Is a PC the next generation of consoles?

· by Steve · Read in about 7 min · (1303 Words)

I’ve been wondering about the ultimate future of consoles lately, following my conclusion that I don’t have a good reason to join the next-gen yet. Yes, consoles are still the pinnacle of mass-market consumer games but in this latest generation, some serious cracks have started to appear in the business model, in my view. It’s all to do with the costs and the direction in which the technology of the ‘living room device’  is going.

With the exception of Nintendo, everyone loses money hand over fist on console hardware. Not even counting the research and development costs, on a purely production basis both Microsoft and Sony are burning handfuls of dollar bills every single time one of their machines flies (or in the case of Sony, crawls) off the shelves. The accepted model is that by keeping white-knuckle control of what gets published, they get to make their money back by skimming a cut from software sales (and, I’m guessing, accessories which always seem to be outrageously priced for what they are). It’s an established idea that’s been going for many years, but it does very much depend on your audience buying a lot of your games, and for your console in particular. Exclusives are the order of the day; without exclusives the punter is going to decide which machine to buy based mostly on price, perceived quality, or just brand loyalty. Although in the latter case you have to put up with the kind of people who say ‘.. is the suXX0r’ or ‘FTW’ all the time, which may lead you to wonder why you’d want them hanging around you anyway.

But exclusives is also where the problems start. Next-gen (or should I now say current-gen) games cost an absolutely staggering amount of money to make, and 3rd party publishers often can’t afford to take the risk on a single platform. That’s why when you walk into a shop today, you’ll see more of the same games on both the 360 and PS3 shelves than ever before in the history of a console duke-out. The multi-platform to exclusives ratio has been eroding for some time, but I’m sure I’m not the only one who’s been looking at the shelves, not seeing very much difference between the platforms and thus wondering what the point of having 2 next-gen machines is. If the result is that more people buy the cheapest console, because most of the games are available on both anyway, that pushes the hardware margins even more into the red. All of a sudden it matters much less which console you own. Only Nintendo hardware actually seems to have a large amount of exclusive content, through a combination of novel input (on both DS and Wii) and cheaper production costs, which might not be repeatable in another generation.

So what happens in the generation after this? Surely this trend can’t continue - for software developers as projects get longer and more expensive, exclusivity seems much more of a liability than anything else - increasingly exclusives are the domain of wholely-owned subsidiaries like Bungee and Lionhead, and 3rd parties are increasingly offering exclusivity only for a period of time, not forever. And even developing for multiple platforms is expensive, plus you have a console manufacturer creaming a sizeable amount off the returns from your hard work. As the devices become more homogenised, why should they continue to do it?

Something else is happening in the living room too. While the consoles are trying to become more like home media hubs, with movie and music playing, internet browsing etc, the humble PC-a-like has also entered the same space, with Windows Media Centre, Apple TV, PVRs abound. The two types of machine are converging on each other in the living room, with consoles coming from one direction, the PCs from the other - the games consoles have to do media & general purpose device work better, and the PCs have to do games better, particularly standardisation of hardware & software components. But with efforts like Dx10 looking to standardise minimum PC hardware and MS pushing the ‘Games for Windows’ standardisation, it might just happen.

Regardless of whether the PC manages to sort its own living room problems out, is it really in many people’s interests for there to be several competing, proprietary, isolated machines as the future of the living room? Who exactly is winning from that arrangement? Perhaps the boom & bust nature of the games industry is in part down to the lack of a single inexpensive living room device, like a DVD player, which every consumer can own and know what they buy will work on it, and every developer / publisher can target openly and inexpensively? In 5 years time, the bare minimum PC spec will be easily in excess of today’s PS3, and may even exceed the rumoured PS4 (unlike some previous console generations, the consoles of this generation were technically behind the leading PCs when they were released) - what will be the argument for owning a closed system when an open one is indistinguishable in terms of features and surface quality? Only content exclusives again - and I seriously wonder whether there will be many of those left.

I honestly think that this generation may see the last of the console wars as we know them. The value statement for consumers for owning a particular brand has been eroded this time (barring the Wii which has managed to etch it’s own identity out), and I seriously wonder whether it will survive another round. Mass-market consumers don’t want a brand war - it works in clothing, or Pepsi and Coke where the items are self-contained and inexpensive. But expensive devices dependent on the provision of expensive media that sits in isolated silos of compatibility - that fragmentation is just a barrier to greater volumes of sales in practice. Can the games industry (and by that I’m mostly referring to the content creators, not the console makers - they are after all the ones that make what the consumer actually experiences), with it’s soaring costs, really cope with that? I’m not sure it can.

Maybe it’ll take another generation to shake out, but I think eventually there’s going to have to be a standard format for games just like there is for every other type of home entertainment (CD, DVD - and yes one of Blu-ray / HD-DVD is either going to have to win or the difference will have to become pointless, as with multi-format players). Then the content developers can make money from a greater homogenised base of people and keep more of the profits themselves, and hardware manufacturers can just make hardware instead of subsidising themselves through other people’s content. It won’t be a PC as we know it now surely, but I think it’s more likely to be the father (or grandfather) of the eventual standard device than any of the consoles - if only because once you take everything else out of the equation - the hardware specs, the gimmicks, the brands - it’s actually the content creators that really matter. It’s the content creators that bring the punters in and do the real selling, not a device manufacturer in their ivory tower. An open device puts the content creator in charge, and all other home media centres are far more open than consoles - and with the internet generation and (wince) Web 2.0 where ‘everyone is a creator’, a closed platform where all and sundry are charged for the right to be creative (or at the least, have strict controls over it) is already looking pretty antiquated as a concept. IMO it all adds up to the eventual death knell of the console business model as we know it.

Let the debate commence. 😀