Xbox 720 and PS4 Will Usher in Latest and Last Generation of Video Game Consoles

Sony announced that it will release the PlayStation 4, the next generation of its gaming console line, for the 2013 holiday season. Undoubtedly, Microsoft will soon announce the launch of the Xbox 720, but whether the manufacturer will make it available by November is unknown. Nevertheless, the console war between the two systems will continue as before.

The hardware and services of the PS4 and Xbox 720 will likely continue to compete neck to neck, distinguishing themselves only through minor differences, a strong indication that the current nature of gaming has reached a saturation point. As hardware and game manufacturers realize that the greatest opportunity lies in innovating the entire gaming experience, these consoles will become the last of their kind. Let’s gaze into the crystal ball to glimpse an imperfect vision of the future of gaming.

Distribution

How video games will be distributed will follow a similar model to the way in which music and television are being distributed today via digital download. Gamers can already download titles to their PS3 and Xbox 360, and Sony is taking that strategy to the next level with the PS4. The PS4 will predict which games that a person will want to play next and automatically download them to be unlocked later. Moreover, the PS4 will further take advantage of its internet connectivity by allowing friends to broadcast and even jump in and take control of each other’s games remotely.

There is nothing groundbreaking about distributing games digitally or connecting consoles. However, as media distribution and consumption transition more fully to the internet, consoles’ hardware will change dramatically to create an economy of scale. It is more profitable and efficient for gaming companies to host their titles in the cloud where gamers can easily access and play them. Netflix usurped Blockbuster with this strategy in the video market.

Currently, bandwidth is the major obstacle to cloud-based gaming. The internet is quickly becoming the preferred distribution platform for television and movies - so much so that it is pushing the boundaries of the internet’s bandwidth. Telecommunications companies must develop new methods for expanding bandwidth and efficiently managing media distribution, which is a different animal than data alone. With such a rich opportunities in cloud-sourcing present, anyone who remembers when simultaneously using the internet and talking on the phone was impossible ought to bet on that these companies’ engineers will deliver in spades.

Hardware

As companies unlock new channels for distributing media through the internet, they will enable gamers to play games that would normally tax sophisticated hardware using simple, low-performance equipment. The gamer needs only to stream the game through the cloud. This would have mutual benefits for both gamers and the game designers. Rather than a consumer owning and operating the machine that enables her to play video games, using generic hardware, she can punch out to high powered servers specifically designed for the demands of gaming. Removing the necessity of a console would remove the high barrier to entry that consoles’ ~$400 price tag creates for a large number of consumers. Eliminating the physical supply chain for manufacturing consoles and games would mean fatter margins for game designers and distributors. Allowing consumers to play games through streaming internet connections opens up new possibilities for hyper-targeted native advertising in games. Such advertising would create revenue that could enhance margins and lower the cost of purchasing games. Cloud-based gaming is the future.

The PS4 already points to the gaming console’s demise. Sony announced that the PS4 will take the console out of the living room and put the gamer at the center of the gaming experience. However, the PS4 does neither. The console is still the central prerequisite for gaming, no matter which room it is in. Sony’s statement instead seems to refer to the extension of PS4 games onto a different platform, the PS Vita, Sony’s handheld console. Sony has recognized that people are playing games on many other devices - social media sites, tablets, and smartphones - than standard gaming consoles. Though Sony is trying to take advantage of this trend by extending games to the Vita, the company is missing the larger picture. The majority of consumers do not have a Vita. I would be surprised if the majority of PlayStation owners had one either. People are playing games on mobile devices because those games are inexpensive, easy to access, and fun. More importantly, a common smartphone has much more utility than a mobile gaming console, and mobile games are neither the sole nor primary reason for the existence of mobile devices. The same goes for consoles. Consoles are computers designed almost exclusively to play games and do not offer nearly the same utility as a standard computer. With the emergence of cloud computing and the convergence of device functionalities, proprietary hardware for gaming consoles, fixed or mobile, will soon be a thing of the past.

Such a phenomenon is entirely feasible in the near future. Nvidia, a leading graphics cards manufacturer, just recently launched NVIDIA Grid, a cloud gaming service. That announcement was the first salvo in decoupling of games from proprietary hardware. It should prove much more significant than debut of the PS4.

Interface

Finally, let’s cast our gaze further into the future with the help of the past. The history of gaming could be measured by how deeply gamers immerse themselves in games. On average, earlier games were simple pick-up games in a two dimensional format. When three dimensional and non-linear games debuted, gamers were given a greater opportunity to explore and immerse themselves in a game designer’s creative vision. To the chagrin of girlfriends worldwide, the next breakthrough in gaming will allow people to immerse themselves further. Such immersion will require gamers to interact with games differently than through a controller and a two dimensional screen creating the illusion of three dimensional space. Games’ space can already occupy reality. Goofy’s Paint and Playhouse, one of Tokyo Disneyland’s most trafficked attractions, is a full three-dimensional environment whose projected surfaces change as multiple players fire virtual paint on the walls and furniture. Virtual reality may become a reality at last with the emergence of promising new technologies such as the Oculus Rift headsets. The Wii demonstrated the appeal of physical methods for controlling games, and Kinect and Move quickly emulated Nintendo’s example. Leap and other companies are pioneering new ways to create a connection between players and games. Specialized, non-proprietary hardware will speed adoption and distribution of these new emerging methods for interfacing with games. The traditional console will impede such innovations.

The console is not yet obsolete. However, a revolution in gaming is near, and it will affect all platforms from mobile devices to virtual reality environments. Cloud-based gaming will eliminate the need for proprietary hardware, and many more factors than enhanced graphics will improve and advance the gaming experience.