Tuesday, February 15, 2011

The Next Console Generation? Don't Hold Your Beath

Throughout the history of video games and video game consoles, one rule has held steadfast--every 5 or so years, the industry refreshes with what's referred to as a new "generation" of consoles, where each of the major console manufacturers trumpets out new, more powerful devices while slowly phasing out the old ones. 2011 marks the fifth year since the 2006 launch of the Nintendo Wii and PlayStation 3--and the sixth year since the Xbox 360's launch in 2005--yet not only have we yet to hear of any new machines, it does not appear likely that new systems will be entering the market until 2015. The reality is that nobody involved in the industry--from the manufacturers to the developers to the publishers to even the consumers--even want a new console generation anytime soon. And for good reason.

PS2: The First 10-year Console (and counting)
When Sony first launched the PlayStation 3, the Japanese tech giant defended the system's initially astronomical price tag by claiming that the PS3 was designed for a ten-year life cycle. While there were plenty of critics doubting Sony's lofty ambitions, in hindsight the goal was not so unrealistic given the ongoing success of the PlayStation 2. By the time the PS2 reached its 10th anniversary in 2010, sales had declined significantly from its heydey, but it was far from dead in the water (games continue to be published for the system to this day). In other words, a system planned to have a 10-year life cycle surely could achieve that goal with little trouble given the PS2's already-established lasting power (then again, the PS2 is the most successful console ever made).

However, the PS2 achieved this feat 4-5 years after the start of the current console generation, so it's not like it can really be regarded as the catalyst for the elongation of the life cycle. Instead, we must answer a fundamental question: why would Sony, Microsoft, or (to a lesser extent) Nintendo even want to release a new console right now? The PS3 and Xbox 360 are still growing and have yet to hit critical mass. Further, the cost of actually releasing a new console is tremendous, and the manufacturers often launch new consoles at a loss and make up the difference over time in game licensing fees, accessory sales, and (down the road) cheaper and/or more efficient components. There's no reason for these companies to go back into the red when the current generation is still in its prime and still growing. The economic turmoil that has tightened up budgets around the world--and that played a role in slowing growth in the generation's early years--has only reaffirmed this position.

The PS3 Slim makes the unit cheaper for Sony to
(Note: the Nintendo Wii may be an exemption to this logic and will be excluded for the rest of the article. The Wii experienced its first sales decline in 2010 and--while still strong and still the overall market leader--there is no doubt that the system will reach its demise first of the three, especially considering that it was a far weaker console to begin with. However, still don't expect a successor until at least next year; the Wii still retails for $200, meaning there's plenty of room for sales-invigorating price drops).

To further strengthen the console manufacturers' position, the developers and publishers are more than happy to keep the current consoles around for as long as possible. The installed bases (number of people who own the current consoles) are still growing. A new set of consoles would mean higher development costs and a need for developers to learn how to develop for entirely new computer architectures when they are only just now tapping the full potential of the PS3 and 360. The publishers would also not want to combine these higher costs with installed bases that would inherently be only a fraction of what's available right now, which would severely limit the sales potential of any next-generation game, no matter how good. The increasing installed bases of the current consoles also decreases the risk of developing middle-ranged niche titles that can sell to just a small segment of the market rather than needing to achieve AAA blockbuster success.

Because of Xbox Live's heavy integration to the 360 dashboard,
Microsoft was able to completely overhaul the dash to
accommodate changing times.

Any rational consumer doesn't want a new console either. With the developers finally getting a firm grasp on development for this generation, gamers are able to play increasingly higher-quality games. The aforementioned benefits of growing installed bases also means that developers and publishers will be willing to take more risks, which opens up the door to new, more radical gameplay ideas. Consumers also get the advantage of sequels and entire trilogies that can actually build off previous titles in the same generation; it would be almost impossible for BioWare's Mass Effect trilogy to maintain the sense of continuity from game-to-game if the generation were cut short as currently these games import previous games' save data directly off the hard drive (of course, a cloud-based memory solution like what Sony's launching with PlayStation Plus could alleviate this hurdle). Perhaps most importantly, these consoles still cost about $300, or the traditional launching price of a new console (though that has already been thrown out the window). Should sales start declining like what the Wii's beginning to see, there's plenty of room for price drops, which trigger a massive increase in sales. With the abundance of quality games still being released for the current consoles, the last thing a consumer wants to do is shell out hundreds of dollars to start over again.

Kinect and the Xbox 360 S: a recipe for longevity.
There are several other factors in this generation's elongation. For one, the primary driving force in the launch of previous generations was technological advancements that allowed for a significant increase in pure graphical power. Let's face it: no matter how much more realistic future consoles may get, any improvements would only be incremental to the strikingly realistic visuals already achieved by today's consoles. Another game-changer is the current consoles' integration with online connectivity. The PS3 and Xbox 360 as they exist today are far more advanced than the machines that launched, even with with the slimmer redesigns aside. Having the Internet so thoroughly integrated into the experience means that the consoles are able to evolve as time goes on--something that previously necessitated an entirely new hardware product. Already we've seen things like Netflix, Hulu, ESPN, MLB.tv, NHL GameCenter, Last.fm, Facebook, Twitter, Zune, IPTV, and a whole bunch of other applications get added to the consoles' stable of features.

Finally, 2010 saw the launch of major peripherals for both the PS3 and 360 that provide a new method of interaction that could easily be associated with a new console, but instead are simply additions to the current hardware. Sony and Microsoft certainly hope that the PlayStation Move and Kinect Sensor for Xbox 360 can carry their respective hardware for the equivalent of a new generation, but as we've been over this whole time, even if they flop (which they aren't), these consoles are plenty capable of continuing growth on their own.

1 comment:

JonnyHu said...

There is also the issue of backwards compatibility for every new generation of consoles. Obviously, something that Sony decided to opt out when reducing the cost of their PS3, which upset a lot of people.
Also consoles have a expectancy to stay stable over the years, because games have to adhere to the limitation of the console. Compare this to PC games, where newer and newer builds for computers need to be upgraded more frequently, RAM, Graphics Card, etc. This raises the bar for PC games to push the "recommended" setting into "required" setting.