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Game over

In the “Race to a Billion” there is a graph showing Android reported activations and iOS cumulative unit sales alongside cumulative console sales. The contrast between mobile phone platforms and game consoles is striking, with an order of magnitude difference in consumption. The best performing console to date is the Wii with about 100 million units sold so far.

[UPDATE: Thanks to Danny Nemer cumulative sales of Sony’s PlayStation 2 (using production shipments from FY 2000-05 and recorded sales for FY 06-12) is 155.81 million units]

However, that is an incomplete picture of the game platform business primarily because consoles are not the entirety of the business. Mobile (but dedicated) gaming platforms have been sold for some time.

To give a better picture of the game business we prepared the following graphs. The first shows Nintendo’s product lines with actual unit shipments (shown as colored dots in millions of units per quarter) and the trend (shown as trailing twelve months’ average trend lines).

Screen Shot 2013-09-09 at 9-9-4.45.30 PM

Note that fixed and mobile products are both shown on the same graph. The picture that emerges is that for Nintendo, its mobile platforms combined are more popular than its fixed consoles with a total of 186 million mobile devices sold since 2003.

There is also a pattern of generational change. The GBA, DS and GameCube era was superseded by the DS Lite, DSi, Wii era. The Wii era (or generation) was significantly more popular than the GameCube generation. If there is a problem however, it seems to be that the new generation devices or consoles are not forming a new era. The Wii U and 3DS are not growing nearly to the level of the previous generations and have faded quickly.

To summarize, the unit volume graph for Nintendo is below.[1]

Screen Shot 2013-09-10 at 9-10-10.25.23 AM

To confirm that this is indeed disruption we should look at the pattern for another competitor in the console market: Sony.[2]

Screen Shot 2013-09-10 at 9-10-11.09.16 AM

The graphs above combine both Nintendo portable/consoles and Sony portable/console sales. Note the similarity in patterns of growth. It’s one thing to suggest that Nintendo consoles have “failed”, it’s another to show that Nintendo consoles and portables have failed, and yet another to show that two competitors in the games business seem to be failing in unison across all their product lines.  The cyclicality is also over a long period of time: The peak for the combined Sony/Nintendo was in 2008, five years ago.

The chief criticism to the industry-wide view of decline is that there is a new generation of consoles right around the corner. This is the eighth generation of consoles which, it is presumed, will bring growth back to the industry.

But the Nintendo 3DS, launched two years ago, was meant to kick off the eighth generation, and the PlayStation Vita was Sony’s response. Then the Wii U was also billed as the successor to the Wii. They have so far failed to re-ignite growth. One might reply that they were merely appetizers and that the main  course of the next gen are the PS4 and Xbox One.

Will they create growth again? Surely not for Nintendo, but I would argue that not for Sony or Microsoft either. There might be a burst of sales at launch as the hard core gamers upgrade, but they are unlikely to recruit new gamers the way the Wii did. In other words the PS4 and Xbox One are unlikely to win against non-consumption.

That is where mobile is the clear winner. More people will hire mobile devices for their primary gaming activity.  And as mobile devices get inexorably better, they will be hired for use in the setting where consoles have been king: the living room.

The implications are that Nintendo, Sony and Microsoft are beyond the point of no return in this industry. Gaming, as a business, cannot be sustained as a platform independent of a general purpose computer. Like other “applications” that used to have systems built around them conforming to their needs[3] the dedicated-purpose solutions came to be absorbed into the general-purpose platforms. And the modern general purpose computer is the smartphone.[4]

UPDATE: I added Microsoft console shipment data which became available after 2008.

Notes:
  1. This is a smoothed graph showing what sales would have been if they had been evenly spread out over a 12 month period. The actual sales would total to the same area but would be much more seasonal and thus noisy. []
  2. We would like to show the pattern for Microsoft but there is no regularly reported Xbox shipment data. []
  3. Applications such as word processing, financial calculation, media editing, music playback, etc. []
  4. One interesting question is why didn’t the general purpose personal computer absorb console gaming. My answer is that personal computers could not conform to the experiences around the “10 foot” interface and still function well at their main jobs. In contrast, mobile devices through screen sharing have the ability to be much more malleable. []

Comments

237 Comments so far. Leave a comment below.
  1. KirkBurgess,

    Its kind of spooky that you posted this article at approximately the same moment as Sony was announcing a new low end ARM based “Fixed” TV console based on its Vita Portable hardware, the “PS Vita TV” for $95.

    Also on Sony, although its console and portable systems have slowed as people moved to mobile gaming, Sony has shipped tens of millions of its own smartphones and also published its playstation for android titles on the google play store.

    • Are you sure Sony has shipped that many smartphones? I don’t believe they release numbers.

      • mjw149,

        They’ve sold that many easily, mostly overseas. They’re not a huge OEM, but tens of millions actually isn’t much on the scale of apple/samsung.

      • Tatil_S,

        Just anecdotes, but I’ve seen people clamoring for Sony handsets in India and metal (or metal look alike) Sony phones being kept behind glass cabinets at some retailers as high end options in Turkey, even though I’ve never seen one in the US. It is all Samsung, HTC and some Droid (Moto?) around here. It seems Sony retains its marquee brand name in poor parts of the world more successfully. It might also be due to the metal casing. “HTC One in Metal” seems to be playing that angle if the ads I’ve seen during the games yesterday is any indication.

    • obarthelemy,

      That sound like a very interesting device for casual gamers. I’ve been using Android TV sticks to do just that: get a handful of games ready at hand for rainy week-ends with nephews… The Sony product is not a lot more expensive, and will be easier to set up (weeding out Android games that don’t like a “console” setup is a pain). Hopefully the games and service won’t be too expensive.

    • normm,

      I think this is a counter-example to at least part of Horace’s thesis.

      Permanently plugged in devices have a big advantage over portable devices: a much bigger power budget. That should be enough to maintain them as a separate category for quite a while. I would expect convergence among TV’s and the various boxes attached to them, and most games are going to be written for the ubiquitous portable devices, but as long as there is a need for plugged in devices, they might as well have extra capabilities the portable devices lack.

  2. obarthelemy,

    Consoles have a much higher spend per device. Comparing only device sales favors mobile heavily. What about devices + apps + services (subscriptions) ?
    I’m not sure the latest mobile consoles’ struggles can be extrapolated to the living room market… where there’s much less competition from mobile (though still some, if only for time and money).

    • profit,

      They also have much higher costs. Neither Sony or Microsoft made significant profit releasing their consoles last generation, as far as I’ve seen, even with higher revenue.

      • profit,

        I’ll also note that there were many high-profile closures of the game developers and publishers than target these platforms during that time, also.

    • Kizedek,

      Are you defending the consoles? This is not about what situation we prefer or what the ideal would be, this is about what has actually happened as far as capturing new users is concerned.

      I think one of the points is that there is a generational shift. Consoles appear to be over. Much larger numbers are involved in the shift to new platforms (if not dollars per device). But, the new mobile platforms are not staying around as long, as they get superceded by the next thing faster than the older platforms that were more about loyal niches. Mobile is about more casual audiences, and therefore it has broader appeal.

      Now, this may have a couple of implications for mobile phones or computing:

      1) Android has quickly gained ground with low cost devices and few if any apps that engage, cause users to spend money, or raise platform loyalty. Will Android be a lasting platform? Or will it reflect the pattern Horace has brought to light?

      2) iOS has both the higher spend per device that you noted for consoles, and a similar ground swell as mobile devices with general appeal to gain ground quickly.

      Does iOS have the ecosystem to back it up and keep users interested and loyal for the longer term, as did consoles — with the appeal for developers to boot? And has it got the flexibility to respond to threats from the low end as well?

      We shall get an idea tomorrow. So far, with hints that Android is peaking (at least in the US), Android seems to be behaving more like a mobile game platform; while iOS may yet display the advantages of both!

      • obarthelemy,

        I’m not really defending the consoles, I don’t have one and don’t want one. It’s just that consoles are the original ecosystem play, it seems weird to overlook that, especially on his blog.
        Again, I think there might be a difference between mobile and living-room.
        As for the rest… you seem to want to force everything into an “iOS is better than Android” debate. It’s neither true, nor the subject here ? For the sake of it…
        1) Android has gained ground in high-end devices too. The GS4 by itself sells at about half the iP5’s rate, and then there’s the Note, the One, the Sony whatever… Also, there are all the “apps that engage” required. Pretty much the same as on the iPhone too, if my foray into image editing apps can be generalized ?
        2) when comparing to consoles, I’m just not sure even the iPhone is in the same spend/device category though.

      • opaque,

        I’m curious where you get data like “The GS4 by itself sells at about half the iP5’s rate”. Seems complex given the complete opaqueness of Samsung’s business. I would like to know the ASP of the GS4 also, but it seems impossible to find.

      • TheEternalEmperor,

        Good luck getting an answer for that one.

      • Kizedek,

        “2) when comparing to consoles, I’m just not sure even the iPhone is in the same spend/device category though.”

        Well, you keep going on about the high price of the iPhone and how it’s only subsidies that sell it.

        So, let’s look at that spend per device, then:

        iPhone: $650, plus $47 per year.
        Console: $300, plus 7 games at $60

        pretty comparable, I’d say.

      • obarthelemy,

        So, over 4 years:
        iPhone = 650 + 200 (30% of 650)
        Console: 300 + 360 (120% of 300, say, 6 games)

        So yep, totally comparable spend patterns, and comparison not at all impacted by only taking out 120% of initial spend (vs 30%).

        I see…

      • Kizedek,

        “Consoles have a much higher spend per device. Comparing only device sales favors mobile heavily. What about devices + apps + services (subscriptions) ?”

        Ah, Gotcha, your “spend per device” is after spending on the device itself.

        OK, so that sounds like an odd outlook: don’t include device cost in any comparison because that would favor one side over the other. I rather think that is the point, but anyway.

        Also interesting how you get generous for the iPhone in this scenario, and give it four years of life; and allocate all of 6 games per console over four years, for something that has “a much higher spend per device”.

        I was merely thinking that 7 or 8 hundred bucks on both sides was a pretty “comparable” total outlay. Looks like you agree.

        Anyway, I can’t find much reference to platform value at all in Horace’s graphs, certainly not any comparisons that discount a console platform by ignoring “spend per device” in favor of just looking at the device cost. So I don’t even know why you were complaining in the first place.

        Horace is looking at user-bases and units sold. Niche consoles were being supplanted by mobile gaming devices, which in turn are being supplanted by general purpose mobile devices. Again, that’s the reality. Why can’t Horace’s comparisons be made?

        If we bring price and value into it at all, then I will happily tell you that if faced with the thought of spending 7 or 8 hundred bucks over a couple of years on a “pastime”, then I sure as heck go for the general purchase option with which I can have hundreds of games and apps at little cost, and do all sorts of of other things (like replace a point-and-shoot-camera), over the hardcore game solution with which I will get half a dozen games.

        People are making that choice, and that’s the whole point. It has nothing to do with “spend patterns”n or “initial spend”, and everything to do with what you want to get out of your device (dare I say, job-to-be-done?).

      • obarthelemy,

        Yes, the totlal in comparable. Which makes Haroce’s analysis (based on 70% of iPhone revenue vs 45% of console revenue) weird.

      • Kizedek,

        Starting with a total spend per device of 760 each, 650 and 300 are 85% and 40% respectively. So, if anything, Horace would seem to be giving consoles the benefit of the doubt and favoring them; but I’m not sure what analysis you are referring to. Where is it?

    • mjw149,

      I think the higher spend per device is really a side issue. That stat just casts these devices (rightfully) as the HBO to ios’ CBS and Android’s ABC (or whatever). Aka, the premium niche split off from the mass market. Microsoft has explicitly chased smaller user bases by charging membership fees and serving ads.

      So the question is, on Dediu’s charts, is this a matter of the blockbluster phenomenon, where distribution and fanaticism combine for big bang releases with a long quiet trail? That’s a different model than consoles in the past, which were not so heavily front-loaded afaict.

      • obarthelemy,

        Consoles are sold on the Gillette model: hardware at cost (if that), profit on the games. Phones are sold at 50-75% margin, and very low software margin (30% – all delivery/processing costs). Directly comparing the two on hardware alone seems partial and biased.

        Never mind, not very important to me.

      • anon_coward,

        except apple and Samsung are literally printing money right now while Sony, MS and Nintendo are barely profitable

      • obarthelemy,

        What bothers me is this:

        When we’re talking Apple vs Android, the mantra is “devices sales don’t matter, what counts is revenue, margins, ecosystem”.
        Now that we’re doing Mobile Phones vs Mobile Consoles, the mantra changes to “Only devices count” !

        Apart from being strongly biased pro-Apple each time, I’m struggling to find the logic this duality of outlook.

      • anon_coward,

        apple finally proved the point that selling something at a loss to be made up with higher margin consumables or by subsidizing it from another high margin product is fairly risky in the long run.

      • growth,

        Not sure where you read “Only devices count”. There’s just not as much visibility into the other aspects, and it’s hard to have significant growth in those other areas with significant decline in hardware sales.

      • Kizedek,

        In both cases, it’s profitability. That’s what bothers you.

        Since Apple is an integrator, it is fair to make both kinds of comparisons.

        Since Apple has done its fair share of disrupting, it’s fair to speculate how Apple has protected itself from disruption from other types of businesses (hardware, software, free, premium, console, subscription, what have you).

        Since many others are engaged in businesses that have been done before and there are numerous precedents, then graphs and trends can be built and analysed. It is fair to wonder why the next business using an historically similar business model expects to do any better than its predecessors in light of later trends and disruptions.

      • obarthelemy,

        How, dumb me, thinking console OEMs were making profit on games…

      • find,

        Find these profits in the last 7 years of Microsoft and Sony financial reports.

      • Kizedek,

        Well, dumb me, but here’s me thinking that you have to buy a specific console to run specific games so that the OEM can make a profit on games.

        If the user base of a particular console is 100 milliion, there are only 100 million potential purchasers for its games.

        So, yes, number of devices matter very much. Especially if they are sold at a loss and the OEM has to cover its development and production costs through games alone.

        But Apple devices pay for themselves, so Apple is kind of asymmetric that way. So?

        Obviously, we know console makers are using the “Gillette” model. Thanks for schooling us, though ;).

        We are looking at the fact that more and more people are choosing a general purpose device like the iPod Touch or iPad, rather than a dedicated gaming device.

        What we are looking at is how Apple’s model is asymmetric to and competitive with several kinds of traditional models at the same time.

        That’s why certain comparisons between different models are apt. Again, it’s reality dictating what Horace is looking at and analysing, not some weird outlook or bias. Get over it. Once again, as I recently commented, you are intent on one small point at a time, and can’t look up to connect the dots and see the larger picture.

