The rise of digital download content and online and mobile gaming reduces the likelihood of a ninth generation console cycle, according to a Digi-Capital investment review.
Digi-Capital's Global Video Games Investment Review 2011 notes that game delivery services such as OnLive create "potentially significant long term issues" for Sony, Microsoft, Nintendo and GameStop.
The analysis explains that the iPad and other such tablets may also impact the console market, but that the effects will take "take much longer to occur than [first] anticipated."
The eighth generation console cycle, estimated to run between 2014-2016, will also be affected, according to the report, as casual, social and online gaming, including MMOs and mobile games, will constrain the growth of console gaming.
The report also notes, "Many major console publishers are struggling to adapt to online/mobile, and are not driving online/mobile games investment."
Digi-Capital estimates that online and mobile games "should grow total video games market size to $87 billion", while taking around 50 percent of the revenue share at $44 billion. In comparison, the console sector will see its share flat to down.
The report also discusses the current console generation, noting that the Nintendo Wii is currently dominating with 46 percent of overall console unit sales, following by Xbox 360's 28 percent and PlayStation 3's 26 percent.
2010 sales of Xbox 360 were 42 percent higher than in 2009, with sales driven by eight million Kinects sold in its first 60 days.
I don't buy into the whole pad and tab sized devices changing everything and making "old" home based stuff obsolete.
The GameBoy has been the definitive mobile gaming platform for a long time and of course hasn't spelt the end of home entertainment.
Some may argue that it is only a toy compared to a pad size device, but then a pad size device isn't that much better when compared to a full blown home entertainment system with a huge screen displaying HD graphics with a sophisticated sound system. Also the big win for the GameBoy is that it is small and can be easily carried around.
The OnLive setup isn't that exciting for me, I'm in the UK and the internet infrastructure, in general, just isn't up to the task yet; I wouldn't want my game library made useless because too many people are downloading ripped DVDs.
The other key factor is that we do spend quite a bit of our downtime in the home, why would we want are sole delivery system to something that can fit in your hand.
Agreed. There's some merit to the argument that the 9th generation may never happen - we're starting to hit the law of diminishing returns on gaming hardware; given the march of Moore's Law, the 8th generation of consoles should be able to run complex game simulations natively at 1080p at 60fps. So the 8th generation is liable to hang around longer than the 6th or 7th did; the 9th generation may simply become virtualised machines running atop powerful commodity hardware (e.g. TVs), allowing you to throw games from machine to machine in the way that the Wii U is prototyping.
However, by the same token, I'm not convinced that services such as OnLive can truly supplant physical, local hardware. For instance, there's somewhere in the region of 100 million game consoles in the USA (plus a significant number of PC gamers): even if only 20% of this userbase is active at any given time, that still requires an astronomic amount of electricity, processing power, RAM and network bandwidth; for all that companies such as Google have shown they can scale to supercomputer levels, rendering and compressing a video game feed takes considerably more resources than streaming pre-compressed video and generating search results...
@ Jamie - well put, and imagine when major titles launch (such as the next CoD, or whatever else is the popular teen male game in the 9th gen) - providers will have to be able to scale up to cope with a massive load of processing and streaming. Personally, given the propensity of networks to fall down at some stage or other, I'm keen to keep the processing at my place. What happens when hackers take down a cloud service for a month like the PSN? At least I could happily play single-player - but with a network down for a streaming service you've got nothing.
And then there's the poor infrastructure around the world, with many areas not likely to have the infrastructure to cope with this kind of service for decades, and it also doesn't take into account the massive load on current infrastructure of people streaming whole games through the internet, rather than just the bare minimum required to play online games (which involves no audio or video at all at the moment).
@ Jamie - I agree with most of what you're saying, the 8th generation will last a lot longer then even the current generation (I just hope they give us enough memory to create larger worlds, quicker).
The tech that might force the launch the 9th gen is Ultra High Definition Television (http://en.wikipedia.org/wiki/Ultra_High_Definition_Television).
