title rather than owning it. From a consumer’s perspective, I find this very disturbing.
Now how does this all pertain to the upcoming generation of consoles? First off pricing. You can’t tell me the PS4 and Xbox One won’t cost at a minimum $400.00 USD. Now I’m a nurse by profession, and very blessed to be making top dollar based on my skill set and knowledge. But I can honestly say that such a price is too much. While it’s debatable as to whether or not we’re genuinely recovering from a global recession, I personally feel that the asking price of consoles, and what we accept as the price of admission for such entertainment is too high. A lot of people would say, “well just don’t play then.” My answer? I won’t. At least on consoles. Will everyone be like me? Certainly not. And the purpose of this post isn’t to sound like a PC elitist. I don’t care what platform you prefer. The more options there are, the more diversity that exists, the more I benefit as a gamer.
But here’s some interesting data for my argument. Per Forbes in March:
David Cole, an analyst with DFC Intelligence, explains part of the sales surge: “DFC was surprised the industry still showed growth in 2012 with the decline of large subscription MMOs, heavy attention being paid to the impact of mobile games, and the struggle of many social network games. However, 2012 saw significantly increased distribution of successful titles that positively impacted the market, including Diablo III, Guild Wars 2, Minecraft and the Mists [of Pandaria] expansion to World of Warcraft.”
Wargaming’s incredibly popular World Of Tanks
Granted, those are specific titles that are a huge force in the PC industry. And they represent a small amount of games compared to the wide array of titles available on consoles. Also, World of Warcraft is a subscription-based service. But with news that World Of Tanks has surpassed 60 million players, there’s obviously a phenomenon going on here. The Forbes article also mentions that China is a country “bereft” of consoles and in 2012 alone, “generated $6.8 billion dollars” in revenue and that PC gaming as a market is growing despite a decline in hardware sales. Furthermore, mobile gaming is expected to triple in revenue by 2015, with mobile gamers spending ”anywhere from $8 to $15 per month.” This isn’t something to be scoffed at. Wonder why people like Lee Perry and John Romero shifted over to mobile development? It’s because thats where the market is headed. Mobile games are cheaper and are starting to reach visual fidelity comparable to that of PC and console games. Furthermore, you have larger companies, like Square Enix, planning to expand their mobile division when fantastic games like Tomb Raider fail to meet expectations in sales. The triple-A market is becoming increasingly competitive. Soon, there’s only going to be room for the heavy hitters.
Epic’s work on getting the Unreal Engine over to tablets and mobile devices is further evidence of this shift. And after seeing footage of the latest Deus Ex game coming to mobile devices, I can’t deny that visually, the gap is closing. The last bit of my argument makes me think Michael Pachter’s predictions may indeed be true
In-game footage of Deus Ex: The Fall
And here’s my reasoning - On May 31st, Sony was said to be working with Morgan Stanley, “as it considers adopting billionaire Daniel Loeb’s proposal for an initial public offering of its entertainment unit.”
It’s no lie that Sony suffered heavily this generation, not just on the console space, but also in electronics. It took close to four years for Sony to finally make profit with the PS3. Worldwide sales between the xbox and playstation 3 are nearly even as of this writing. But it’s been a long time coming from Sony’s end. Interestingly, there is also news that Microsoft is undergoing corporate restructuring. Part of that could entail selling or spinning off its Xbox division, though some analysts think that unlikely with the launch of the Xbox One so near. I feel the same way. But with the data, along with Dan Magaha’s post on the Xbox One’s announcement, you can’t help but wonder if this is a possibility. Regardless, what is evident is that games aren’t as profitable as television and the sale of digital goods. With Nintendo’s console languishing in terms of console sales, things don’t look bright on that end. But, where Nintendo has an advantage in my mind, is cost. They also have exclusives that people adore. The problem, at the moment though, is that there really isn’t anything great out there right now for the Wii U.
Sales data from VGChartz
The bottom line with all of this is that from what I’m seeing, consoles are quite possibly shooting themselves in the foot. Xbox seems to be alienating its core audience. Gamers are unhappy that both Playstation and Microsoft seem to be letting publishers handle the sale of used games. And the options are increasing. Ouya and Mad Katz are both offering cheaper consoles that run Android-based games. And though I don’t expect either console to do well, what we’re seeing here (in my mind), is the first step where mobile is edging forward to replace consoles. Will hard-core games go away? Certainly not. So long as there’s a market, people will make games to cater to that crowd. But I think we’re seeing a huge shift in the gaming industry, and in some instances, the outcome will be disastrous.
When I think of a console, I think of ease-of-use. I want a device that works in the living room and allows me to play games. And I also want something reasonably priced. Do I think consoles will disappear entirely? No. But I think there may be new players on the horizon. What we consider to be a console may certainly change. All in all, it’s definitely an interesting situation, but also a bit scary as my favorite past-time appears to be threatened.
-ty