        Look, why don’t you start a consulting company and sell your narrow “outlook” to OEMs to reassure them how something asymmetric to their business is no threat whatsoever, and doesn’t really exist anyway. Tell them how people like Horace are making unfair comparisons and conducting illogical analysis, and how this has no bearing on the future trends, etc. You can’t be much worse than the pundits out there now.

  3. Alan,

    Is the Nintendo 3DS XL missing from the first graph? I see it in the second graph as a significant portion of their ongoing sales of portables.

  4. williambeekhuis,

    Wouldn’t measuring the total software revenue per platform and/or brand be more indicative of the current state of the game console market?

  5. poke,

    The problem with this industry is it always looks the same. Nintendo follows a successful console with a wholly unsuccessful one, the other players make endless mistakes and fail to grasp new trends, the industry is constantly in a slump, only hardcore gamers care about the new products, etc. It always looks like it’s on the verge of melting down. I’m less inclined to draw conclusions. The industry is extremely predictable in always doing the wrong thing.

    The success of the Wii was essentially the success of Wii Sports and Wii Fit. A great many people bought that console and have never purchased another game for it. Nintendo failed to capitalise on that because they’re Nintendo and they’re notoriously incapable of capitalising on past success. Both the Wii and the DS should really be seen as aberrations. Yes, the PS4 and the Xbox One will fail to appeal to anyone but hardcore gamers: a story as old as the industry.

    The 10 foot space still looks open to me (although perhaps not for much longer). The mobile space is probably best served by accessories.

  6. anon_coward,

    the game innovation is on mobile now. the console business is about call of duty and a few other games where you walk in a line, shoot something, repeat

    • It mostly seems that it gets harder to sell an expensive game of which the name does not end with a number. Paradoxically innovation is welcome and acclaimed, but people would rather shell out money for copies of old concepts.

    • obarthelemy,

      Yep. Temple Run is sooo much better !

      • anon_coward,

        real racing 3
        asphalt
        breach and clear
        xcom
        Sid Meir’s Aces
        GTA

        lots of 90’s style hex war games
        platformers

        even then i bet you can find just as much people who spent more time on candy crush than CoD

      • Yes… And?

        Real Racing is no Forza and no certainly no Gran Turismo
        GTA III isn’t GTA IV or V

        The point was that there’s a type of game that currently isn’t available on mobile devices and the simple rule there is FLOPS = FPS = HEAT. If you see pixels they blew it.

        You can’t put a CoD on an iOS device because it would kill the battery. And it’s neat that people now play Candy Crush when before they played Farmville. None of these people play CoD and CoD just like Gears. They sell copies worth BILLIONS with a large B.

  7. If the console market falls beyond viable where will the hardcore gamers move? Will the old new blood help the dwindling sales of PCs?

    • mjw149,

      My idea is that prices will just go up. We’ve seen the rise of membership fees, DLC costs, ads being added to the devices, peripherals costing more money. Over all, yes, it’s cheaper than 15, 20 years ago, but seen in the broader market it’s an expensive, premium niche, like Bose stereos.

      If the console hardware business become untenable (which I’m not sure will happen, hardware is dirt cheap and getting cheaper), then obviously Sony and MS can just move to be a PC service like Steam, they’re already on x86 chips. Or possibly, if the tech advances, they’ll be online streaming gaming services like OnLive.

      • Walt French,

        “…seen in the broader market it’s an expensive, premium niche, like Bose stereos.”
        I dunno if people think Bose fled up-market — they started there, no? — but I don’t know if you could come up with a better description of disruptive innovation than how game devices have targeted more revenue from a shrinking base.

      • gjgustav,

        Bose is a bit unique in that they categorized themselves as premium while offering middle of the road quality.

      • Tatil_S,

        Specs vs. experience.

      • gjgustav,

        Well, that’s just it. With the exception of their noise cancelling headphones, they offer a mid-level experience for premium prices. For example, their wave radios can be matched in quality by other brands at far lower price.

      • Tatil_S,

        I only have their noise canceling headphones. There might be other ones at the same price range that work just as well, but they perform considerably better than the merely good headphones that sell at about half the price.

        I don’t have their wave radios, too rich for my blood, but “experience” is not just the audio once everything is setup and you are ready to listen with a glass of wine in hand. This includes buying process, trust, ease of setup etc.

      • gjgustav,

        That’s why I said “with the exception of their noise cancelling headphones.” Every other consumer product from Bose is just plain overpriced. Buying process, trust, ease of setup, etc. are not any more premium than anyone else. Only the price is.

      • Tatil_S,

        I know what you mean and I am not disagreeing with you on the price vs. quality from Bose in general, but on the other aspects of the experience marketplace disagrees and happily pays for that premium.

      • obarthelemy,

        Consoles are also being repositioned as entertainment hubs. I know quite a few people who use their PS3 mostly as a BR player. They seem to want to build on that.

    • anon_coward,

      back to PC’s. there are some good games on Steam that don’t cost $60

      the biggest problem with the consoles is that the games are in the $60 and the publisher needs to sell enough copies in the first 2 months to make a profit. with IOS games and in app purchases you can release a free game and have recurring revenue months after release

      there is also the psychological issue. for my 6 year old son i told him he had to finish an online math test to get a new 3DS game that costs $30. but a lot of the IOS games he likes are in free to $1.99 range so buying them is a no brainer

    • mjoecups,

      No, because there are way too few of us, and the garden variety tablet or smartphone is powerful enough for some serious gaming action.

    • My generation used to build model airplanes out of injection-moulded plastic. We can still find a few places to buy the stuff.

      • I have glued up some plastic model airplanes myself. My point is that if the console market goes away it will substantially diminish the amount of players a developer can reach with a long feature game.

        Games like Bioshock cost huge amounts of money to make and already only big studios with affirmed franchises can make them without ruining themselves. When all players move to portable devices where ideal price of an application is $0 I can not see a bright future for this kind of games.

    • obarthelemy,

      I’m a bit confused about what “hardcore gamer” means. In my time, it meant a C64. So one can be a hardcore gamer on hardware less powerful then the lowliest of dumbphones.

      I think hardcore gamers self-define, by playing entirely too much and in herds. Most of the self-titled “hardcore gamers” I come across are neither very good gamers, nor very hardcore. They’re mostly compulsive users of whatever will isolate them from real life and society.

      Not sure the underlying hardware matters that much. Nor, really, the actual game being played. I’m not too worried : kids and young adults will always find something to obsess and anti-socialize with.

      • anon_coward,

        i saw some of the Mass Effect 1-3 walkthrough videos on youtube, and the guy making them played the game on the easiest level and he mostly used his weapons with almost no powers.
        if you play on the harder levels you have to know the powers and build your team around power combos and figure out whether to upgrade for power or recharge speed

        most of these hard core gamers are the same. they play on the easiest level and run through the game to finish it just to play the something else. and most of the games are the same thing

      • I am thinking about people who spend years playing Starcraft or Street Fighter online, participate in leagues and go abroad for tournaments. Hardware itself is not important, but the games these people play usually cost a fortune to make and need to be sold at a normal price to a substantial number of players.

      • obarthelemy,

        Minecraft ?

      • What about it? Minecraft is a typical example of a game destined mainly for your definition of ‘hardcore gamer’. Granted, it received a huge audience thanks to its arguably great gameplay and it definitely did not cost millions to make.

        Hardcore gamer is a bad use of words from my part though I realize. Rather it should be ‘people who play games as other people play sports’.

  8. mjw149,

    You can see the shrinking camera and PC and video camera markets the same way as consoles, only in a more advanced state.

    Namely, as the general consumer products fade away, the professional and luxury products will dominate.

    I’ve long thought that while MS missed it’s chance to dominate the living room (and goal that was perhaps a mirage), they AND Sony HAVE managed to stake out a nice business in the ‘luxury gaming market’. Which is what consoles should be considered now. Look at the details: memberships, exclusives, narrow demographic, high priced proprietary gear, highly specialized terminology.

    Xbox and Playstation are more comparable now to Ferrari or Puma as brands than Apple or Google or Microsoft.

    In that view, it’s Nintendo that is going to falter. While Sony and MS will never hit their old heights, they already know this and their business models compensate. Also, they switched to x86-based hardware that has a built-in exit strategy (aka become Steam). Also, they’re better positioned as appealing to an older set of mostly male gamers with disposable cash. Unfortunately for Nintendo, the entire casual market they conquered with Wii has moved on to low-cost tablets and the children have moved on to ipod, ipad and cheap tablets.

    Nintendo is losing their time to pivot. They’ve waited out other changes on their own time before, but this time it is different. There might not be a next generation, it’s just black slabs of various sizes to infinity, eventually costing nothing. Of all the companies to sell out to Disney, this is the one that always made the most sense.

  9. Steve Vogt,

    It feels much like other industries that have been invaded by smartphones/mobile computing (e.g., cameras). Mobile computing is good enough to eat the low end (in this case, Nintendo is the low end of devices, like the point-and-shoot camera), leaving only the “premium” devices at the high end (XBox & Playstation… the SLRs of the gaming industry) for enthusiasts. My guess is Nintendo disappears, but the higher end sticks around, albeit at lower volumes and more of a niche.

    • David Leppik,

      The problem is that low volume premium doesn’t work for devices with high development costs, unless the sky really is the limit for pricing. Just take a look at Silicon Graphics in the 1990s. Custom chips require high production volumes to be cost-effective. Gaming PCs can make the economics work, since they can share chips with professional graphics and supercomputing workstations. But the only hope for custom-built gaming consoles is to essentially be gaming PCs without the keyboard.

      • Tatil_S,

        Rumors claim this round of consoles will not start out with negative gross margins and the processors and GOUs are more compatible with gaming PCs. The former may help with variable costs and the latter may help with the fixed development costs.

      • obarthelemy,

        Not really custom chips, this time around. At most, a respin.

    • Walt French,

      Point-n-shoot sales are indeed being devastated — I think I saw sales had fallen by 3/4 in just a year or two — but SLRs offer no refuge either; they’re off by maybe a half?

      Cameras are very different from games, but you’re dead on with the fact that smartphones offer a damn good and inexpensive substitute for both game consoles and cameras.

      • Steve Vogt,

        Never said cameras and games are the same… just that they’re industries that I think will be impacted in the same way. And you kind of make my point… point-n-shoot (i.e. Nintendo in my comparison) down 75% and dying faster (especially with the new 5S). SLRs (i.e. MSFT/SONY targeting the higher end) have lower volumes but holding out longer (because they’re targeted at the more “hardcore” enthusiasts of the hobby, be it gaming or photography). Nintendo is at the wrong end of the games market…more vulnerable to mobile. They’re not coming back.

    • JTon,

      Nintendo branded games have always been, and still are, very high quality. Is it fair to categorize them in a lower tier based on graphics alone? I’m not sure. Overall I think I agree with your assessment… but I don’t believe it’s so black and white.

      • Steve Vogt,

        Talking primarily about the hardware/devices. Their hardware is more easily attacked by mobile computing because it’s slower, cheaper, and has worse graphics; it’s performance is more easily matched by the new mobile devices. People can design high quality games/software for any platform (and some have suggested that Nintendo should just do so for iOS).

  10. SubstrateUndertow,

    Young teens are injected directly into a world of peak attention.

    They all have mobile smartphones and when it comes to garnering a dominant slice of their attention pie . . . . . the winner is !

    Instantaneous social intercourse, playing the first person persona wars, via text, pics, video, Facebook, twitter and other social-gaming Apps.

    Gaming is merging with life as we all get on Borg with the new social-Apps culture fabric.

    Here’s hoping political social-Apps soon start gaming the system into a more effective distributive-governance.

  11. Brian W. Crumley,

    What is the right move from Apple or Google in order to start dominating this space even more. Create a controller for your device so that they can have traditional games created for the platform? Would it be smart to buy a game developer to create their own games or a game SDK specifically for their devices?

    it’s started, where does it stop?

    • obarthelemy,

      Actually, that’s already done for Android. xbox and dualshock controllers Just Work ™. The one remaining issue is to motivate devs to code for that “console” mode (gamepad, TV screen, fewer sensors…), and segregate such apps in the store.

      • Brian W. Crumley,

        It is great that they work. I just can’t but think that’s the issue again with Android and fragmentation. If your a developer you now have to figure out controls for every type of controller out there. Wouldn’t it be smarter to just come up with a standard controller and tell everyone to develop around that. And wouldn’t a game SDK help motivate game developers to code for their platform?

      • obarthelemy,

        I’m not sure about what you mean by SDK. If you mean API, it’s there since 3.1, ensuring hardware abstraction for joysticks/gamepads. http://android-developers.blogspot.fr/2011/05/android-31-platform-new-sdk-tools.html .

        Hey, apparently even iOS users are at last getting that in iOS 7 !

      • Guest,

        What I mean by SDK is more like API’s or even game engines that Google and Apple could develop to help developers create games on there platforms with less work. Although if you start talking game engines they would probably need to acquire a development studio for the talent to even make one.

      • Brian W. Crumley,

        What I mean by SDK is more like API’s or even game engines that Google
        and Apple could develop to help developers create games on there
        platforms with less work. Although if you start talking game engines
        they would probably need to acquire a development studio for the talent
        to even make one.

      • obarthelemy,

        I think game devs love using crossplatforms SDKs, so an ecosystem curator doing their own exclusive one is probably not a good idea. Working with Unity et al. seems a better move.

    • jameskatt,

      Once Apple upgrades the AppleTV to a game console, it is GAME OVER for the other consoles.

      • anon_coward,

        the console is the iphone and ipad. upgrading the apple TV is going against the trend

      • Brian W. Crumley,

        Maybe, but until what we have in our pockets has the same power as a console I don’t see GAME OVER. I’d love to see a chart of processing power change in smartphones vs consoles. Consoles obviously would get a huge boost every 10 years but is it keeping pace of smaller but significant boosts every year?

  12. monkeyrun,

    The whole idea that smartphones are cannibalizing gaming console’s sales is flawed.

    It is 99 cents games and free games (that gets you with micro transactions) VS $30-$60 games. Price of games have to come down for consoles. I know it cost more to make those $30-$60 games, but I think time for big budget games are coming to an end.

    • jameskatt,

      Wrong. The Free and 99-cent games are what gets kids and adults hooked. The higher priced games for the iPhone and the iPad are in the $20+ range. The cost is hidden by the fact that so many of them have in-app purchases. Gamers buy and buy and buy from these games. There is a continuous after-sale that doesn’t exist for console games. The quality of these games are the same for what you can get on consoles. And with AppleTV, they can be shown on the big screen and can be multi-player.

      • monkeyrun,

        Candy Crush Saga
        Clash of Clans Clash of Clans
        Hay Day Hay Day
        The Hobbit: Kingdoms of… The Hobbit: Kingdoms of…
        Pet Rescue Saga Pet Rescue Saga
        Game of War – Fire Age Game of War – Fire Age
        MARVEL War of Heroes MARVEL War of Heroes
        Racing Rivals Racing Rivals
        The Simpsons™: Tapped Out The Simpsons™: Tapped Out
        Big Fish Casino – Free Slots,… Big Fish Casino – Free Slots

        here are the top 10 grossing games on the iPhone. Tell me how are the quality the same as console games?