In my opinion it's a little naive to say that we will never need more than the current/next gen of any technology. There will always be new possibilities opened up by new tech and people will push it to the limit so that we will end up craving that little bit more advancement.
I'll not try and predict what any of these might be, if I could I probably should be a lot wealthier.
@ Jamie, there was an article a few days ago about cloud gaming. It basically said that games like Crysis 2 were not made specifically for the cloud, but if they were then the compression would be a lot better. At the moment i've gathered onlive uses a lot of bandwidth (3 gigs an hour?). Once better compression algorithms are developed (alongside the game engine) it should lower the barrier of entry. After all, Perlman has always made it his goal to make onlive ubiquitous, and there is even a video of him playing Crysis on an iphone in front of a bunch of students. I know this is not the most scientific response, but taken from a financial perspective and science aside Onlive makes a lot of sense for game developers and even console makers.
it only makes since if the consumer wants it. I personally prefer a physical copy of a game and i refuse to download a AAA title, ill make an exception for an indie game or retro game but thats mainly because i dont value them as much as the other big titles. The cloud may have friends that want to play with it, but im happy with my friends here on the ground.
Why make new music or movies? The technologies for these have been established for decades and yet people are still making new media.
The first point is that society's values and preferences change over time too - for instance, movie remakes which alter or remove elements deemed unpopular or unsuitable (such as airbrushing the guns out of ET).
Then too, what's old and understood is rarely as interesting as something new. Boredom and curiosity drives more human activity than we'd probably care to admit :)
It doesn't matter how powerful new hardware is if TVs are rooted to 1080p and it takes a literal army of artists to create content. The business model on the console side doesn't scale up, with fewer and fewer companies able to create viable products at that scale (20-50 million dolllar games). The scale of current generation console games put a lot of developers out of business.
The only way forward is a fundamental change of hardware / game experience. I.e. - 3D TVs that don't suck (effectively needing double the render power), maybe 4K resolution TVs (no time soon!), game experiences that with densely populated worlds that are interactive (rather than pretty, but "dumb" empty spaces) or switching to monitor glasses rather than using a TV.
I suspect there's a much better chance we'll see the Xbox Tablet that the Xbox 4th generation, and by all accounts, it should have nearly the same power in about 5 years as mobile largely closes the gap with dedicated console boxes (nVidia's words, not mine). The next 10 years is the story of portability and connectivity, after that, who knows? Maybe separating the consoles from mobile from the cloud will seem like a quaint idea.
@James: we've definitely moved away from the era where making best use of the technology ate up most development resource. These days, it's far more about the content.
However, I'm not sure we'll see a dedicated "Xbox Tablet". Instead, I think we'll see something closer to the model Apple is effectively trailblazing: games which can run on multiple platforms and automatically reconfigure themselves to take best advantage of available resources - from phone to tablet, console, laptop or even the TV. The Wii U is another step in this direction and Microsoft has been showcasing it's "AMP" technology (http://hardware.slashdot.org/story/11/06/15/2338258/Microsoft-Demos-C-AM P-At-AMD -Developers-Summit)
Of course, this carries several potential issues: the "console" companies (which I'd expand to include Apple and maybe even Google) are unlikely to want to relinquish control; there's also the question as to what happens if/when games have to cater for the lowest common denominator (i.e. a mobile phone with a touchscreen). But we'll just have to wait and see how things unfold...
I fail to see the additional value generated by a new console that offsets its prohibitive purchase cost. I don't find myself buying new consoles because I'm thrilled at the new hardware opportunities they provide. Instead, it is merely because new games cease to be created for the older systems. In other words, when I buy a new console, its not because I'm excited about what I'm getting, but rather because my gaming capbility is being ransomed back to me by the console makers.
Hm, can't imagine why next generation consoles might have diminished sales and decreasing market. I bet it is the iPad's fault!
