New Consoles: The End of the Road

Nintendo released the Wii U console in September, and since then, less than 3 million people have bought it. It sold less than 57k in January, making it the worst preforming console to date. 

Many consider the Wii U console already finished. 

Sony announced a console that promised “more of everything” without actually showing anything that couldn’t have been shown at the PS3 announcement in 2005. Microsoft will of course follow suit, chasing the living room crowd with a machine that apparently does it all, but mostly deals with media and TV in a grab for eyeballs.

Except, the world has already moved on. 

Markets always do this. They discover a niche, become as streamlined as they can to earn money in that niche, and then the niche shifts or vanishes altogether. Meanwhile, the stalwarts who occupied it, hang on to the past as a predictor of the future, and go down with the ship. They have no choice. They can’t change. Even the dwindling returns (or growing returns on a market that’s collapsing!) are too valuable not to pursue.  

When a business becomes big enough, its biggest threat is its own inertia.

I hear rejoinders such as:

“There will always be a Call of Duty…”  

“A tablet can’t deliver what a console does…”

“Wait until X title comes out…”

None of these things matter because kids don’t want consoles. Or they don’t want them as much as they want tablets or smartphones. By a large margin.

These kids will determine the future success of the consoles.

Some people want a new console, but that number is dwarfed by the people who want (or have) a connected device. (1 billion smartphones and tablets worldwide in a great 4 year orgy of sales vs. 240 million consoles in 6 years of sales).

Worse yet. The console market has been artificially glutted. 70+ million each for Microsoft and Sony, and about 100 million for Nintendo. How many of those owners do you imagine buy releases regularly? How many consoles sit on shelves covered in dust? How many are used to play a single game like MADDEN over and over and for nothing else? 

The average iOS device is already comparable to an XBox360 or PS3 in processing power. Android is also pushing bigger and stronger devices. 

These Tablet/Smartphone devices run in multi-year or even multi-month release cycles, pushing new hardware out fast. They are not locked in ten year console-dev cycles with physical media lock-in. 

Smartphones and tablets are getting cheaper and cheaper to make and sell. To a large degree, if you bought a game in 2008 on an iPhone, you can still play it today. The development market is not dictated by huge dev costs for verification and release, and are not subject to license fees. The list of advantages go on and on. 

Developers for them can find many free engines to develop with, and one man shops often release titles that chart in the iOS store. Success is not an absolute must the first time out of the gate. You can squeeze out a mobile game for 30k, fail and try it all again. Compared to a projected average PS4 dev cost, you could afford 3,333 attempts at success in mobile vs. just 1 console release.

Will tablets and smartphones ever be able to deliver the feeling and experiences found on console games? No, probably not. Does it matter? Not to the money behind such enterprises. The math and business case determines the market, not the wishes of hardcore gamers.

1 in 4 PCs sold last year was a tablet. That will be 2 in 4 by the middle of this year. 

The total iOS worldwide install base will top 1 billion by 2015.

1 billion. 1 billion customers. Connected. Projected up, a game like Clash of Clans which today makes 1 million dollars a day would be making 20 million a day.

Already, the money is moving away from consoles, leaving Activision, Ubisoft, RockStar and EA to toe the line. The mid level and low level companies have been squeezed out of the game. There’s no money to go around. Now it’s just a game of Duck, Duck, Goose, until no one is left at the console table.
 
I love console gaming. But there’s nothing there that wouldn’t run better on STEAM.  The future seems clear. It’s one where consoles occupy a dwindling niche, surrounded by huge industries at the beginning of an upswing in adoption unprecedented in the history of technology.

Who’ll be the last in the pool? 

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