      • anon_coward,

        for some of us quality is more than pretty graphics

        candy crush the game play changes as you move along the game. Playing ME 2 and 3 the game play or strategy never changed

      • monkeyrun,

        Candy Crush game play actually doesn’t change. It’s almost the same, the only difference is as you move up the level, the more you depend on luck to pass a level. Which is how they sell you on those boosters.

        It would be a sad day if games depends on selling in game items to make money.

      • anon_coward,

        so console games don’t have weapons and armor DLC to help you play? or avatar DLC to dress up your online avatar?

      • monkeyrun,

        there is some, but no where close to those on smartphones.

        Those top 10 grossing games, most of those are basically pay to win games.

      • Because more people are playing Candy Crush Saga than Call of Duty? (ergo, more people see it as worth the value charged)

    • Walt French,

      Hard-core gamers want high-quality games, amirite? And the industry seems to need a lot of art, software engineering, storytellers, etc to create a high-quality game. Some categories need dozens of people just to upgrade a good title per year.

      You can pay these people by selling a million games at $60, or by selling 15 million games at $4. What you can’t do is pay them by selling a million games for 99¢.

      There’s room for both high-end and low-end games. But the charts above make the economics look pretty bleak for Nintendo-specific titles, even for customization for it. Meanwhile, selling opportunities abound on smartphones & tablets, leading devs to emphasize more effort on the always-available devices, and the vicious circle that results.

      • peter,

        I look at all leisure activities together. Games, consoles, gadgets, music, mobile phones, sports, TV and cameras all compete with each other for a limited amount of time and money.

        Consoles have been affected by the fact that money is diverted into mobile phones and subsequent sales of console games are reduced because of the time spend on 99-cent games (and social media on those phones in general). In that dynamic, the model where games subsidize the hardware quickly breaks down.

        While there is demand for high-quality games, the console business model may not be able to generate the revenue to support many expensive productions in the future.

        DFC Intelligence noted recently that they believe that by 2018 the market for dedicated portable game devices will be about a third of what it was at its peak. Given what is happening to compact cameras at the moment (40-50% annual decline), they may be overly optimistic.

      • StevenDrost,

        Agree, I think the new invention of the purely digital market place is scary for customers. They understood paying 50$ for a piece of software they could hold, but in the transition to digital they were only willing to try something out for a dollar. When big names start making their way to devices and the devices begin to get the tools necessary to support the “hardcore gamer” things may change. But the biggest problem is getting people comfortable with the idea of spending 50 dollars for something that only exist in 1 and 0s.

  13. John Marstall,

    I think 2007-present (for Sony-Nintendo) is too small a window to draw any long-term conclusions. With that timeline and selection of manufacturers, you’re only capturing one really successful home console (the Wii).

    The Wii blew past sales of any previous Nintendo console, & the DS blew past all previous handhelds. Meanwhile the PS2 was bigger than PS1, and the 360 did much better than the original Xbox.

    While Post-PC gaming plays its part, the struggles of more recent consoles are just as likely due to *those consoles* than any long-term trend. Originally high price for the PS3, and strange hardware choices for the Wii U.

    Of course, we’ll see how the PS4 and Xbox One fare.

    (see worldwide sales numbers at http://en.wikipedia.org/wiki/List_of_best-selling_game_consoles#Nintendo)

  14. Bruce_Mc,

    How costly would it be for Nintendo, or another game company, to add Android to a game console? I don’t mean port their games to Android software, I mean add Android software alongside their current game software in a package with their current hardware buttons.

    • Walt French,

      How many people would pay extra — anything extra — to have capability that is about the same as what’s in their pocket?

      It wouldn’t seem to cost LOTS of money — maybe a few dollars of memory and few dozen software engineering years. But as we get to virtually all well-off Americans and other high-income nations’ populace with a smartphone, what’d be the point?

      • Big Kev,

        Hey Walt,

        Smartphones are an easier and more convenient way for the majority of people to play video games.

        Videogames existed and survived for years before smartphones.

        I think the biggest take from this is MORE people are playing video games than ever before. So for every person who says they no longer need a console to play games because their phone can do it, who’s to say another person doesn’t decide they need a console to enjoy bigger and better games now that their appetite has been wet by the casual smartphone games?

        Just seems like something you are ignoring and something a chart like this won’t reflect until smartphones have reached that level of saturation that you already claim they have.

      • Bruce_Mc,

        I was thinking more about a 7 inch or smaller tablet. Do people buy the stock Nexus or pay more for extra buttons and Nintendo along with Android?

        I agree with you about phones – Horace addressed that on one of his podcasts and I agree. Phones would be a big headache for Nintendo.

  15. jeffbax,

    I’d be curious to know how many people making predictions about the doomed nature of gaming consoles… actually play games. In the end, controls really do matter. Smartphones and Tablets are surely impacting the space, but I find it hard to believe that demand for high-end games is going to die out because of them.

    Mobile I think is one thing, people who may have bought a separate machine may be less inclined to now that something capable is in their pocket (I count here, but I never found portables that comfortable – that said plenty buy portables to play on vacations and within homes too) but I’m dubious of the TV being dominated by them so quickly too. Angry Birds might be a hit on mobiles, but it’s no Halo, Metal Gear, or Legend of Zelda. While there are big mobile hits, and they may be very lucrative, I don’t think they’re as consistent as the wide range of legitimate console hits. It’s night and day in terms of actual gaming quality and I don’t think that’s invisible to people.

    Maybe little Joey can be placated by mobile games now (which to be fair, are also improving drastically) but he’s still going to want to play Call of Duty which is something that demands a real controller and benefits from much better hardware than a $99 machine can deliver. One set hardware standard also means less moving targets. A 2 year old phone is pretty ancient, and newer software usually neglects those of the past. I’m not so sure people will rush to swap out $99 TV devices every year or two because developers are now forgetting to tweak performance on your old one and games now run like crap.

    It could be argued that Samsung and Apple get lots of boxes connected to the TV, but who is to say that Sony, Nintendo, and Microsoft won’t be strong there, as well as have the IP content to be set them noticeably above? Nintendo isn’t very good at platforms, but Microsoft certainly is and Sony’s proven very adaptive with their support of independent developers. I also imagine many developers would rather target a smaller range of devices instead of 50 Android variants per year.

    • anon_coward,

      i just got rid of my game consoles after a few years with them. PS3 was only for blu rays and played some games on the 360.
      most of the games are boring after a while and linear. its like the “interactive movies” from the 90’s but better graphics.
      the violence, language, sexuality means i can’t play when my kids are awake and they get old after a while
      the console hogs up the TV unlike the ipad
      and there are some excellent games on mobile now. the 90’s were awesome with a range of genres and consoles are mostly CoD clones. mobile is where a lot of genres of games live now. i always hated racing games until playing on my iphone and ipad
      iphone 5 and ipad 4 have the graphical power of the xbox 360. this year its going to increase again, like it does every year. consoles are stuck in the 5-10 year upgrade cycle. only thing holding back mobile now is local storage for more graphically intense games

      • jeffbax,

        That sounds like you’re slowly growing out of gaming as you age (which, I’m sure happens to many people, although it seems less and less since the average gamer is in their 30s IIRC), not that mobiles are providing a necessarily better experience.

        If you think all console games are CoD clones, you also aren’t really paying close attention. I mentioned CoD because it’s popular, but there are no shortage of hits that are not military shooters. Games like:

        Journey
        The Last of Us
        Starcraft 2
        BioShock Infinite
        Fez
        Rayman Origins/Legends
        Dishonored
        FTL
        Brothers
        Dark Souls

        I can keep going, but the point is if you think consoles are all CoD clones you’re missing the best games they offer.

        Even then, only a few of the really high-profile games have hit mobiles (X-Com: Enemy Unknown and Telltale’s The Walking Dead) but the console experience has definitely been better for those too.

        Maybe you’re a trend of people who will be pacified by mobiles, but I’m still not inclined to agree you are necessarily the norm.

        I think that gaming will grow with these new mobile platforms, but I don’t think it means the end to higher end gaming and if anything I hope it helps make more people gamers.

      • anon_coward,

        other than the CoD clones you have the Mass Effect/Deus Ex clones

        FPS with RPG elements and story line. but the missions are walk in straight line, shoot others, use powers, repeat. almost like US Army lane training

        never got a chance to play skyrim. the reason is that the console experience is limited by the fact its locked to a TV. Mobile you can play on the train to work, lunch, break, etc

        people said SC2 was almost exactly SC1 but better graphics. i was playing warhammer 40,000 on my laptop the other day and got bored. walk along path and build a few squads to take out enemy positions

    • I’d be interested to see how many people that play games can actually read graphs.

      The trends are clear.

      • jeffbax,

        … for portables, which as someone who gave up on portable consoles with the smartphone age can largely agree there will be a big impact.

        But these graphs don’t include the Xbox, which made significant strides in becoming a much more formidable contender to Nintendo and Sony with the 360 (which would impact Sony in particular)

        Some napkin math, but

        PS2 + Xbox + GameCube + Dreamcast sales = 211 million
        Wii + PS3 + 360 sales = 257 million

        Is this purely because the Wii was a fad and had hyper-inflated sales, denying the gaming market actually grew between generations? Possibly. That said the Wii, PS3, and 360 will continue to be sold for years to come (2015-2016) as they are shrunk and made cheaper.

        I just think it remains to be seen whether TV-based consoles have a similar fate, or will have a different market dynamic in general. Even then, I’m guessing that the big three are impacted sales wise if casual gamers are somewhat satisfied by cheaper mobile games, but many of these games will also hit the PS4 and Xbox One, and the people who make the big games million sellers aren’t going to suddenly abandon their desire to play deeper, bigger budget titles.

      • trip1ex,

        No the trends aren’t clear because if you know your history in this space then you know that a company like Nintendo has had many ups and downs. They had 3 successive consoles that each sold worse than the previous console. And if the trend was clear then the Wii should have sold only 10 million units. But no it sold 100 million.

        The GBA sold less than the GB before it and so if the trend was clear then the DS should have sold less than the GBA. But no it sold more than the GBA and GB. And is close to being the best selling dedicated system ever.

        Sony sold more PS2s than PS1s and so if the trend was clear then the PS3 should have sold better than the PS2. But no the PS3 sold quite a bit worse.

        So this trend thing is for mindless monkeys who just extend lines and then beat their chest and pretend they are nostradamus.

        Dangerous game in the entertainment business where, each cycle, companies basically start from zero and introduce new entertainment products that no one has seen before.

      • outsell,

        The mix might change, because consoles are an undifferentiated product to varying degrees, but the total units sold increased from the previous generation to this generation. Do you expect the Nintendo, Sony and Microsoft to outsell the previous generation this time around?

      • No the trends aren’t clear

        The trends are excruciatingly clear. Look at every last one of those lines: down, down, down, down, down.

        If one or two companies were seeing their markets grow, bucking the trend, stealing customers from another platform, your optimism might have a leg to stand on.

        There is nothing to be optimistic about regarding those lines.

    • Walt French,

      @jeffbax wrote, “I’d be curious to know how many people making predictions about the doomed nature of gaming consoles… actually play games.”

      Do you think the economics of the game industry are a whole lot different from say, smartphones or PCs or other tech toys?

      Most businesses you can learn a lot about by looking at how much better they serve their customers than competitors, where “better” might be cheaper or more widely available. And the economics for alternatives to gaming are pretty radical: you can play a game on your existing smartphone — and most affluent American adults have one, especially young adults — for a few dollars per year. You can play them while you’re on the bus or in line at the supermarket.

      They may not have the graphics that a dedicated box has, but thanks to the phone angle, they have become dirt cheap and pretty damn good—especially compared to the portable games. The tech has shifted dramatically from a few years ago vis-à-vis bad-ass consoles, even.

      Sure looks here like dedicated games’ heyday has passed. Not that people don’t want games, even intense games, but that the console or portable as the best bang for the buck will increasingly be a niche for the most dedicated gamers with plenty of money left over after they buy a high-power, TV-optional, always-present smartphone.

      PS: I confess to never having gotten hard-core on games. If you can tell me how that affects where my head is, versus where my heart is, I’d be happy to be enlightened.

      • poke,

        I think he has a point and people are too quick to judge the game industry in terms of other technology industries. You can look at mobile games as being to console games as a mobile web browser is to a desktop web browser: not technically as good, but sufficient for most people’s needs. But is that right? Or are mobile games to console games as a game show is to a feature-length movie? Is this really a difference in technology or a difference in content?

        I’d say there are actually three phenomena here. There’s the so-called “hardcore” console games market, there’s the casual games market and then there’s the occasional mass market outlier, like the Wii. They all essentially co-exist independently. The core market has always been about “hardcore” gamers. There has always been a casual game market on various platforms (PC, web, mobile), although it’s inconsistent. Very occasionally, something breaks out and gains mainstream appeal (like the Wii), but, because it’s tied to a particular title, doesn’t change the industry. Yes, people have a finite amount of time, but game show enthusiasts still make time to go to the movies.

        I would argue that “hardcore” gamers are not similar to technology enthusiasts at all. (The PC game market is the nexus for gaming and technology enthusiasm and it’s basically dead.) What they want is not technology. They want a certain kind of content that happens to be tied to technology, kind of like the way most people don’t want to watch a feature-length movie on their phone. The game industry has expanded not by finding mainstream appeal – if anything, games have gotten harder to play over the years – but by expanding the market of “hardcore” gamers.

      • Andy Bates,

        “Do you think the economics of the game industry are a whole lot different from say, smartphones or PCs or other tech toys?”

        Yes. PC manufacturers make money when they sell PCs. Smartphone manufacturers make money when they sell smartphones. Console manufacturers usually make a tiny profit or even a loss when they sell consoles, but make profits when they sell software, or sell licenses to other companies to sell software. That’s why the “console sales go down over time” graph is misleading: both because consoles become more profitable through their lifecycle as components become cheaper, and because the overall platform size is more important than month-to-month sales.

        “Most businesses you can learn a lot about by looking at how much better they serve their customers than competitors, where “better” might be cheaper or more widely available. And the economics for alternatives to gaming are pretty radical: you can play a game on your existing smartphone — and most affluent American adults have one, especially young adults — for a few dollars per year. You can play them while you’re on the bus or in line at the supermarket.”

        You want to know how your lack of knowledge affects your judgement? This is the perfect example. You think that portable games are “better” than console games because you can play them in line at the supermarket? That’s like saying that Amazon is going to go out of business, because why would people read novels when they have millions of freely-available web pages to read. I mean, I confess to never having gotten into reading, but they’re all just words, right?

        “They may not have the graphics that a dedicated box has, but thanks to the phone angle, they have become dirt cheap and pretty damn good—especially compared to the portable games.”

