There is a theory in some quarters that the old-school video game console is on its way out. This theory is wrong or, to be kind, premature by years or even decades.
The console, a modified computer system specially designed for use by gamers, replaced the arcade machine as the dominant means of playing and selling video games long ago. The dominant console manufacturers are: Microsoft (maker of the Xbox 360); Nintendo (the GameCube, the Wii, the 3DS); and Sony (the various incarnations of PlayStation). For purposes of brevity, I will here use the word “consoles” in a sense broad enough to include their smaller handheld cousins.
Smartphones and tablets take over their functions. I don’t have to buy Sony’s (NYSE:SNE) hardware to play “Assassin’s Creed,” for example. I can play it on Android, Nokia Symbian, and the Windows Phone 7 platforms as easily. Although some people buy expensive hardware to play games such as Assassin’s Creed, if the hardware enhances the experience, nobody would buy expensive hardware to play “Angry Birds,” where the crudity of the graphics is actually part of the fun.
Jeff Karp, who heads the “EA Play” label of Electronic Arts (NASDAQ: ERTS), a “platform agnostic” game developer, suspects the games market is moving away from the heavier hardware. “After all, how many devices do people want to carry?” he asks.
Whatever may be their own long-term concerns, the major players in the console/handheld market show no signs of abandoning it in a search for greener pastures. Nintendo (OTC: NTDOY) released its 3DS in Japan in February, and in North America, Australia, and Europe in March. This was heavily hyped for its ability to create a three-dimensional effect without the need of glasses or other paraphernalia.
The challenge from proliferating tablets and ever-smarter smart phones comes at an especially bad time for Sony, which just reported a second quarter loss of $191 million, and a 59 percent decline in its operating profit compared to the second quarter 2010. Many of Sony’s recent troubles are earthquake related. Sony has gone the price-cutting route with its latest offering, the PlayStation Vita.
Microsoft’s XBox 360 has just received a shot of market adrenaline from the success of Kinect, the motion-sensing capability it has been offering since December. Microsoft (NASDAQ:MSFT) has more recently released a software development kit for Kinect.
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On the software side, Sony came out with its God of War III in 2010 and is said to be preparing God of War IV, for release in September 2012.
The console will survive the appearance of alternative and less-expensive ways to play simply because these games are absorbing. For the serious fans (addicts might be a better word) they are life-defining. An admirer of Kratos, the protagonist of the “God of War” game series, won’t be satisfied playing the game on his smart phone, any more than an admirer of the Star Wars movies will be satisfied seeing those movies on those same phones. The latter needs the wide screen, the former needs the console.
Hardcore gamers will for a long time demand platforms that do justice to the characters they love, and the roles they want to inhabit.