Weapons of Mass Disruption #3: How and Why Consoles Will Die

Many people (me included) have been saying publicly that they think the ‘console'—dedicated hardware designed primarily for gaming—is on its way out.

I used to keep a list of famous developers and executives who shared my view, but it got too big to maintain!

Anyway, here's just two whom you might care about: David Jaffe and Hideo Kojima.

For many people, the idea that the mighty console will die out is too radical to comprehend. It sounds so outlandish that it requires further explanation than I was able to put across in a 26-minute Game Developers Conference presentation. So how about I go through the mechanics and the economics of it?

I base my view on a bunch of Assumptions and Data Points. Assumptions would be things I believe are true, but that we have no data for, and Data Points are things that we know are true. You can argue with assumptions, but it's pretty much impossible to argue with data.

  1. Data point—Consoles like Xboxes, PlayStations & the Wii U are sold at a loss. It costs more to manufacture and distribute the device than it is sold for. Console manufacturers do this because they hope to make back the money from the license fee they charge for every game sold on the system. In order to offset the huge cost of hardware production, distribution, R&D and marketing, a hardware platform holder must sell vast quantities of hardware, and even bigger quantities of software. So much needs to be sold, in fact, that the data points to PS3 and Xbox 360 having made huge losses, despite having sold 70+ million units of hardware each.
  2. Data point—Of those 70 million Xbox 360s sold, a large proportion (approx. 40%) were bought after the most recent price cut of August 2009. Of the 70 million PS3s sold, a large proportion (approx. 42%) were bought since the introduction of the PS3 Slim.
  3. Assumption—The large proportion of sales of these consoles coming so late in the cycle, and at low prices, indicates a large proportion of the console user base that isn't looking for the most advanced system (indeed, a custom gaming PC is the most advanced in terms of CPU and GPU this late in the cycle). This mainstream sector of the market bought a console because it offered them the best balance of price/performance/convenience. Let's call these people "mainstream console gamers." They are the types of people who buy hits only—Madden, FIFA, Call of Duty, Halo only, i.e. not Kotaku readers. In fact, they probably don't visit any gaming websites.
    Without this huge group of people buying consoles or console games, the console platform holders will no longer be able to make enough money to justify developing, marketing and manufacturing the devices.
  4. Data point—Eighteen months ago our research, at my mobile gaming company, told us that 50% of console owners also owned a smartphone or tablet and that this number was growing fast.
  5. Assumption—For these "mainstream console gamers" mentioned in (3), a high-end tablet or smartphone actually suits their gaming needs better than a console in terms of the balance of price/convenience/performance. From a performance point of view it may be below console, but the device is more convenient to use, the software is cheaper or free, and the device has a low or zero perceived cost, because the user owns one anyway or pays for it in instalments via a carrier.
  6. Data point—Mobile developers and publishers are starting to target these "mainstream console gamers" aggressively. I work for a mobile publisher just slightly smaller than EA, and we are targeting them aggressively.

Given those data points and assumptions, what I think will probably happen is that, as smartphones and tablets continue to get more and more powerful (and they are increasing in power faster than any other class of device), and as more and more publishers start to actively target those "mainstream console gamers" with mobile games, more and more of those people will gradually move their gaming hours and dollars away from console gaming to their mobile devices. Without this huge group of people buying consoles or console games, the console platform holders will no longer be able to make enough money to justify developing, marketing and manufacturing the devices.

It doesn't matter that there will "always be a market for consoles" among the hardcore, because the console model as we know it relies so much on the money from the "mainstream console gamers."

In the future, I see gaming as having two main markets:

  1. Mobile devices like smartphones and tablets will serve the biggest market—covering kids, casual gamers and the mainstream console people.
  2. The core and ultra-core gamers would be served by PC gaming, which will be smaller than mobile, but that will continue to grow. Many of the old-school PC gamers I know that moved to playing games on Xbox over the last 10 years are coming back to PC because of free-to-play and indie games, controller and TV support, as well as incredible digital distribution on platforms like Steam.

If you are a console gamer and can't ever see yourself playing games on a mobile device, then I expect you will be one of the 10s of millions who will move more and more of your hours and money to playing PC games.

Many people often dispute my position on the matter by arguing, "he would say that, he's a mobile developer!" but those people are getting cause and effect mixed up. I spent eight years of my life working on console games for companies like Microsoft, Sony and EA. The reason I moved to mobile a year and a half ago is precisely because I came to the conclusion the consoles were on their way out. I bet my career on it. That's how much I believe in it...

Ben Cousins (@benjamincousins) is a 13-year veteran of the games industry who's worked at Lionhead, Sony and EA among others. He currently runs Scattered Entertainment, a studio in Stockholm owned by Japanese mobile gaming giant DeNA. where his team are working on disruptive AAA mobile FPS The Drowning.

Top image: A scene from the movie Minority Report.

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