        Yes, they have become cheap, and convenient. But no, phone games are not anywhere near to the quality of portable games. There is not one game on the iPhone or Android that is anywhere near the level of something like Luigi’s Mansion or Ocarina of Time on the 3DS. And Ocarina of Time is a 15-year-old game!

        Yes, some people will prefer cheap portable games instead of more expensive games on a dedicated portable or console. But arguing that those games are somehow “good enough” is tantamount to arguing that the movie industry would die shortly after televisions came out, because they both show moving pictures.

      • charly,

        Xaomi model is not to make money on the smartphone but on the services they sell. I think they are the third most profitable mobile phone maker but that doesn’t say much

      • charly,

        Also pc makers earn their money by filling your pc with crapware. hat is their whole profit

      • DesDizzy,

        How could a company that “just made a profit” according to the CEO (source Bloomberg interview) be the 3rd most profitable smartphone maker? Do you have any facts/attribution to back this up?

      • charly,

        Smartphone makers outside Samsung and Apple have very big problems to be profitable. So making a profit is probably enough to be number three

      • Tatil_S,

        Your metaphor regarding movie and gaming business is quite apt. Movie business did not die and Horace does not argue gaming business will die, but that does not mean everything will be honky dory for the console business. Movie industry did not die, but movie theatre business contracted sharply with many closing down or falling into disrepair after TV ended the golden age of Hollywood. After losing market share for evening entertainment to TVs, movie theaters had to compete with VCRs, DVDs, Blu-Ray’s, premium cable channels and streaming. All of these distribution channels combined bring in more revenue than ticket receipts nowadays.

        There might be one big difference between the two entertainment businesses though. It is fairly easy for movie companies to re-package the same expensive content for multiple distribution schemes, so production companies could address the high end movie watching customers without losing much on the low end. The re-packaging is much more tricky and expensive for gaming. It is not quite clear to me how the industry will respond.

      • charly,

        Ocarina of Time is not an handheld game but a port of a console game. How hard do you think it will be to port a “serious” pc or console game to IOS or Android? Though the price wont be a few dollars

        If you look at the handheld market than the claim that the smart phone killed the handheld is something that is likely to be seen as truth in a couple of years. Add the speed at which smart phone improve, they are already as fast as a PS3 or Xbox360, and the wireless methods to connect them to the living room screen and it will be a serious question if console gaming will prosper.

      • anon_coward,

        they already have CoD ports on iOS. they have been there for years.
        the new CoD iOS game that just came out is #4 seller but not in the top 10 for top grossing games

      • Andy Bates,

        Those are not ports of Call of Duty; those are stripped-down versions which lack even basic functionality from the console versions, made to cash in on the popularity of the console games by deceiving people who can’t afford a real game console.

      • Andy Bates,

        How hard is it to port a serious PC or console game to iOS or Android? Difficult to impossible, because touchscreen controls lack the precision of dedicated hardware controls. And yes, Ocarina of Time is a port of a console game, which was my point: Touchscreen phones can’t even match up to the gameplay of a fifteen-year-old console, or a current-generation portable game. “As fast” doesn’t matter when they can’t even match the gameplay. The only people who claim that phone games are anywhere close to consoles are people who don’t know anything about console gaming.

      • charly,

        Call of Duty type game were largely played on pc and their mouse/keyboards because consoles missed the dedicated hardware controls. Now they are the core market for consoles.

        ps. I still can’t get why people would use a console to play a fps. The few times i tried it was touchscreen bad

      • Andy Bates,

        Some people prefer playing FPSes on a computer. Some people prefer playing FPSes on a console. No one prefers playing FPSes on a touchscreen.

      • charly,

        15 years ago FPSes were mainly played on computers. Now the bulk of their players is on console while it still has a less user experience

      • Andy Bates,

        In your opinion, FPSes are inferior on a console, but many millions of people would disagree with you. By contrast, no one things that FPSes are even passable on a touchscreen, much less superior.

      • charly,

        I wouldn’t call it an opinion. You almost never see console players play again pc players on the same map. There is an obvious reason for it. The console players would be creamed.

    • Moeskido,

      “My use-case is universally applicable.”

  16. Uhm… all I see is that consoles sell heavy when they are introduced – and then trail off.

    This post is moot until the XBox One and PS4 go on sale.

    • Walt French,

      If I understand you correctly, there’s no point in looking for trends in tech industries… the coincidence of a massive failure of multiple smartphone companies all in a short timeframe is purely coincidental… the sagging profits and sales of IBM, Dell, HP just because…

      So in the meantime, what would you advise the game-makers to do… put all their eggs in the Microsoft and Sony baskets and assume everything will work out fine?

      • What do you mean by “meantime”?

        Do all those consoles which were sold in the past suddenly evaporate? Do these gamers not buy any more games? Have you seen the sales records “Gears of War” and “Call of Duty” set these past couple of years?

        What you seem to miss is that Nintendo in the past raked in money in heaps publishing their classic titles. Mario, Zelda, Donkey Kong, Smash Bros. etc. etc. Nintendo was THE ONLY device manufacturer that acutally made any money at all selling the hardware, but all the money was in selling their games and the license fees the third party game publishers have to pay.

        Concerning Sony: the PSP has been dead in the water because of PIRACY and the Vita simply failed because it wasn’t much of a change compared to the PSP.

        And one aspect nobody is looking at is that what iOS/Android give customers is ease of purchase. It’s not so much that these devices with their touch screen inputs are better than the ones with joypads and buttons, IMHO it’s the relative ease children and teenagers can sink their allowance into it, while you have to jump through hoops to do nearly anything on a Nintendo device. So Nintendo is to an iPhone as the CD was to MP3s. And Nintendo isn’t learning. The experience on their devices is horrible. I for one only game on an iPad but that’s just because I listen to podcasts which clearly warn me every time Sony or Nintento bring a new device to market. It’s literally like getting teeth pulled trying to get a downloadable game running on some of these portables. Or has been. Now it’s more like getting a bikini wax.

        But to get back to your question: if I were EA, I’d produce games for iOS, PC, XBox 360, XBox One, PS3 and PS4 – PC first, then convert to XBox 360 then to PS3 as well as PC to XBox One and PS4 conversion. And then publish on the same day. And if the PS4 and XBox One sales are mediocre, just cancel the projects.

        And that’s how it has always been. Like I said in my previous comment, the graph simply shows the usual graph for a console generation. I bet the graph for the SNES looks the same. Gameboy most likely not so much (1989 version) because that sold an anormous amount of devices because there was no contender that could keep up with the battery life that thing provided.

        Hope that covers everything :-)

    • fl1nty,

      Given the product cycle of these consoles is around 7 years what you mention about the trailing off can’t be a great sign now, can it? The best case scenario as described in the post and by you here would be that both sony and microsoft manage to have a little epinephrine boost for a few months where in the really advanced buyers of consoles, the ones who have been invested into the console as a product for a long time, will buy them while new users will not be adopting these devices for any specific role in their life. Thus without a new source of “oxygen” coming in from new buyers the console business as a whole will either die off or will become such a niche that it might only be able to sustain perhaps one vendor. Which implies consolidation between the big players – microsoft buying out sony’s play station division/sony buying out nintendo or something along those lines.

      • This has been said when the Playstation 2 was published.

        I have been reading gaming magazines for… Jesus… twenty years. Do you really want me to count the times the PC was “dead”? I think the first time I read that was while playing “Strike Commander”. Then again when the PS2 came out. And the XBox. Every time new generations are on the horizon, people stop buying the last generation and wait for the new one. This isn’t news. And every time the new generation of consoles is out, people need to put something under their TV set and at the moment I don’t really see how that device will be an Apple TV. Or an iPad streaming through an Apple TV (airplay) because of that effing couple milliseconds of lag.

        There are HUGE TVs in people’s homes and they need to put content on it. Because it’s THERE. Because it’s BIG. Because you can plant your ass in front of it and because you can’t play a wide variety of games without a controller.

        Now this all may change if Apple for instance publishes an Apple TV without the lag and with Bluetooth controllers. But then iOS is just another console platform. And the last thirty years have shown that there’s always room for at least two if not three successful consoles.

      • Nintendude,

        “Do you really want me to count the times the PC was “dead”?”

        The difference is that in the past, these predictions were based on how cool some technology was. Today’s predictions are based on actual consumer purchasing behavior. Smartphones have been outselling PCs for 3 years. At the current rate, tablets will outsell PCs this calendar year. The PC is no longer top dog.

        “But then iOS is just another console platform.”

        Kind of like how it was “just another” phone platform? Right. If iOS becomes a gaming console platform, it’ll be the first new gaming platform to appear fresh out of the gate with a quarter million developers, and half a billion users. This is like saying Ronald Reagan was “just another” presidential candidate. No, he was a friendly face that every person in America already knew.

      • Good points, I like them. Pinky swear :-)

        Yet I have so say that the reason I for instance didn’t buy a new PC is because it has gotten so powerful that I don’t need a new one. So I bought a couple of Smartphones and Tablets instead.

        Yet that didn’t stop me from putting just as much money into Steam as I did into buying iOS/Android software.

        My point being: maybe what we see right now is the PC trailing off like every other console generation before because the need to upgrade according to Moore’s Law just isn’t there anymore. Maybe you can keep that PC you bought for 1000 bucks for five years now instead of just two in the past. Which means that there’s still a ton of PCs out there that will generate sales. Software sales that is. And that’s the main point here, right?

        I know that APPLE (!) is a hardware company, but this post is about software since Sony, Nintendo, Microsoft and all the publishers produce software. That’s what’s making them money, NOT the hardware.

  17. angelday,

    LEAVE NINTENDO ALONE!!

  18. rustywheeler,

    Let’s not overlook the fact that next-gen consoles are already promising mobile platform crossovers. IOW, you can play your FFXIV campaign at home AND take it with you on the Vita. Look for more of this ‘you-don’t-have-to-choose’ functionality.

    And frankly, I’ve never really thought of Angry Birds and Candy Crush players as “gamers”.

    • Andre Richards,

      You’re failing to grasp the “good enough gaming” aspect of this which is that for *most of the market* the games offered by mobile is good enough to make users self-select out of the console market. How does a mobile component to an expensive gaming system matter to someone content with iPhone/Android games? Do you think they’re looking to spend another $300-400 to get this mobile component that is going to be more or less what they already have with their phone? And don’t kid yourself–it has nothing to do with who you or anyone else consider to be “real” gamers.

      It’s okay to be defensive about this turn of events, especially if you’re in some way invested in the industry, but it’s not okay to argue around the facts with specious arguments about who shouldn’t qualify as a real gamer. The fact is that there is a rapid decline in the gaming industry concurrent with the rapid increase in mobile. Bashing Angry Birds doesn’t change that.

      • rustywheeler,

        Oh, agreed. My bias is my bias and I freely own it. The term ‘gamers’ has expanded continually over the years to encompass folks who would previously have occupied their time with Sudoku or crossword puzzles. Which is totally fine, it just obscures the truth that for most long-form console “gamers” —at one time, the only kind — $.99 mobile content is not, actually, “good enough” to make then self-select out of the market. Because the Vita mobile component I’m talking about is not *really* more or less what they already have with their phones.

    • anon_coward,

      back in the 90’s FPS gamers weren’t considered real gamers. Doom was just a stupid game people played to let off steam at the end of the day.

      the real games were RTS and other strategy games you couldn’t play on a console.

      same here. PS3 didn’t start selling until the price dropped. the financials of the console industry are that all you need is a small drop in sales to start losing a lot of money.

      • JMatthew,

        RTS and strategy ? Let me laugh while every person in my childhood memories are playing Mario, Zelda, Sonic, Pokémon, Donkey Kong, Spyro, Crash and Metroid.

    • kgelner,

      The Vita is not a “mobile platform”. It’s a portable game system, a vast distinction… the portable game systems are wrapped into the consoles in declining sales, as “mobile platforms” (read: general purpose devices) ascend and trump them.

      Now if you can go from the next-gen console to Android or iOS, then you might breathe some life back into the next-gen console sales…

      • rustywheeler,

        Agreed; an important distinction. But that’s a pretty big “if”. Developing proprietary content for those (cross-) platforms seems a bit if a stretch; in Apple’s case, because they would probably never allow it, in Android’s case, because getting it to work well on all those devices probably isn’t achievable or cost-effective. Owning the hardware is a clear advantage…

  19. intarwebber,

    Let’s check back after GTA V is released on Sept. 17th. Actually, forget it. I’ll be too busy playing my PS3 to care about the death of dedicated game consoles.

  20. Stealth,

    Those numbers I think are not accurate.

    It also doesnt take into account the 3ds spike that is about to happen

    Expecting 3ds to outsell a 150+ mil system is insane

    • Andre Richards,

      “Those numbers I think are not accurate”

      Your source?

      • Stealth,

        check CVG twitter, they mock this

      • Andre Richards,

        Someone’s Twitter stream isn’t a source.

        Not the academic type, eh?

        Let’s try this again. What authoritative information do you have to claim that the numbers in this article are not accurate? That would be any first-hand source for data, like an industry group or consumer statistics company, that contradicts what’s reported here. (Hint: blogs, Twitter, opinion, discussion forums are not sources.)

    • Those numbers are accurate. Nintendo 3DS has been underperforming for all of the last two years.

      • Stealth,

        those numbers are totally false and made up according to cvg, ign, ect. I checked.

        And nintendo has been OVER performing for the last 2 years

  21. Andre Richards,

    Personally, I attribute this decline to mobile as well as the sudden and widespread appearance of $60 price tags on new console titles. It’s simply too much money for a video game. I think that has isolated a lot of buyers and left the console market to survive mostly off the so-called “hardcore” gamer set (which is really just a small, vocal minority.) The majority of game buyers are not hardcore gamers, but parents picking up games for their kids. As one of those parents myself, I can tell you that $60 absolutely crosses the line for me. I haven’t bought a new title in over 2 years. Previously, I bought maybe 6-7 new titles a year. I was never happy with $50 but it was just right there at the edge of acceptable so the occasional impulse buy happened. Now, nothing. I don’t buy new titles and I’m completely disinterested in any new consoles. The industry is shooting itself in the foot.

    • jacksonsquire,

      Games were $60, $70, and sometimes $80 in the 90’s, and those were the price tags then, not inflation adjusted. $60 has been the norm for console games for quite a while now with $50 being the price tag for Nintendo games. Now everyone’s $60.

      Let me put it in perspective on just how cheap that is today compared to what it used to be. The Legend of Zelda went on sale at day one in 1986 for $49.99. Inflation adjusted that’s over $100. So, if you were a gamer back then call your parents and thank them for blowing huge amounts of money on your gaming fixation because back then the gaming industry was definitely niche.

      I don’t much care for the prices of games myself today, though. I find a lot of these high production games today to be worse than simpler things released so long ago, and the advent of digital distribution and much cheaper disc production make these prices to be more about greed than a necessity to cover the cost of custom cartridge chips.

