More and more industry insiders are talking up the cloud and mobile platforms as serious alternatives to console gaming, Phil Nachum reports
Things are not looking good for consoles these days. Logitech recently announced that it would no longer produce console accessories, calling it a “non-strategic,” product category. Furthermore, Microsoft’s latest financial statement noted a 28 percent decline in 360s shipped during the holiday period of 2012 compared to that of 2011. More generally, an NPD report stated that every console and handheld performed worse in North America in 2012 than it did in 2011.
Perhaps this is normal for the end of a console cycle. After all, it’s hard to maintain sales growth after seven years. Or maybe the future of consoles isn’t quite as secure as we think. In fact, several industry figures have made doomsday predictions of a time when the console no longer exists.
Ngmoco Sweden founder Ben Cousins is among those people. In an interview with Gamasutra, he expressed his belief that the rise of mobile is the biggest threat to consoles. He said, “What we’re seeing with mobile is actual classically described… as bottom-up disruption. [That's] where something comes into the market, which is worse but is cheaper and more convenient; it serves the same purpose, and people just drop down to it and then they ride it up.”
Cousins believes that even if console manufacturers are aware of this, they aren’t structured in a way that will allow them to adapt quickly enough. He said, “It’s almost impossible to get the organization to change away from being one that creates Cell processors and enormous boxes with fans on them that draw 300 watts of power.”
EA founder Trip Hawkins has a similar view. His position, as expressed in an interview with IGN, is that consoles will remain, but will be relegated to a niche hobbyist audience. He also cited the expansion of mobile games as a potential cause, saying “[The gaming industry is] across two billion PCs and four billion mobile phones, and within a few years a billion tablets. In terms of total audience size, we’re getting into really big numbers.” Like Cousins, Hawkins also thinks convenience and ease of delivery are part of the benefit of these alternative platforms over traditional consoles.
Lastly, Nvidia‘s GeForce Grid Cloud Gaming general manager Phil Eisler weighed in with his view that the next generation of consoles will be the last. However, he believes cloud gaming will be the cause, rather than the rise of mobile. Eisler said, “The thing about the consoles… the last one is almost ten years old now in terms of the technology. The good thing about cloud gaming is it’s going to get better every year. Bandwidth is going up. The cost of server rooms is going down. We’re bringing latency down. The experience will just get better and better every year, to the point where I think it will become the predominant way that people play games.”
It’s worth mentioning that Ben Cousins, Trip Hawkins and Phil Eisler all have a vested interest in seeing traditional consoles decline. They all work, in some form or another, to create products that are potential alternatives to consoles.
But of all their claims, Eisler’s seem the most realistic. His assumption isn’t that the market’s preference will shift in a way that is less satisfied by consoles, but rather that the same preference and demand for hardcore games can be addressed in a better way. There are certainly benefits to cloud gaming: no more disks, no more downloads, no more patches, no more hard drives, no more large, expensive boxes, and no more waiting five years for an upgrade in technology.
But is this vision feasible? And if so, when? Is it possible for cloud gaming to become such a viable alternative to consoles by 2018 – roughly when the next console cycle will end – that there won’t be any need for them?
Perhaps the perspective of a console manufacturer could shed light on the matter, though Sony has sent mixed signals. On the one hand, it acquired cloud gaming company Gaikai last year for $380m. While the short term implications of this are likely to provide backwards compatibility for the next PlayStation, it’s possible that Sony is shoring up a foundation in cloud gaming, in case it wants to continue delivering games to people in a world without a dedicated PlayStation box.
However, chief executive Kaz Hirai told Bloomberg that it’s “very important that we continue to have a dedicated home-based console. Relying solely on networks to deliver content is unfortunately just not possible. It’s still very difficult to have consumers download 50 gigabytes of data or more.”
Hirai was referring to digital distribution, not cloud gaming, but the concept is the same. The biggest bottleneck to the growth of cloud gaming, and therefore it’s capacity to replace consoles, is the internet. Imagine trying to stream a new blockbuster game on launch day to half a million concurrent players without any latency. That isn’t possible with the internet infrastructure we have in place, especially when you also consider how much of Sony’s business happens in developing countries, where access to high-speed internet is even more limited.
So really, the question is when this problem can be resolved. If the Federal Communications Commission’s call for nationwide gigabit internet to be available in the US by 2015 is met (or other schemes in primary markets in the Western nations successfully conclude), or if Google Fiber takes off, then cloud gaming could be a good alternative to consoles by the end of the next generation. But as long as a sizable population doesn’t have access to reliable high-speed internet, disk-based home consoles will be around. Eisler’s claim that cloud gaming will soon become the predominant way people play games is entirely possible, though his claim that the next consoles will be the last seems less likely.
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