I know what you mean, but rarely have I agreed. The leap from SNES to PSX and N64 was a significant and exciting one. The current console generation has a huge upper hand over its predecessors thanks to the robust online systems they have. It was a big deal to go Game Boy Color, even if the games themselves were essentially the same.
However, this is certainly how I'll feel if Microsoft or Sony reveal something new out of the blue tomorrow that doesn't impress me with a feature I didn't know I needed.
Just a personal opinion here, I really don't see this happening to the 8th generation. Its far too soon. Heck by the time the 9th generation is due the UK will still only have about 2/3 covered with fibre to the home. (constant downrate of 40mbps) and right now with current technology there are still bandwidth issues just from people downloading / youtube etc. When it gets to the point of all console gamers trying to stream an HD game at the same time it would just pull the internet to a halt.
Perhaps in the future when the bandwidth issues are solved at all levels, but until then no its just not worth it to risk it.
I'll be honest when I say onlive does intrigue me, and I do see it as the future. Just not yet, and definately not within the next 12 years. 20 perhaps, generation 10 of consoles. But not the 9th generation.
As technology improves, better compression algorithms will make more use of available bandwidth also dedicated hardware and smarter decompression on the client side will further reduce latency, end result everything is moving to the cloud.
Bandwidth is going wireless people won't need fiber connections to get access to these services. This is a trend piggy backing upon the emergence of mobile internet, it's not gonna stop anytime soon. 5G networks will be more than capable of handling these speeds / bandwidth and they are probably 3-5 years out. Putting up a cellular tower is alot cheaper than laying out miles of fiber optics..
@Duong: But then you run into the incumbent carriers, who are all gung ho about throttling and bandwidth caps (if they even offer service in your area).
That's what they will do, to try and increase their profit margins, but that will just speed up the adoption of wireless internet. It's funny that way, they think they have essentially a monopoly but in a decade or so they will be fighting to survive..They (the cable companies) could delay it through lobbying for legislation but that won't work everywhere..
Wireless connectivity is rapidly advancing esp in the developing world where it's not cost effective to setup land lines due to poor infrastructure, paradoxically.
I'm sure you'll still pay a usage fee proportional to your consumption but with wireless atleast there will be competition, right now cable companies basically have a monopoly.
Id rather pay a flat rate to the cable company (which there are more than one of so they are not a monopoly) than a by minute or per gigabyte rate to a mobile carrier any day.
I highly doubt that online and mobile games have the possibility of completely destroying the console market. the quality of a console game is much better than a mobile or online social game. I mean really the iPad is nothing more than an over glorified, over sized iPod touch, and all the non apple tablets are just trying to take some of the market from apple. honestly take the apple off the back of the iPad and there would not be so many people who want it, and thus no other company would be shoving a tablet out into the world.
and still these analyst leave out the people who would prefer a physical copy rather than a right to a file on a server.
The GameBoy has been the definitive mobile gaming platform for a long time and of course hasn't spelt the end of home entertainment.
Some may argue that it is only a toy compared to a pad size device, but then a pad size device isn't that much better when compared to a full blown home entertainment system with a huge screen displaying HD graphics with a sophisticated sound system. Also the big win for the GameBoy is that it is small and can be easily carried around.
The OnLive setup isn't that exciting for me, I'm in the UK and the internet infrastructure, in general, just isn't up to the task yet; I wouldn't want my game library made useless because too many people are downloading ripped DVDs.
The other key factor is that we do spend quite a bit of our downtime in the home, why would we want are sole delivery system to something that can fit in your hand.
However, by the same token, I'm not convinced that services such as OnLive can truly supplant physical, local hardware. For instance, there's somewhere in the region of 100 million game consoles in the USA (plus a significant number of PC gamers): even if only 20% of this userbase is active at any given time, that still requires an astronomic amount of electricity, processing power, RAM and network bandwidth; for all that companies such as Google have shown they can scale to supercomputer levels, rendering and compressing a video game feed takes considerably more resources than streaming pre-compressed video and generating search results...