      We could definitely vote with our feet. Many indie games are affordable and quite good, but moving to smartphones as Mr. Dediu and others aren’t going to cut it for us. If we’re such a vocal minority then why exactly are many of these games top sellers at general purpose retailers? Grand Theft Auto V, Pokémon X, and Pokémon Y are among Amazon’s top sales right now of anything — and they’re not even out yet.

      • Andre Richards,

        “Games were $60, $70, and sometimes $80 in the 90’s”

        Do you have some examples? I bought a *lot* of games in the 90s and never once did I encounter anything over $50 back then. There may have a been a handful of games that were more expensive than that, but those were very definitively not the norm. $50 was the typical high-end price on new, top tier games in the 90s, and a lot of second-tier titles were between $30-40. Games on my Sega Genesis were $30 new.

      • twilightmoon,

        No way games were over $50. There were a tiny number of them over that price back then, but it was no way a general trend. I got plenty under $50, and often around $30. Inflation adjusted that still might be a lot, but it’s not $100 today.

      • Trippie,

        You remember incorrectly. Most games from the late NES days through today were $50-$60. Check out these old Sears catalog scans for a blast from your nostalgia shaded past.

        http://www.huguesjohnson.com/features/sears_catalog/

      • JY,

        Why would you buy a game at SEARS of all places? Both Sears and Macys overpriced their games because the console prices are fixed by the manufacturer. The games are not.

      • Trippie,

        They did not overprice their games. Those were the MSRPs, similar to today’s standard $60 MSRP. I 100% remember cartridge games costing $50-$60+ at mean locations in the late 80’s and 90’s.

      • JY,

        The price of game consoles are fixed by the manufacturer. Retailers are not authorized to adjust the price of the console The ONLY exception to that rule is if the console is used (trade-in). The consoles are priced to recoup the cost of the R&D that went into developing and designing the console. The manufacturer will reduce the price for one of three reasons. One, the console isn’t selling. Two, the manufacturer has recouped their costs. Three, another version of the same console was introduced into the market (usually at the same or lower price point as the original console).

        The pricing of games is far more flexible. Retailers are allowed to adjust the prices of games based on demand/hype of the game. The price point on each game is roughly $5 to $10 (more with cartridge based games). The profit was made on the games and the accessories made by the manufacturer. You are absolutely right about the MSRP for games because there is; however, the MSRP for Macy’s isn’t the same as say Electronics Boutique or Babbages.

        When I used to work for Electronics Boutique (EB), I was able to get games (the same ones people pay $50) for as little as $5 from the company directly just for being an employee of EB. Access (who was bought by Microsoft) mailed me games for FREE every time they had a new release. Their biggest franchise was the Links golf series.

        Did you ever note when the games went down in price in stores like EB, Babbages,etc. that everyone else kept their prices up? The stores that kept their prices up? Sears, Walmart, Macy, etc. I’ve seen it many times in my years of buying games/shopping around. I’ve seen games sell for $10 to $20 more in Sears/Macy’s upon first day of release. That is their model and it works for their clientele. Macy’s then is not Macy’s today. Same applies to Sears.

        I didn’t mention toy stores and I should have. Toy stores are normally in line with the EB and Babbages, etc. type stores. When it came to price reductions, there were faster than Macy’s and Sears, but slower than EB and Babbages.

      • Alex,

        Street Fighter 2 Turbo for the SNES was GBP-65 when it came out in the UK in the early 90s. I asked for it for my 11th birthday, my mum freaked out completely. BAck then that would have been US$130.

      • Trippie,

        You did in fact encounter games more than $50 back then. Check these old Sears catalog scans for proof.

        http://www.huguesjohnson.com/features/sears_catalog/

      • Dylan,

        It’s true that games were more expensive in the 90’s, but there are other factors to consider as well. People had higher incomes in the 90’s, and living costs were lower. The video game consoles/portables also had no real competition. There wasn’t really a full internet yet, and PC games never became mainstream and were less accessible than the straight forward systems of cartridges and CDs on the dedicated platforms.

        Things are very different today. Wages are down. Living costs are up. The internet has opened up competition on a vast number new devices. There is a cultural pressure to make smartphones “everything” devices because that is perceived as simpler, more accessible, and easier to manage.

        I think Sony, Nintendo, and Microsoft are fine for a while, but there are very real trends that could see their markets marginalized to very small sizes that won’t be capable of sustaining their current operations. Smart devices are a real danger. Right now, smartphones are looked down upon by many hardcore gamers who disapprove of the lack of quality titles and hardware inputs. Many parents look down on them as being too expensive and delicate for their kids. I don’t think these things will remain the case indefinitely. There are already a number of independent developers starting/planning to port their games to mobile platforms like iOS and Android. Apple is supporting controller API’s, and is rumored to be making an iPhone controller case. These things could dramatically alter the industry in the long term as smartphones drop in price and approach full market penetration (they still have a long way to go). That’s when Nintendo’s business model will really be tested and they will likely face profuse difficulty without taking strong adaptive and/or competitive measures.

        Consoles appear to be much safer for the time being, but there is still potential for that market to move as well. Young people seem to not be buying TVs, and smart TVs are still in the process of actually becoming smart.

        The fact that this is an entertainment business makes it somewhat unpredictable, but video games are unique in that they are so tied to the technology that runs them. Nothing is certain and any one of these companies could spring another Wii-like hit that changes everything again. It will certainly be interesting to watch this space evolve.

      • charly,

        If Gaikai etc. works than all you need is a smart tv

    • Nintendude,

      $60 isn’t really that much when you consider how much work went into these titles. They’re as deep and complex as movies (and in some ways, more), and have hundreds of people working on them, sometimes for years. But the number of people who buy these games is much lower than the number of people who see blockbuster movies. I’m sure if it was possible to make a top-shelf game today for half the price, people would be falling over each other to offer it. The video game industry is extremely competitive.

      That said, if you want games which are cheaper, they can be found. I recently picked up a great little $20 game. Of course, it’s not a full cinematic experience like some of these big expensive games, but that doesn’t mean it’s not fun. For that matter, buying a used game from a couple years ago is also cheap, if you don’t absolutely need the latest and greatest graphics.

      I’m not sure exactly what your complaint is. You’re getting more game for your buck than ever before. Surely you can see that buying 6-7 titles at $50 but 0 titles at $60 is not rational behavior.

      • kgelner,

        They’re as deep and complex as movies (and in some ways, more), and have hundreds of people working on them, sometimes for years

        So do movies, which I mostly rent.

        The fact is that someone may spend a billion dollars and tens of thousands of people to produce a game, but it doesn’t matter how much you spend to produce if prices go up sales will go down. It means that you have to balance what it makes sense to put in to a game to reach a reasonable price point, not that you can justify any production expense just my raising the price to the end user.

      • Andre Richards,

        “I’m not sure exactly what your complaint is.”

        I’m thinking you work in the industry and don’t want to hear it.

        It’s very clear what I said: $60 is too much for a game. Period.

        I don’t care how much effort went into it. That’s a behind-the-doors- discussion for video game execs, not me. The bottom line is that consumers think it’s overpriced for what it is. It’s a game. It’s not food. It’s not shelter. It’s not clothing. It’s a game. It’s a diversion and $60 is asking too much for it.

        The justifications might sound good to a room full of video game insiders and may even have merit, but I can guarantee you that the $60 price tag on new games is not going over well with the majority of shoppers. I’ve heard the same thing from many, other parents and other gamers. The cost is prohibitive to all but the hardcore gaming crowd which is a small group.

      • Jonathan Mackenzie,

        Would you pay $60 to go see a movie just because a lot of people worked on it and it was expensive to make and, oh by the way, also a cinematic experience? Probably not.

        In the end anyone’s price point for entertainment is a function of how pleasing they find that entertainment and how much disposable income they have. But taking the notion that how much something costs is justified by how hard people worked and then assuming that therefore the market will pay that amount is flawed logic.

        You can spend a great deal of money to get shot into space. I am sure that the cost is justified by how enormously complex this process is. (Plus you wouldn’t want anyone “value engineering” your space shot, would you?) But the fact that the cost is justified does not mean that many people will pony up for a ticket.

      • puggsly,

        I have to disagree. Yes some titles have that kind of production value in them but the potential sales are larger than you indicate if you include the new mobile market.

        In the pas 4 years we have seen sales of around 1.5Billion android and iOS devices. The potential sales figures could absolutely dwarf blockbuster Movies and actually have.

        Remember, we are seeing near vertical line growth in both android and iOS so over half a billion of those sales happened this year.

  22. BuckNasty84,

    WOO HOO! THE CONSOLES ARE ABOUT TO DIE! GOOD TIMES A’COMIN’ :D

  23. Nintendude,

    You talk about “‘good enough’ gaming as provided by mobile phone platforms”, but this misses the elephant in the room: for a lot of people, the PS2 (!!) and PS3 are already the “good enough” platforms. Remember, Sony only stopped manufacturing new PS2s very recently. For somebody who is a casual gamer (but maybe not “smartphone only” casual), the PS2 or PS3 was a cost-effective way to get a nice console.

    It’s just like PCs. In the late 1990’s, everybody upgraded their PCs after 2 or 3 years, because you needed the new PC to run the latest software, and you needed all the CPU and RAM you could get. Every software title listed exactly the MHz and RAM you needed to run it! Today, people aren’t replacing PCs as fast, because there’s nothing new that they need. I’m using a 4-year-old PC, and it’s doing great.

    Every day I see commercials for phone companies that have some way to trade in your smartphone after 1 year. (Who would be caught dead with a smartphone that’s over 12 months old — that’s ancient!) Smartphones are at the point where you need all the RAM and CPU you can get, and new models are coming out all the time, and so upgrading frequently makes sense. In a couple years, this will trail off, too, as they mature.

    You see this in every market. There was a time when 100,000 miles on a car meant it was basically dead and you needed to buy a new one, and the new safety features meant you probably wanted a new one long before then, anyway. Today, 100,000 miles is still a lot, but you can reasonable expect a well-made car to last much longer than that. The shoulder harness and airbags and ABS are all much older than 10 years so improved safety in new cars is only incrementally better.

    I’m not sure the PC market or console market is “dying”, so much as it is maturing. I don’t need a 2013-era PS4. I don’t need a 2010’s-era PC. The game industry is simply going to fall back to the size it should be, for a device where users don’t feel the need to upgrade every 7 years. Everybody with an iPhone 4/4S wants an iPhone 5 because it’s significantly better, but by the time we get to the iPhone 10, we’ll be hitting physical limitations on how good it can be, and demand will have leveled off. The device won’t “die”. It just that having year-old hardware will no longer be the limiting factor in the user experience.

  24. jacksonsquire,

    Where exactly is Microsoft in these sales data graphs? Leaving them off would be like showing a chart of Apple and HTC sales of phones but leaving off Samsung. Microsoft is missing from the entire dataset, but there isn’t a Sony sales volume graph either. Not only is this a problem with what has been presented there’s also a problem with the fact that another 20 years of sales history is missing as well because if it was included the entire narrative that’s being told here falls apart.

    It falls apart because if you created a volume graph of Nintendo sales dating back to the NES you would see a 30 year decline with Wii and DS anomalies near the end. So, if cheap handheld smartphones are the cause of this decline why is it 30 years long for Nintendo? Smartphones have played a role, but they have so far scooped up the only part of the gaming market they are capable of conquering: casual gaming. Touchscreen smartphones are highly capable, but they’re crippled by their touch-only controls. Many types of games cannot be engineered to run this way, and many of those are types of games that don’t fall into the casual category. They are also inhibited by the accepted price of these games. Most developers aren’t encouraged to spend a decent amount of time on games if they can only sell them for a dollar a pop. This has created a situation where there are a lot of crapware games and especially annoying games that require people to fork over additional money for in-game content. These games are not remotely “good enough”. Apple and other smartphone companies can have this market, and their taking this market away from Nintendo over 4 years ago was a blessing to many of us. Unfortunately, Nintendo hasn’t yet learned they lost this market years ago. Instead of returning to the mindset they had in the days of the SNES by killing competition with power they produced the Wii U.

    However, traditional console video gaming is still viable. It might not be sustainable in the future, but selling crapware games for a dollar on handhelds isn’t going to sustain them either. They all need to provide a digital download store for games that circumvents the retail market that also sells the games cheaper than for regular retail. Gamers aren’t stupid, and they don’t see how games must be $60 when a CD doesn’t need to be pressed and shipped to sell it. This is their biggest challenge of today. If they don’t solve this they will definitely be unsustainable shortly because some of their sales are being lost to the PC where there are multiple sources that follow this model in existence — the biggest among them Steam.

    Indie gaming is where a lot of the more exciting stuff is occurring in my opinion, and when an indie game gets kickstarted or funded in some other manner the biggest question they’re always asked from the public is whether the game is coming to console, not iPhone. Consoles are seasonal, and it’s quite stupid to count out a new generation of consoles before they’ve even gone on sale. However, you can go by pre-sales. On Amazon the PlayStation 4 and the Xbox One are among Amazon’s top sales period, so it looks like there will be a decent start to sales at least. Sustainability will be determined by their own actions and not by sales of smartphones.

  25. Danny Nemer,

    How was it determined that “the best performing console to date is the Wii with about 100 million units sold so far”? The following calculations indicate Sony’s PlayStation 2 is the best performing console:

    Sony states in its FY 08 Form 20-F:

    For the fiscal year ended March 31, 2008, the method of reporting hardware and software unit sales has been changed from production shipments to recorded sales. In accordance with this change, the numbers for the fiscal years ended March 31, 2006 and 2007 have been restated.

    (Page 50, FY 08 Form 20-F, http://www.sec.gov/Archives/edgar/data/313838/000114554908001104/k01608e20vf.htm )

    For all filings since, Sony has continued to report its unit sales as recorded sales. Hence, the following are the PlayStation 2 worldwide hardware unit sales since the start of FY 06, stated in Sony’s 20-F filings as recorded sales (in millions of units)[1]:

    FY 06: 14.71
    FY 07: 14.20
    FY 08: 13.73
    FY 09: 7.9
    FY 10: 7.3
    FY 11: 6.4
    FY 12: 4.1
    Total (FY 06-12): 68.34 million units

    (Sony’s 20-F filings: http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000313838&type=20-f ; nearly identical numbers on its investor relations site: http://www.scei.co.jp/corporate/data/bizdataps2_sale_e.html )

    Unfortunately, Sony has not restated PlayStation 2 unit sales as recorded sales instead of production shipments for years prior to FY 06. Thus, we must use Sony’s FY 05 Form 20-F, which states the total production shipments of hardware[2] for the PlayStation 2, cumulative as of March 31, 2005, is 87.47 million units (Page 37, FY 05 Form 20-F, http://www.sec.gov/Archives/edgar/data/313838/000114554905001127/k00949e20vf.htm ).

