Wednesday, May 26, 2010

Console Post Of The Week: What Happens Next?

I thought it would be interesting this week to take a look at where we might be going from here.

"Here" is the current console generation, and here's what analysts never seem to mention: this generation has been a financial disaster for almost everyone not named "Nintendo" or "Activision."

I took a look at Microsoft's segment reporting by fiscal year from 2003 forward (MS didn't report by segment before then, as far as I can tell). They've lost 5.5 billion dollars in what is now called the "Entertainment and Devices" division. Yes, there are other items included in that division, like Zune, but there's no question that Xbox and Xbox 360 have been big money losers for Microsoft.

Sony? They've lost 2.5 billion dollars on the Playstation family since 2002. Again, they've recently put Playstation into a larger division, but this is still a conservative estimate of their losses.

The gaming software industry in the last five years? There's no question it's net negative as well, even including Activision's substantial profits.

Gaming is the future, but that future apparently doesn't include making money.

I have no idea, at this point, why Microsoft and Sony would ever want to make a new generation of consoles. That's not to say we don't need a new generation--we definitely do to support the open-world games that are so compelling--but who's going to pay for it, exactly? It would be far more profitable (or less punitive) for Microsoft and Sony to ride these consoles all the way into their graves, then just drive off into the sunset.

I think I just went from horses to cars there, but no matter.

If Microsoft does want to create another console (here's hoping), the last thing they should do is be involved with the hardware. Create a joint venture with a company like Samsung to manufacture the hardware, then Microsoft could supply the operating system and the online services.

If they had done that in this generation, they would have made a ton of money. No billion dollar charges for shitty hardware FTW.

Sony has a different problem. They had a compelling reason to make the PS3--to further the adoption of the Blu-ray standard--but what's the incentive for the next generation? Unless gaming is going to massively promote sales of 3D displays (I'm skeptical), what's the point, exactly?

It's not that I didn't personally get my money's worth out of this generation--hell, yes, I did--but the companies making the hardware and making the games certainly haven't.

The software companies, certainly, have responded. EA, Take-Two, and Ubisoft decided to just copy Activision. That's a really, really bad idea, but after they realize it's a bad idea, where do they go from there?

It's been promoted by certain analysts and developers that the future will be "platform agnostic," but that would depend on broadband streaming, and metered or capped broadband seems to be the holy grail for broadband providers.

In all the years I've been writing about gaming, I don't think there's ever been a less clear path to the future than there is now.

Well, except for Nintendo. Their future is paved with gold coins, and if you say anything negative about them, they'll just put a gold coin in their mouth and bite it to prove that it's real gold.

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