These Are The End Times For The Gaming Console

Image courtesy of Coyoty

The newest, fastest, shiniest, next generation of video game consoles — Microsoft’s Xbox One and Sony’s PlayStation 4 — launched to great fanfare last fall. They are both generally well-received and have sold in respectable numbers. Both companies have declared success, and not without reason. And yet, in spite of all the indicators of a thriving console business, this is almost certainly the last generation of set-top video game consoles we will ever see.

It’s not that video games are becoming less popular; on the contrary, the industry just keeps growing and adding new ways to participate.

But much in the same way that streaming video services like Netflix and Amazon Prime have supplanted the idea of a personal DVD collection, so too is an all-streaming, on-demand, rented-access culture coming to the world of games.

Taking the ‘Station’ Out of PlayStation

Image courtesy of Jason Cook

Discs have been on the wane for a while now; digital distribution isn’t the wave of the future, but rather, of the present.

In 2013, for the first time, more video games were digitally distributed than were sold at retail — 53% to 47%, according to the ESA (PDF). In 2012 digital distribution was 40% to retail’s 60%, and back in the long-long-ago of 2011, it was a 70/30 split favoring discs.

Consoles have been about the last bastion of the optical drive. PC gamers have been switching over to using services like Steam, GOG, and others for years, as retail shelf space was carved away and buying anything other than a World of Warcraft expansion in stores stopped being an option. And although dedicated PC gaming enthusiasts who build their own desktop machines still install optical drives in them, the trend in home computing in general has been toward lighter, smaller, more portable machines like ultrabooks and iPads — no disc drive required.

But owners of Xbox and PlayStation consoles, of every iterative generation, have had game discs at hand that they put into their consoles to play. At the time the Xbox 360 system launched, in 2005, one of the two models sold didn’t even include a hard drive at all. The physicality of games, and the fact that players could share, rent, and resell them, has until recently supported an entire secondary industry (namely, GameStop).

Even the consoles are now stepping away from purchased discs now though, and into a purely digital world. And it’s not just digital downloads replacing physical media; it’s live-streaming, too.

Starting later this summer, Sony’s PlayStation Now service will enter its open beta phase. The service allows users to remotely live-stream game content, instead of buying a disc or downloading a full game.

For now it’s limited in which devices it will run on, and how many games it has available, but it’s also just getting started. Sony’s eventual plan is to run the service directly to (Sony brand) smart TVs, bypassing consoles entirely, and to expand the library to include more — and more current — games.

While Sony has long been a company that wants consumers to only use its products, it’s not that hard to imagine that a successful launch of PlayStation Now could someday lead Sony to try to open it up as an app to run on non-Sony-branded devices… even, say, an iPad.

Using PlayStation Now, once it launches the planned subscription model, will be exactly analogous to logging into your Netflix account to binge on all of Breaking Bad instead of buying the DVDs — and with the same pros and cons.

Always-On… Until It Isn’t

Image courtesy of Katherine

There are a few big issues with a world of cloud-based, online-accessed, networked, streaming games.

The less physically tangible media becomes, including games, the higher the chance of consumers losing their paid-for access becomes. It already happens with multiplayer games, as when Nintendo unceremoniously yanked support for Mario Kart Wii when Mario Kart 8 launched earlier this month. As games age, it makes financial sense for a company like Ubisoft, Nintendo, EA, or Activision to stop spending time and money on servers a very small number of players use, and instead to focus on the newest titles.

But that does create an ephemerality in games that is absent — or at least less pronounced — in other media. At least for the time being, streaming a movie or getting an e-book is a preference, and not a requirement; we can always go to the bookstore or the library and get a paper copy of something if our Kindle copy gets pulled. But with games, the online component is rapidly becoming integral to more and more titles.

The other roadblock in the streaming future, though, is even more foundational. Of all the years to launch a streaming games service, 2014 perhaps most clearly highlights the biggest challenge: America’s broadband networks.

Good Luck Reaching the Cloud

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The problems we face with a complete lack of competition, broadband caps, terrible customer service, slow speeds at high prices, and cable company f*ckery (a.k.a. net neutrality) have not escaped the notice of gamers or the gaming press.

PS TV sounds like a great idea until you remember what a corporate-fucked joke American broadband is.
Jim Sterling (@JimSterling)

Your average big-budget blockbuster video game these days takes between 8 GB and 20 GB of data. That’s how much space it takes up on a blu-ray disc, on your hard drive, or to download from a digital storefront. HD video and audio files are not small.

We still don’t know how much bandwidth streaming PlayStation games will use. If it’s comparable to Netflix, as we worked out in January, then a gamer could get a solid 150 hours per month of playing in under the cap… so long as she didn’t also use the internet for anything else, and as long as nobody else in her household did either.

But of course, ISPs like Comcast and Verizon are unlikely to let that much data move through their systems without putting up a stink. Netflix has had to cough up cash to the last-mile providers this year just to keep providing their service to customers, and yet even after a new agreement, Netflix and Verizon remain in a standoff that’s preventing consumers from watching the videos they want to.

It is easy to imagine Comcast and Verizon demanding Sony pay to avoid bandwidth bottlenecks, just as they have demanded from Netflix this year. Additionally, if the FCC’s proposed “fast lane” version of net neutrality becomes law, streaming gaming could become subject to a thousand other fees and restrictions.

Big-budget games always try to leverage the best and newest tech. How much bandwidth will it take to live-stream a competitive 16-player first-person shooter at 4K resolution? Lots. And as long as all our internet access remains tied up in a handful of businesses without incentive to improve, access to that kind of gaming will remain mixed and limited at best.

But What About All the Good Stuff?

Image courtesy of Scott Lynch

Rented-access culture and the limitations of our broadband infrastructure are kind of depressing. So, too, is the fact that digital storefronts allow and in a sense even encourage companies to release fundamentally broken products at full price with the promise of later patches to fix it.

But the fun thing about the video game industry is that someone, somewhere, is always trying to come up with cool new things, too.

The newest frontier in high-tech gaming is one of the oldest wishes for it: immersive virtual reality. The Oculus Rift promises to offer it, and big business believes them: Facebook acquired the company for $2 billion earlier this year. Early reports out of E3 indicate that the current Oculus experience is astonishing.

Sony clearly feels that there’s something to this VR business, after years spent fruitlessly beating the 3D drum. They’re working on their own headset, Project Morpheus. And those who have gone hands-on with it think it’s pretty awesome, too.

The big blockbuster business of games is calcifying around certain common action tropes, just as the big blockbuster business of Hollywood has, too. But just as indie film thrives and tells all sorts of stories, so too do indie games. Sony devoted a significant portion of their E3 press conference to quirky titles from small studios, showcasing everything from abstracted mythology to interplanetary exploration. And that’s to say nothing of the explosion of independent development on all platforms that doesn’t get mentioned at a conference like E3.

We are in a period of change, away from the status quo of the last few decades, and so the challenges for both companies and consumers are legion. The industry is booming, and as its growth keeps skyrocketing, big businesses will do what big businesses do: create value for shareholders and consumers be damned.

But the video game industry is also not a monolith. It’s a fragmented landscape with a million different things happening all over. And despite all of the roadblocks, there’s a lot in the future to get excited about.

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