    Thus, cumulative sales of Sony’s PlayStation 2 (using production shipments from FY 2000-05 and recorded sales for FY 06-12) is:
    68.34 + 87.47 = 155.81 million units.

    Thank you for reading.

    Notes:
    1. Sony stopped reporting sales of the PlayStation 2 in FY 13.
    2. “Production shipments of hardware and software are counted upon shipment of the products from manufacturing bases. Sales of such products are recognized when the products are delivered to customers.”

    • asherrd,

      PS2 may have sold more total units but it was out much longer than the Wii. You’d have to calculate units sold per year and estimate a projection of what sales will be in future years until both of the systems are out of production. Only once they are both out of production can you really state which one was the overall best seller.

      • erickwong,

        Wii is selling at a far slower rate now than the PS2 was at this point in its lifespan. Indeed, Wii sales have collapsed in the last 2 years, and it is getting essentially zero software support. In some markets it has been discontinued in favour of Wii mini, which lacks Internet access of any kind. It would take a miracle for Wii to reach 110 million units, let alone the 150 million needed to approach PS2.

    • Thanks for providing this information. I’ve updated the post to show this this.

  26. bothari,

    The entire premise of your article is hinged on what I consider a bad assumption:

    “And the modern general purpose computer is the smartphone”

    The modern general purpose computer is the internet. My phone, my iPad, my PC and my consoles are simply portals to my Facebook, Google Docs, Dropbox, Flickr.

    The separation in usage exists purely as an interface problem now. I can’t edit Google Docs on my consoles because you can’t reasonably type with a controller. I can’t upload photos to Flickr from my SLR with my phone because there’s no SD slot. I can’t play blockbuster action games on my iPad because the touch screen sucks for input.

    And having specialised hardware for these things is not a problem for me. Mobile gaming on my phone is fun. I’m happy to sit down at my PC and edit and upload photos. I enjoy sitting down with a controller in front of my TV to play games.

  27. James King,

    This is the problem with using raw data to make assmptions. You lose context and don’t take into account factors that the numbers can’t show.

    1) There are two types of gaming, casual and high-performance. Casual gaming has long been a larger market than HPG and is suitable for mobile devices without tactile controls. But HPG is driven by ergonomics; in that respect, the greater the sensory data, the better the gaming experience;

    2) Tactile controls provide a greater gaming experience because they provide more sensory data. All things being equal, people will naturally gravitate to the system that has the most tactile method of control because our bodies are pre-programmed to want as much sensory data when performing a task;

    3) The larger the screen, the better. Screen size directly correlates to immersiveness. That is why products like Oculus Rift have created so much excitement. You simply cannot equal the level of immersiveness a larger screen provides. Even if you make the claim that a handheld screen, such as on a tablet, is “equal” to an HDTV as the relative viewing distances, you don’t have to hold up your HDTV with both hands.

    It’s a simple matter of ergonomics… when it comes to high-performance gaming, consoles are superior in every way that matters.

    The key is to get the ECONOMICS of gaming to match mobile. If you want to know what that looks like, pay attention to Sony’s new PS Vita TV. Once Sony’s Gaikai technology is fully implemented, you’ll have state-of-the-art gaming and content delivered through a device the size of a Roku. You’ll get the benefits of casual AND high-performance gaming in a tiny box. Sony will get away from building expensive consoles and have a system with perfect DRM. The economics will become more than competitive with mobile.

    Consoles aren’t going anywhere. They will evolve into tiny boxes that tap into massive cloud computing systems. They will be cheap enough to be affordable in markets where today’s game consoles can’t penetrate. The PS Vita TV is the future playing out in front of us.

    • disruptive,

      And if someone does launch a “cloud” game streaming device as their next-generation game console then that would be a disruptive innovation, worth reconsidering. They’re sticking to the same old business model for the upcoming generation, though, and this article is addressing that. Do you disagree with anything in particular in the article, in the context of the currently announced consoles? Or is your objection only about possible future products, possibly years away?

      • James King,

        The product I referenced is already going to production. Sony ALREADY has Gaikai, a state-or-the-art integrated gaming infrastructure capable of delivering other content, such as music and games.

        The “old” model is evolving. Both the PS4 and XBox One connect to cloud back ends, Gaikai and Azure. In the near future, both will handle almost 100% of the processing related to games.

        As I stated, the future is already playing out in front of us.

      • disruptive,

        “Both the PS4 and XBox One connect to cloud back ends, Gaikai and Azure. In the near future, both will handle almost 100% of the processing related to games.”

        If this is really the near future, why are both next-gen consoles $500 boxes with powerful hardware for local computation? All you need for cloud game streaming is network hardware and a video decoder. Console generations are historically ~7 years, are you saying this one will be replaced midway through? Seems like a big money sink to have done all this hardware development, then.

      • James King,

        “If this is really the near future, why are both next-gen consoles $500 boxes with powerful hardware for local computation?” – disruptive

        To answer your question:

        Bandwidth.

        And both consoles sell for at least $100 less than you quoted, $200 in the case of the PS4.

        “All you need for cloud game streaming is network hardware and a video decoder. Console generations are historically ~7 years, are you saying this one will be replaced midway through? Seems like a big money sink to have done all this hardware development, then.” – disruptive

        Console sales are slowing. They have to release products based on the current realities of spotty broadband and immature infrastructure. There is normally a hardware refresh several years into a console’s lifespan, to take advantage of falling component prices and economies of scale. No reason the change can’t come then.

      • Tatil_S,

        People are complaining about the latency through AirPlay inside the same room, but somehow the latency from the cloud to the living room will be no big deal?

      • James King,

        To put it euphemistically:

        “Technology ain’t standing still.”

      • disruptive,

        AirPlay has exactly 2s of latency built into the system on purpose, for ease of audio-sync reasons. It is showing its age as an extension of the original music-only functionality. There’s no reason why it couldn’t be imperceptible.

      • Tatil_S,

        TCP/IP was also not designed to minimize latency, either.

        All it takes is the latency to jump momentarily at the wrong instance to ruin the gaming experience for hard core players.

      • disruptive,

        But UDP was, etc…

    • Sprewell,

      I used to make a similar argument to you, that the mobile gaming devices would always do well because they have tactile controls. Then I saw these smartphone gaming accessories:

      http://www.theverge.com/2013/2/20/4001278/best-controllers-for-your-smartphone-android-or-ios

      As Horace says, game over. What would you rather do, buy a $200-300 Vita in addition to the $400-600 smartphone you already have, or buy one of those controllers for $50-100 more and simply play games on your smartphone? Most mobile gamers are going to choose the latter.

      As for sticking it up on a HDTV, there’s no reason you can’t put the game from your smartphone up on the TV also. Just connect through HDMI and you’re ready to go, maybe have a $30 dock next to the TV that you can just place the smartphone into. Most smartphone displays are now comparable to TV displays in resolution, so they’ll have no problem driving the display. Use the same bluetooth game controllers as you would with a console.

      Admittedly, there will always be a hard-core gaming minority who will choose much more powerful consoles, just as there will always be a hard-core computing minority that buys extremely powerful desktop PCs. But most people who bought consoles and PCs weren’t in that hard-core group, so sales for both PCs and consoles are already dropping and will essentially be wiped out. Your Vita TV/”tiny boxes” argument is a horrible one because those devices will have all the constraints of smartphones because of their small size, but none of the benefits of convergence, no reason why your smartphone couldn’t hook into the cloud computing platforms you predict either. There will always be big boxes like the PS4, but with less than a tenth of their current sales.

      The key word here is convergence. Your smartphone or tablet will do everything your previous computing devices used to do, because they’re so much more powerful now. The software isn’t quite there yet- ie Android doesn’t have multi-window, other than Samsung, so you can multitask between multiple windows on a laptop or desktop, but Google is supposed to be working on it- but when it is, those hardware categories will be killed off, ie PC and console sales will drop by 90+%, just like single-function GPS devices and PDAs are now gone. The smartphone hardware is already powerful enough, so it’s only a matter of the software getting done.

      • James King,

        “What would you rather do, buy a $200-300 Vita in addition to the
        $400-600 smartphone you already have, or buy one of those controllers for $50-100 more and simply play games on your smartphone? Most mobile gamers are going to choose the latter.” – Sprewell

        I’d rather have a $95 PS Vita TV that stays attached to my TV while I carry my phone around. If I lose my phone, I haven’t lost all of my entertainment. I think most people would think like me in this regard.

        “As for sticking it up on a HDTV, there’s no reason you can’t put the game from your smartphone up on the TV also. Just connect through HDMI and you’re ready to go, maybe have a $30 dock next to the TV that you can just place the smartphone into.” – Sprewell

        Then the phone becomes a single use device. You aren’t using it to tweet friends, check email or Facebook, etc. One you have to buy a tablet or computer to perform those tasks, then the economics of your argument fall apart.

        “But most people who bought consoles and PCs weren’t in that hard-core group, so sales for both PCs and consoles are already dropping and will essentially be wiped out.” – Sprewell

        Non sequitur. Declining marketshare =/= “wiped out.”

        “Your Vita TV/”tiny boxes” argument is a horrible one because those devices will have all the constraints of smartphones because of their small size, but none of the benefits of convergence, no reason why your smartphone couldn’t hook into the cloud computing platforms you predict either.” – Sprewell

        Already disproved. And there’s no evidence that “convergence” is a benefit.

        “The key word here is convergence. Your smartphone or tablet will do everything your previous computing devices used to do, because they’re so much more powerful now.” – Sprewell

        But not at the same time.

        “The software isn’t quite there yet- ie Android doesn’t have
        multi-window, other than Samsung, so you can multitask between multiple windows on a laptop or desktop, but Google is supposed to be working on it- but when it is, those hardware categories will be killed off, ie PC and console sales will drop by 90+%, just like single-function GPS devices and PDAs are now gone. The smartphone hardware is already powerful enough, so it’s only a matter of the software getting done.” – Sprewell

        Your scenario relegates your smartphone to “serial” usage. Either it’s a phone or a console, but not both. The only way it can continue to be both is if you don’t actually add tactile controls or hook it into a TV. That’s when it loses the ergonomics battle with consoles. If you need a laptop or PC to perform tasks while your smartphone acts as a console, then it loses the economics battle with consoles.

        You scenario MIGHT play out in emerging markets but anyone who can afford to have a dedicated console, tiny or otherwise, WILL have one. Like I stated before, it’s a simple case of ergonomics.

      • charly,

        The phone will not be connect with wires to the living room screen but wireless so you can pick up your phone while playing a game. Doing something else heavy may not be really possible but making a phone call or browsing will certainly be possible just as it will be possible on the next-gen consoles who all have dedicated cores for no-gaming.

        About ergonomics. You probably will be able to use your PS4 controller on your Samsung phone out of the box. With a Sony phone i would use the word definitely but you could otherwise just buy a logitech or other 3 party brand controller

        What if your phone is stolen? Buy a new one. Type in your accoun info for google play/Stream/apple and start playing your already bought games.

      • James King,

        You can game AND make a phone call using just your smartphone? Definitely not at the same time. But I can, using my console and smartphone.

        “What if your phone is stolen? Buy a new one.”

        Hey, those things ain’t cheap ;)

      • charly,

        Not so good if they output to the phone screen but if a smartphone is competing with a console that that can only happen if it is using the “TV” for output

        ps. how does Microsoft handle skype and the xbox. I assume you can be called (skyped) when your playing

    • Walt French,

      I don’t think that anybody would argue a Porsche 911 isn’t “superior” to a Ford Focus. But whereas you can get a sporty Focus for $23K, you’ll pay over 3 times that to get the Porsche.

      Unsurprisingly, Ford moves (very roughly) 100 Focuses for every single 911 sold. The higher perceived quality doesn’t offset the 3–7X price disadvantage, resulting in a huge quantity disparity.

      Autos are a relatively stable technology: the Ford (or the Corolla or a hundred other models that outsell the Porsche), didn’t suddenly become much better. And Porsche racked up its best sales year ever last year; it’s no fallen icon.

      Games are very different: it used to be that you needed to get premium PC hardware or a game console to get good gaming performance, and phone-based games like snake/centipede were trivial and couldn’t hold your attention. In the last ten years, phone-based games have gone from being useless to pretty darn good. Console games are getting better, too, but nowhere near as rapidly as the phones’ games.

      And the economics have gotten even more ridiculously lopsided than the 911/Focus ratio: anybody can get a pretty-good game for $5 or $10 to run on the smartphone they already have in their pocket, while the console market requires at least $99 up front and many times more per title.

      Premium cars, fine wine, and game consoles are still very desirable. But the latter faces some new, and very aggressive competition that will be a challenge for the consoles to respond to. Unlike the big liquor conglomerates or the car companies, the big console manufacturers don’t have low-end, mass-market products that would benefit from a money-losing, high-priced flagship.

      • James King,

        If your Ford/Porsche example is meant to be truly analogous to consoles/mobile devices, then it has a few issues:

        1) Which is the Ford and which is the Porche?

        “…anybody can get a pretty-good game for $5 or $10 to run on the
        smartphone they already have in their pocket, while the console market requires at least $99 up front and many times more per title.” – Walt French

        I don’t know about you, but I purchased my phone for $350 unsubsidized and pay $70 a month for service. A phone capable of competing with a console has an MSRP roughly in the $650 range w/ service costs of $70-$90 a month for an individual. You can improve the economics with a family plan but then you are looking at data caps, making the costs of mobile broadband uncompetitive with home broadband. The costs of your mobile phine increase significantly with a 2 year contract.

        Smartphones don’t magically appear in people’s pockets. A $399 PS4 with a $40 home broadband service gives you all the gaming and content you can handle on a screen 10x the size. So far, you haven’t made a compelling case that the economics favor mobile phones.

        2) Unlike driving a Ford and Porche, the experience of gaming on a console is fundamentally different than gaming on a smartphone or tablet. Not just superior, different.

        3) “Unlike the big liquor conglomerates or the car companies, the big console manufacturers don’t have low-end, mass-market products that would benefit from a money-losing, high-priced flagship.” – Walt French

        I don’t know why this would be important. However, as I’ve pointed out, the economics of console gaming are evolving to be more competitive than mobile. The PS Vita TV, at $95, is already a far better value proposition than a tablet or smartphone. Consoles already have the advantage in game quality and ergonomics.

        Your analogy simply doesn’t apply. You haven’t made a case for why mobile devices will significantly impact consoles.

        The reality is that the console/mobile debate is closer to cars vs. motocycles. Motorcycles are easier to maintain, cheaper to own, get better gas mileage, and have range comparable to cars. But no one would ever make the claim that they will ever significantly impact cars because they both present fundamentally different experiences.

      • Walt French,

        First, people buy more expensive cars at least in part because they find the driving experience to be better.

