This is the extraordinary statement by Sandy Duncan, who is CEO of YoYo Games and also the person responsible for launching and overseeing the European Xbox business on behalf of Microsoft. Sandy Duncan’s quote is below:
"The industry is fundamentally driven by technology. I think dedicated games devices i.e. consoles (and handhelds) will die [out] in the next 5 to 10 years. The business model is very risky and the costs associated with creating new hardware are incredibly high."
While a lot of people in the industry may disagree with this bold statement, its important for the single fact that if someone’s opinion counts on this sort of thing, it's this one. Read the full interview here.
Hardware development costs for gaming consoles, as we saw with the launch of the PS3 are extremely high and the likes of Sony, Nintendo or Microsoft may be waiting years before they recoup their research and development costs. But this has always been the case why is it different now? Well as technology becomes more complex and complicated so does developing it, with an associated greater price and time demand. Hence we might see a diminishing return on the relative improvement of games consoles with the same time and money invested into them, which may mean companies may see a decline in the profits from them. It doesn’t take an economist to see that this isnt a very attractive long term business model. Cost is only half the story though as Duncan says:
"In 5 to 10 years I don’t think you’ll have any box at all under your TV, most of this stuff will be ‘virtualized’ as web services by your content provider."
This is the kind of situation that has been touted for years, one computer controlling everything from your games to your fridge. Other authors have denied the capability of the UK infrastructure to support this kind of arrangement. Very true, for now, but this is an advancement we will inevitably make - faster connections to our home as well as a bigger, better and stronger network backbone. It’s only a matter of time until this happens which makes the 2nd aspect of Duncan’s statement all the more realistic. Why will it happen? Well if the UK wants to keep up with the Scandinavian countries as well as other countries developing super-speed internet connections we have to. Secondly, whoever cracks it first stands to make obscene amounts of money and i’m sure BT will already be making progress with it, at the least. The bandwidth isn’t there yet but it will be.
Is it possible that in 5-10 years time console gaming will be dead? It’s possible but i think the industry is very strong and it’s an entertainment medium that is proven to work and until either of these stops being true there will be money to be made from it and so the games and, hopefully, consoles, will keep on coming. Also lets not forget the living-room-logistics problem of having one box for everything. She wants to watch TV while you want to hit the xbox. The playing habit of a large proportion of gamers, from young adults in the spare room to kids in their bedroom, lend itself to dedicated games devices and its hard to see that changing.