And then there's the poor infrastructure around the world, with many areas not likely to have the infrastructure to cope with this kind of service for decades, and it also doesn't take into account the massive load on current infrastructure of people streaming whole games through the internet, rather than just the bare minimum required to play online games (which involves no audio or video at all at the moment).
The tech that might force the launch the 9th gen is Ultra High Definition Television (http://en.wikipedia.org/wiki/Ultra_High_Definition_Television).
I'll not try and predict what any of these might be, if I could I probably should be a lot wealthier.
I'm sure stuff still will get dated. And new ideas will still emerge and old ones will be improved.
But at some point why make new games?
Other than new generations will want games to reflect their lives. The trends going on. Not much different than music or movies.
I mean 50 yr old board games are on the shelves today.
Should a good videogame be any different?
The first point is that society's values and preferences change over time too - for instance, movie remakes which alter or remove elements deemed unpopular or unsuitable (such as airbrushing the guns out of ET).
Then too, what's old and understood is rarely as interesting as something new. Boredom and curiosity drives more human activity than we'd probably care to admit :)
But, like books and movies, as the technology becomes easier to use I think you'll see many more new games (just maybe less new 'types' of games).
The only way forward is a fundamental change of hardware / game experience. I.e. - 3D TVs that don't suck (effectively needing double the render power), maybe 4K resolution TVs (no time soon!), game experiences that with densely populated worlds that are interactive (rather than pretty, but "dumb" empty spaces) or switching to monitor glasses rather than using a TV.
I suspect there's a much better chance we'll see the Xbox Tablet that the Xbox 4th generation, and by all accounts, it should have nearly the same power in about 5 years as mobile largely closes the gap with dedicated console boxes (nVidia's words, not mine). The next 10 years is the story of portability and connectivity, after that, who knows? Maybe separating the consoles from mobile from the cloud will seem like a quaint idea.
However, I'm not sure we'll see a dedicated "Xbox Tablet". Instead, I think we'll see something closer to the model Apple is effectively trailblazing: games which can run on multiple platforms and automatically reconfigure themselves to take best advantage of available resources - from phone to tablet, console, laptop or even the TV. The Wii U is another step in this direction and Microsoft has been showcasing it's "AMP" technology (http://hardware.slashdot.org/story/11/06/15/2338258/Microsoft-Demos-C-AM P-At-AMD
-Developers-Summit)
Of course, this carries several potential issues: the "console" companies (which I'd expand to include Apple and maybe even Google) are unlikely to want to relinquish control; there's also the question as to what happens if/when games have to cater for the lowest common denominator (i.e. a mobile phone with a touchscreen). But we'll just have to wait and see how things unfold...
Hm, can't imagine why next generation consoles might have diminished sales and decreasing market. I bet it is the iPad's fault!
However, this is certainly how I'll feel if Microsoft or Sony reveal something new out of the blue tomorrow that doesn't impress me with a feature I didn't know I needed.
Perhaps in the future when the bandwidth issues are solved at all levels, but until then no its just not worth it to risk it.
I'll be honest when I say onlive does intrigue me, and I do see it as the future. Just not yet, and definately not within the next 12 years. 20 perhaps, generation 10 of consoles. But not the 9th generation.
Bandwidth is going wireless people won't need fiber connections to get access to these services. This is a trend piggy backing upon the emergence of mobile internet, it's not gonna stop anytime soon. 5G networks will be more than capable of handling these speeds / bandwidth and they are probably 3-5 years out. Putting up a cellular tower is alot cheaper than laying out miles of fiber optics..
Wireless connectivity is rapidly advancing esp in the developing world where it's not cost effective to setup land lines due to poor infrastructure, paradoxically.
I'm sure you'll still pay a usage fee proportional to your consumption but with wireless atleast there will be competition, right now cable companies basically have a monopoly.
and still these analyst leave out the people who would prefer a physical copy rather than a right to a file on a server.