        Second, your price comparison would be really great if smartphone customers didn’t care about making calls, accessing the internet on the go, etc, i.e., if the purchase price were all about the games on the phone. But while there may be some people who primarily buy a smartphone for gaming, it doesn’t seem very smart to me — why buy all those unused features that take a $300 iPodTouch up to a $2000 iPhone-cum-service? Gamers, are certainly not idiots and the number of people who stroke their ego by buying $2000 contracts they don’t need is too small to worry about.

        Meanwhile, an easy majority of Americans have smartphones already. The demographic (age/income) that can afford game consoles and would be likely to want them, could be as high as 90% saturated with phones. Aside from some teens whose parents keep them on a short leash, who has a game console but not a smartphone…already?

        People may figure a good fraction of the iPodTouch price goes for gaming, but only a tiny fraction of a smartphone price is “for gaming.” For the overwhelming majority of people whose interest in gaming isn’t in the top 10%, “pretty good gaming” is pretty close to free.

        I don’t have any reason to challenge the notions that consoles and dedicated handhelds are capable of better games, nor that there are a LOT of people who like high-powered games and have the income to buy them. All I’m doing is noting that the alternatives for anybody willing to settle for less CPU/GPU horsepower have very-low-cost alternatives, alternatives they didn’t have 5 years ago when the gamebox sales charts peaked.

        It’s simply the most obvious explanation for the obvious facts.

      • James King,

        “First, people buy more expensive cars at least in part because they find the driving experience to be better.” – Walt French

        But it isn’t different. Better, superior? Yes. Different? Viscerally but not practically. It’s a semantical point.

        “Second, your price comparison would be really great if smartphone customers didn’t care about making calls, accessing the internet on the go, etc,…” – Walt French

        We’re going down a slippery slope here. Based on your standard, nothing is more effective than a desktop PC. It does practically everything including making calls and definitely has the most bang for the buck.

        You are inadvertantly proving my point. It’s preposterous to compare a PC to a mobile device strictly from a cost/benefit proposition. The ERGONOMIC experience of a mobile device is proving to be more suited to how people operate than a tethered computer.

        But you can’t unequivocally state the same dynamic re: consoles.

        “Meanwhile, an easy majority of Americans have smartphones already.” – Walt French

        Yes, with a TWO YEAR upgrade cycle. A console has a 7-10 year upgrade cycle. In the lifecycle of a console, a person will upgrade their phones 3 times minimum. That’s roughly $2000 in hardware alone. Add in games, apps, movies, mobile broadband, and a game console over its lifespan is still easily competitive.

        What mobile phone has a 7-10 year lifespan?

        “I don’t have any reason to challenge the notions that consoles and dedicated handhelds are capable of better games, nor that there are a LOT of people who like high-powered games and have the income to buy
        them. All I’m doing is noting that the alternatives for anybody willing to settle for less CPU/GPU horsepower have very-low-cost alternatives, alternatives they didn’t have 5 years ago when the gamebox sales charts peaked.

        It’s simply the most obvious explanation for the obvious facts.” – Walt French

        And the point that myself and others have made is that there really isn’t enough information to determine a causal relationship and quite a bit of non-quantitative information that could explain the phenomenon.

        I don’t think the chart offers anything near enough context.

        Horace also makes a supposition about the future of consoles that is already being “disrupted” by new technology. Console gaming is evolving and the economics in relation to mobile gaming are improving dramatically.

      • Walt French,

        My wife is not a gamer, but she is serious about upgrading her phone now that she’s seen the new iPhones.

        If she wants more than the casual (and “free”) Words With Friends that she shares with a couple of people, she can do so at a very low cost. She’s not a likely player of Infinity Blade III, but as a $7(?) sequel in a top-selling series, many people will. They will think there’s pretty decent play for $7. They will NOT have to factor in the cost.

        A more serious gamer may ALSO look at Halo or whatever, and figure the gameplay is worth the cost. But they will have to have FIRST decided to get themselves a serious piece of hardware, mostly for gaming. Yes, XBone does all sorts of other media and stuff, but the fact that it MUST be tethered to the TV makes it less flexible for the mobile set.

        Six of one, half-dozen of the other? I think not: the only-at-home gamers have had their systems for a couple of decades, while the on-the-go crowd is buying huge numbers of new hardware.

        I have nothing against relatively costly, high-end goods — I’ve been thinking about my sporty Acura while I sit her sipping my Bruichladdich (Scotch). But gamers should realize that the category has pretty much topped out in its userbase, and the economics are favoring much more widespread users. The economics of high-end cars are known and stable. The economics of expensive, 10-year-aged Scotch are challenging but stable. The economics of console games are unstable; major brands are at risk as a limited talent pool migrates towards mass-market games.

      • James King,

        The irony of interacting with you is that people like you and Horace are the LEAST likely to understand a company like Apple because you focus on the aspect of analysis to which Steve Jobs was the most hostile: the quantitative. Apple is a unique company due to the QUALITATIVE aspects of its business, its focus on user experience and consumer psychology. It’s Apple’s “special sauce.” Guys like you and Horace just don’t get it.

        You are making a judgment about a market about which you have little personal experience, based on what you read in a chart. I’m making my assessment based on 15 years in technology, a great bit of it building some of the fastest gaming PCs in the world. I’m also making my assessment based on my years as a graphic designer and student of UX and ergonomics. When I told my contemporaries that consoles would supplant PCs as the platform of choice for high-performance gaming, I got the same resistance. Sadly, exchanges like this are nothing new to me.

        I’m reminded now of an exchange I had with Jef Raskin (yeah, THAT Jef Raskin). I told him that cameras would become a major feature of mobile phones and he pretty much made it clear that he thought I was nuts. My premise was that photos were not just another form of communication, but the most efficient form so it was reasonable to conclude that cameras were a natural extension of the multi-faceted functionality that mobile phones were beginning to provide. Let’s just say we agreed to disagree.

        This is no knock on Raskin, for whom I still have a tremendous amount of respect. He was one of the most respected UX experts and a bona fide genius. But I was correct.

        I’ve been down this road many times: the rise of consoles as the center of the home multimedia experience, virtualization, multi-processing supplanting single processing in PCs, streaming of high-performance 3D graphics over networks… hell, even the recent economic collapse.

        I don’t expect you to believe me… in fact, I very much prefer you don’t. But the reality is that Apple has already shown that the key to understanding technology comes from understanding how people use technology, not how the numbers add up. Quantitative analysis has its place but it is much better at analyzing WHAT has happened, not WHY. It is the ultimate “hindsight” tool.

        If you want to insist that consoles are an unsustainable business in comparison to mobile gaming, be my guest. If you want to ignore the qualitative factors, such as UX and ergonomics, that clearly suggest that the two areas don’t truly correlate, be my guest. If you want to ignore the “disruptive” new technologies, such as massive cloud gaming infrastructures like Gaikai and Azure, that will provide perfect DRM and allow developers of all sizes to compete on an even footing and in ways that will make them more profitable, be my guest. If you want to ignore the industry’s clear move away from expensive hardware to small, inexpensive hardware connected to cloud infrastructures, by all means, be my guest.

        I’ve already been down this road many times. I already know how it plays out.

      • Walt French,

        “Guys like you and Horace just don’t get it.

        You are making a judgment about a market which you have little personal experience…”

        You made my day.

      • James King,

        According to your Twitter account, you referred to yourself as a “Quant” which normally references a “quantitative analyst.” If your profile is correct, then you likely do similar work as Horace, using quantitative data to analyze trends, more than likely for a financial company, possibly for a tech company.

        Everything I’ve written to you has taken this into account. If I’m correct, then my assessment of you is still likely very much correct.

        If I’m not, you’re welcome to reveal your background so that I can address you without having to speculate.

      • Walt French,

        Just to blow off a bit of accumulated steam here:

        You complained about ad hom attacks but here attempt to pigeonhole me by my job, implicitly claiming that my strength is all that I am. (This was not your first ad hom in the thread, go back to where I cited JLG as actually supporting a point you made of Ballmer’s unsuitability, which you gratuitously used to call him a nincompoop in service of no insight into the point at hand.)

        Throughout, I have attempted to interpret the data shown, and show how it fits into bigger patterns of thought. Without going back and reading every one of your posts, my general impression is that you have objected to Horace’s work and argued about my interpretations, without actually providing alternative data or understanding.

        The site “rules” (that’s right, not “desiredments”) call for exactly the type of analysis you find unsuitable:

        This site is an evolving experiment in collaborative and peer reviewed analysis. Participation is subject to some rules designed to encourage a scientific method of analysis. Contributions to this site as authors or through comments are welcome but they must also obey these rules.

        The rules are:

        Show work. Like your teacher and professor told you: no credit without a clear trail of logic. Extra credit for brevity, clarity and visualization.

        Attribute and cite what is not your work. This is why URLs were invented.

        Share data. Keeping analysis secret reduces its value and accuracy because it is not subject to peer review.

        Cite only public information. If the owner does not want to share, he or she has the right to keep secrets (but see rule 3).

        Extraordinary claims require extraordinary evidence.

        Maintain zero tolerance for lack of civility. Any disrespectful comments will be deleted. There are no warnings.

        .

        I note that your tone has been civil, but will opine here that your posting otherwise runs pretty much exactly counter to the purpose Mr. Dediu lists for allowing people to comment.

        There are plenty of sites — some that I enjoy — where opinions are welcomed; justifications can be absent, implied or insinuated. A simple reading of the above shows that this is not one of those sites.

        So I’ll go back to the conclusions at the end of your first post:

        Consoles aren’t going anywhere. They will evolve into tiny boxes that tap into massive cloud computing systems.

        .

        These conclusions seem to pretty much define what you’re trying to say. But these “consoles” sound like nothing more than controllers hooked up to a modest communicator, possibly general-purpose computer; how are those more “console” than today’s smartphones?

        Meanwhile, that vision defines the removal of all value from the console per se and moves it to the ecosystem, where smartphones have a tremendous advantage (as noted by many others).

        So please, if you have some analytical insights into why consoles will thrive despite the trends of the last five years, please bring it on. Otherwise, save your opinions for TechCrunch or SlashDot or wherever, which will value them much more highly.

      • James King,

        “You complained about ad hom attacks but here attempt to pigeonhole me by my job, implicitly claiming that my strength is all that I am. (This was not your first ad hom in the thread, go back to where I cited JLG as actually supporting a point you made of Ballmer’s unsuitability, which you gratuitously used to call him a nincompoop in service of no insight into the point at hand.)” – Walt French

        My statements are far from ad hominem. My points have been to show that you do not value QUALITATIVE factors that do not support Horace’s or your narratives. You don’t seem to be able to understand or be willing to understand the very factors that make Apple a unique company or the qualitative factors that drive much of the innovation in the industry. I have the same criticism of Horace. How can either of you be objective if you are not willing to see BOTH sides of the coin? How can you understand innovation, which is qualitative in nature, using quantitative methods? It’s counter-intuitive.

        As for JLG, I do not have a great deal of respect for his opinion. His shortsightedness is partly responsible for the demise of Be Inc., which was well ahead of the market in OS technology and likely could have also been a major player in virtualization. His arrogance also was a large factor in Apple’s decline after Jobs first departure. Maybe time and experience has chastened him, but I largely do not pay much attention to him. I was providing perspective for why that is the case.

        “Throughout, I have attempted to interpret the data shown, and show how it fits into bigger patterns of thought. Without going back and reading every one of your posts, my general impression is that you have objected to Horace’s work and argued about my interpretations, without actually providing alternative data or understanding.” – Walt French

        This is a completely false statement. What I haven’t done is provide QUANTITATIVE information but I have provided plenty of qualitative information that you have chosen to ignore because you either don’t understand it or it doesn’t suit your narrative. For instance, I have explained the underlying principles of ergonomics that show why, when given a choice, people will choose a large display over a small display. It’s simple: more visual information. The human body is pre-programmed to desire as much sensory data as possible when performing a task, that is why people will choose tactile controls over non-tactile controls absent of some compelling reason to choose otherwise. Do you know WHY the original iPhone was a more appealing product than the Blackberry, though the Blackberry had the “advantage” of a real keyboard? Because the iPhone’s virtual keyboard gave it about 50% more visual area in comparison to the Blackberry when it wasn’t in use. These are ergonomic factors that most people do not understand. These factors drive HOW people use and adopt technology, not numbers. When you understand HOW and WHY people use technology, it is easy (or, at least, easier) to predict what technologies will be readily adopted. I was one of the few people I knew who UNDERSTOOD why the original iPhone was a revolutionary product when it was introduced. I had quite a few dust-ups with people who were immensely successful in tech who thought the iPhone wasn’t that impressive because it wasn’t as “functional” as Windows Mobile.

        The subjects of interface design, user experience and ergonomics are valid disciplines that you ignore because they don’t come on a spreadsheet. I understand pretty much everything posted in Horace’s charts; I’m more than familiar with quantitative methods and data. But, as I’ve stated before, the information lacks CONTEXT.

        “I note that your tone has been civil, but will opine here that your posting otherwise runs pretty much exactly counter to the purpose Mr. Dediu lists for allowing people to comment.” – Walt French

        If someone’s ideas cannot withstand scrutiny, then they probably shouldn’t hold them. If Horace is a professional, then he welcomes the opportunity to have his ideas challenged. It is only through the crucible of scrutiny that they can be validated, modified, strengthened or discarded.

        “”Consoles aren’t going anywhere. They will evolve into tiny boxes that tap into massive cloud computing systems.”- James King

        These conclusions seem to pretty much define what you’re trying to say. But these “consoles” sound like nothing more than controllers hooked up to a modest communicator, possibly general-purpose computer; how are those more “console” than today’s smartphones?” – Walt French

        And that is where you are utterly, grossly incorrect. The processing power of these “consoles” with be provided by HUGE data centers rather than a local SoC on a mobile device. I gave the example of Sony’s new PS Vita TV to illustrate how content of all kinds will be delivered in the future. The problem is that you don’t understand the UI/UX and ergonomic factors that give it an advantage over mobile devices. You treat these factors as “opinions.” Until you take the time to understand these factors, nothing that I state will make any sense to you.

        “Meanwhile, that vision defines the removal of all value from the console per se and moves it to the ecosystem, where smartphones have a tremendous advantage (as noted by many others).” – Walt French

        Once again, you are incorrect. Today’s ecosystems are nothing more than glorified shopping carts and hard drives. Systems like Gaikai and Azure bring something far more powerful to the table: PROCESSING POWER. Think of the systems (like the one offered by Amazon) that host some of the most powerful and trafficked sites on the web, such as NetFlix and WordPress. Now imagine that type of power being available for CONSUMER devices. These new infrastructures are game changing, which is why Sony purchased Gaikai and Microsoft invested so heavily in Azure (which it can also leverage for enterprise applications).

