Have we seen the last generation of game consoles?

March 24, 2009 | N. Evan Van Zelfden | Comments | |

While game publishers might want to phase-out retail boxed products, Colin Sebastian from Lazard Capital Management said that we’re going to see a lot of friction with online distribution.

Sebastian was on the analyst panel at our GamesBeat 2009 conference today in San Francisco. At the panel, Wedbush Morgan’s Michael Pachter also said that recently announced technology OnLive will create value for the consumer, and that Sony, Microsoft, and Nintendo will lose in the equation.

David Cole, of DFC Intelligence, said: “We know that consumers spend a whole lot of money on games.” Currently, he added, two-out-of-three dollars goes to Sony, Microsoft, and Nintendo.

Pachter said the game industry can have 10 percent annual macro growth forever, because much of that will fueled by China and India.

“I actually think we’ve seen the last generation of consoles,” stated Pachter. He predicts that Nintendo will upgrade the Wii to high-definition version.

Microsoft is in a strong enough position to try another generation of Xbox, but Pachter said, “I think the publishers will tell them to pound sand. ‘We haven’t made any money this cycle, and we’re not going to support it.’” Sony, he said, won’t make another console until they make a profit on the Playstation 3. “They will make a profit in 2015.”

Cole notes that Sony have said they have a 10-year plan. “From a financial standpoint, they need that 10yyear plan to work.” But he believes it’ll be closer to 2012.

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  • Miramon
    Considering that mobiles are awful for so many game genres, and that PC gaming has been devastated by piracy and by successful console competition, I'm going to answer "no" to the main question of the article.

    I have no idea why digital distribution would have an impact on consoles vs. other gaming platforms. Or was that quoted comment out of left field, with no relevance to the main topic?

    The reasons that Sony isn't making money with the PS3 have nothing to do with the fundamental viability of consoles, but have more to do with a string of colossally inept decisions made by Sony over the entire life of the project.

    Publishers aren't making money off it partly because development is too hard, and partly because the economics of the industry in general are bad. The difficulty with development may well possibly lead them to tell Sony to "pound sand", at least for a while, but that will be for contingent reasons having to do with PS3 design, not for fundamental reasons that will cause consoles to become permanently non-viable.
  • Miramon
    After reading more about OnLive, I have to concede that if it actually works as advertised to give an in-home local experience with server round trips for every bit of i/o, that would really have a big impact.

    However, to be honest, I doubt it will work as advertised. It's great that they have some magic compression algorithm, but when you compute the bandwidth of the latest and greatest HD with the latest greatest compression, it just seems overwhelming for current networks, and with their ultra-thin-client approach, it seems like there will be no scope at all for local graphics processing.
  • Maximilian sandmann
    Evan,

    Don't forget that once people move to 3dtv (which is actually easy to adapt to from a game perspective) it will probably take quite a while before onlive will have an adequate response in place.

    I also think that sony therefore (deliberately) has the "longest" term strategy of the 3 consoles at the moment, which might play out pretty nice for them in the longer run.