        “So please, if you have some analytical insights into why consoles will thrive despite the trends of the last five years, please bring it on. Otherwise, save your opinions for TechCrunch or SlashDot or wherever, which will value them much more highly.” – Walt French

        This statement is almost comically arrogant and is a shining example of why Apple is so far ahead of its competitors. The sad reality is that you and others like you seem to have absolutely no understanding of anything that is not quantitative in nature. You treat valid disciplines such as UX, HCI and ergonomics as if they are “opinions” rather than extensively researched areas of knowledge.

        The worst part is that you have chosen to feel insecure when confronted with these disciplines rather than opening your mind to unfamiliar areas of knowledge. You’d rather attempt to push me off this site than confront your own lack of knowledge. That’s unfortunate.

      • Daniel Heavlin,

        Reading your analysis, it is clear that you don’t play enough games to understand the industry.

        Mobile games are not “good enough” to almost anyone interested in PS4, Xbox One or PC gaming. It is probably good enough for people who only played Wii Sports, and maybe even some types of games not requiring fast reflexes, but smart phones will NEVER replace consoles as long as people want to play these better games.

        I do agree that hand held game systems are very likely going to disappear eventually, but Nintendo continues to produce games that millions of people are willing to buy a console just to play (IE, Pokemon) and their life will be prolonged. Eventually, the will probably just sell a Nintendo branded phone that is the only way to play their games.

        Sales will probably decline among people who are not interested in “hardcore” games, but it is unlikely that many of those people were buying Xbox, Playstation 3 or high end PCs to begin with.

  28. Dimirti,

    You didn’t once even consider the fact that the recent (and yes, 2 years is recent) downtrend of sales is due to the fact that new consoles are and have been expected soon, and the old generation was nearing a decade old?

    Seriously you wonder if they’ll bring recovery but they are the reason for the drop in the first place.

    • Tatil_S,

      Last plot shows 5 years of downtrend.

    • franksspam,

      Did you miss the 3DS and Wii U data?

    • guest,

      so you’re arguing that people have been waiting for 5 years for a new console? that the PS3 was only desired for 3 years?

    • paragraph,

      There’s a section about this in the article you pretended to read.

      • Dimirti,

        “Will they create growth again?”

        He implies that the reason for decline is mobile, but that the new consoles are trying to overcomes the mobile gaming deficiency. Look at it the other way around, that there is no mobile deficiency, the wait for the new consoles themselves is what is causing the drop. Nobody wants to buy a console that’s outdated in a year.

        The Wii U failed because for one, it wasnt a significant upgrade to the WII, and two most people didn’t even understand it was a new console as opposed to some addon to the Wii. As the Wii was already aimed at casual games, this readability and marketing problem mean nobody got a new one.

      • paragraph,

        Considering something and suggesting maybe it isn’t true is entirely different from “You didn’t once even consider the fact”, yes.

  29. It is true that portable consoles have little sense when smartphones dominate. (just like iPhone was sort of continuation for iPod in a world when every phone can play music).

    Stationary consoles are a little different, mobile competes with them in a ‘time spend’ dimension, not on features. Small fraction of people thinks: I have smartphone, so I do not need a TV. Drop in sales is caused by waiting for next generation, not(all) by mobile. Nobody wants to spend money on old hardware.

    It’s also worth mentioning that we are on the verge of next revolution in gaming: Glasses. Several companies are working on these now.

  30. Petar,

    Stop the presses! A new console sells well after it comes out and then sales for it gradually fall as it nears its newer, better, faster iteration.
    Also, newsflash! Half-assed attempts at capitalizing on the success of the mobile market via gimmicks like Wii U and the PS Vita inexplicably fail.
    Market trend prediction – Mobile phones will kill consoles, consoles will kill PC’s so you better be in the mobile space (like everyone else), because.. you know… Bandwagon and shit.

  31. I usually agree with your analysis, but this time I think it’s incomplete. You don’t consider the fact that traditional gaming devices are sold especially because of the content available for them, while this is not the case in the mobile industry where there are lots of other important factors beyond content (apps) like OS preference, hardware specs, design, availability, supported carriers and so on.

    Traditional gamers using consoles and PCs also have kids and I’m just looking at my three year old daughter. Each time I pick up the controller she comes and asks me what the buttons do and how do I move the character on the screen with the sticks. Kids are usually interested in devices their parents use and when they grow up a little they are interested in devices other kids use. That’s why, consoles and mobiles are not necessarily excluding each other. They are not even competitors as they not offering the same products BUT they compete for your time and money.

    Mobile games are quick, easy and casual, at least most of them (with exceptions). Traditional games need you to invest more time and effort. Maybe they are two sides of the same coin, but that coin is everywhere else you look. Think food, cars, TVs, everything. There are always products for quick and easy consumption coexisting with dedicated, specialized products delivering a different experience altogether. This will never change. The products themselves will, but the principle will always be here.

  32. Eelco de Vries,

    One thing you forget in this analysis is that there’s a very different market underneath. The growth that nintendo had on its Wii lifecycle was based on non-gamers who were just as easy to leave the platform to anything apple nowadays. And like a teenage pop hit single that demographic will, sooner or later, find something else that plays the games the way they want and that will in turn mark the decline in ios sales as far as games are concerned just as they did regarding the wii.

    The nintendo market in particular, though, is kept afloat by an incredibly loyal fanbase. In a way, they deliver quality products, critically acclaimed, and their target audience knows it. That target audience isn’t growing as boomingly fast as stock traders would love, but it is growing nonetheless.

    Meanwhile, regarding sony, microsoft and nintendo, nintendo is the only console manufacturer actually making a profit. Sony is bleeding money left, right and center, and microsoft is as well, though it’s kept afloat by their other business of course.

    Sony will probably launch a powerhouse that costs them money, hoping to regain profits down the line – probably failing in the end -turning another loss because of the same technology driven approach. Nintendo is selling portables just fine, though, and their home console business is sort of cyclical in terms of being just about profitable, just about break even or a relatively small loss. It is a practically free catalyst for maintaining brand momentum, promotion and quality.

    It is really odd to see people that want to throw that away by putting their ip, old and new, on other devices. Sony is the one at risk here, nintendo is here to stay. Meanwhile, the demographic that drove the sales of the wii and now the ios games remains as intangible and risky as ever. Nintendo? They’ve got the ultimate get out of jail free card, and they know it. They’re much healthier than most people make them out to be precisely because of that carefully, strongly built market they have. The graphs don’t show that, however.

    • monkeyrun,

      If Nintendo can survive the Gamecube era, they can make it through Wii U just fine. I think so far Wii U is out performing Gamecube.

      • charly,

        in the Gamecube era they had a lock on the kids market. Know there is more potential for a Cars or Barbie branded Ouya knock-off with a game store filled with kids appropriate games.

      • monkeyrun,

        People who supported Nintendo during the Gamecube era were kids 10-20 years ago.

    • Walt French,

      “That target audience isn’t growing as boomingly fast as stock traders would love, but it is growing nonetheless.

      Just as with BlackBerry & Nokia, when a co isn’t able to grow sales, developers’ time is better spent on other platforms. Products become less competitive. Price cuts keep sales from imploding but starve next gen development.

      This is a common pattern and very hard to avoid. A company needs to

  33. It seems to me that the trend is far more marked for nintendo as a whole, and mobile. The non nintendo consoles do not show the marked decline, and if the sacked volume graph had them on the bottom your case would look weaker for consoles. I suspect that the next gen consoles will do better than wii u, but not much.

  34. Terence Young,

    Horace, it would be very interesting to see that last graph without Nintendo. I think the huge success of the Wii and DS with non-gamers, and the subsequent fall, distorts our perception of the industry.

    There is no doubt that the success of the Wii and DS was fueled by casual gamers that have since moved on to post-PC devices, but i don’t think the industry ever relied on them to sustain itself.

  35. korhal,

    Wait, you mean to tell me that after a surge of new purchases of handhelds/consoles at their initial release, there is a slow and steady decline of new purchases?

    WHO WOULD HAVE THOUGHT THAT EVER.

    /sarcasm

  36. Oh, one more thing. The smartphone has just been disrupted by the PS Vita TV and this is why. At 100 USD/EUR, the PS Vita TV will sell big and will introduce PS Vita games to lots of (new) consumers. This will kill all Android-based microconsoles (like Ouya), as no Android game can compete with a Vita title and this will definitely take some of the market share from Apple TV (which doesn’t run games, at least yet). When this happens, those new consumers will also get a PS Vita for gaming on the go (as they’ll be able to play the same titles they have acquired for the PS Vita TV).

    In the gaming industry, it’s the content which drives the platform, not the other way around. Apple and Google don’t know that yet and frankly they don’t care. There’s one other company which knows that and they are really trying to reinvent Android-based gaming with mixed results. It’s nvidia with their Shield. Unfortunately, they are a hardware company. All other console manufacturers are both hardware and software companies, as they are also producing and/or publishing first-party games (which nvidia is not able to). And then there’s Valve which still hopes that developers will invest in Linux ports of their games so they’ll be able to release their Linux-based dream box. They’re the opposite of nvidia. They’re a software company struggling to build hardware. Widespread Linux-based gaming is not going to happen soon, but if Valve and nvidia unite, miracles could happen.

    One more thing. This is all about demand. While there is still demand for huge AAA titles, the publishers will continue to provide them and you will never have those on smartphones while there are better specced, dedicated devices. Of course, sometime down the road the publishers will better integrate their software line-up with the available mobile devices (including smartphones and tablets), but dedicated and specialized devices will never be replaced. The smartphone has replaced your ordinary point-and-shoot camera BUT it will never replace the DSLR simply because of their unique features (just think glass for example, as you cannot have the same glass on a smartphone). So the best and only thing the smartphone can do is to attack the portable consoles, but it will never compete with the living-room consoles and the PCs, no matter how many units it sells. We will always have a better specced device, capable of running better, more beautiful and more complex games and it’s not the smartphone.

  37. Commentzilla,

    I can’t stop laughing. All the commenters who think traditional game consoles will make a big comeback are only fooling themselves. Are in a RIMM board meeting talking about the comeback of the physical keyboard?

    • Terence Young,

      In a way it is like saying youtube(or TV) will disrupt cinema. People hire youtube/mobile games to relax, watch/play for a few minutes.

      Cinema/consoles is something you clear your schedule to watch for two hours or more(in the case of games). Hardcore gamers are so upset because mobile games don’t get the job done yet. Game controller support in ios7 and better graphics in the future may change that.

      The console/PC game business may be disrupted but post-PC devices, or collapse under its own weight (much like the huge blockbuster movies), but it hasn’t happened yet.

    • Steve Vogt,

      I certainly don’t think traditional game consoles will make a big comeback. I just think Microsoft and Sony will stick around longer than Nintendo, and at even lower volumes. Nintendo is in real trouble.

    • Stephen Gozza,

      Console gaming does well for the same reason iPhone apps. Developers only have to develop for 2 platforms.
      PC gaming sucks for the reason Android apps suck. No two people have the same hardware.
      Thats why iOS games are taking off, because developers can take massive advantage of the hardware’s capabilities.
      Thats also why console gaming isn’t going away.
      Hardcore gamers that sit around playing CoD or whatever on their 70″ plasmas in their mom’s basement, aren’t going to be content with a 10″ iPad or a poor performing $2000 PC.

  38. Mochammad Santaka,

    Is it me or this article forgot another important thing about the game market; the games themselves!

    The price disparity is huge. You can not equate a 1 dollar game to a 60 dollar PC/console game. And the ARPU between console/pc (coregamers) and casual gamers are different.

    http://kotaku.com/who-are-the-whales-driving-free-to-play-gaming-youd-1197333118

    If platform adoption is the key to market ownership, well Apple is making more money in their App store than Android.

    My point is, it is a different market. People who only game on their handphone is a different people from people who play console/pc games. It is a different experience. And believe it or not, there are people who play mobile and console/pc games (As the article that I linked above stated). So, console and pc games will still be there with mobile games as part of the market.

  39. Jeff Goldwarf,

    A single console game just pulled in $800 million in revenue in a single day (a worldwide record). Tell me more about how game consoles are a dying business.

    • anon_coward,

      and how much did it cost to develop and market? plus the operational costs of the cloud infrastructure?

      • Jeff Goldwarf,

        The total budget was $300 million. The cost of online multiplayer infrastructure will be offset by in-game purchases and downloadable content. If the sales trajectory is like previous games, GTA5 is likely to hit upwards of 1.8 billion over the next few years. So at least $1.5 billion in profit.

  40. Rogerio Ap Silva de Andrade,

    The last chart is clearly a joke. Never a Sony handheld sold better than a Nintendo handheld, in any given month. There was just one week in 2013, Japan, when the PsVita barely surpassed 3ds sales. Even during the period of 2009-2010 the Wii sold a lot more than the PS3

  41. Thirdrail1,

    Consoles aren’t dying, but they’re changing. You’re misinterpreting your numbers. It’s not death you’re seeing, it’s a transition to being more like sports, combined with a saturation point. You don’t need to buy a new football every 4 weeks. You buy one football and then go play football all year. Which is exactly how online gaming has become. If you work video game retail, you quickly realize that people are not buying the ps3 or the 360 for their vast, robust, libraries. They’re buying the piece of equipment they need to go play the sport with their friends – COD, Halo, Battlefield. So, yeah, they’re done buying those consoles because they have them. But, yes, they will also buy the ps4 or the Xbone. Just like all the LoL and Dota players will upgrade their video cards when that’s what need to happen to keep playing. People do not just abandon their sports.

    But the more traditional gamers? The people who just want a single player game to fill their time? They have a million choices, and most of them aren’t $60. Those people are not going to be in console land much longer. The pitiful Wuu sales and skyrocketing mobile sales are those people abandoning ship. And if that crowd wouldn’t stay for Nintendo, they’re sure as heck are not going to stay for MS and Sony.

    So, consoles dead? No. Consoles kept alive by 2-3 big games per year instead of a diverse library? Yes. That is already happening, and that trend will only become more exacerbated as we move into the next gen.

  42. cloudotaku,

    moblies in about 6-8 years yes will more than likely take over console as there no ground braking tech in any of the next gen console the ps4 or the x box one and 3rd dev’s are goin to go the moneys at evan sony are jumping on the moblie gaming wagon and they need to make good choises the now due to the fail of the ps3 to the company it is more n more likely with each year

    • courte,

      fall of the ps3? how did it fall? less people are buying as frequently yes. but doesn’t that equate to overall large sale numbers? it sort of makes sense that if you’ve already got one, you’re not going to buy another for no reason. and with nature of games these you tend to pick one and play it like a habit. people play a cod daily or weekly until a new one drops, why buy anthing else over the course of a year if someone is the type of person to get their game and play just that. it’s like hard core die hard football fans. and dlc practices adjusting show that devs understand this and are adjusting for it as well to give the people closer to what they want

  43. Lloyd Thompson,

    The downward trend in hardware seems to mirror the trend in console game sales – http://www.theesa.com/facts/pdfs/ESA_EF_2013.pdf

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