Xbox co-founder and online games advocate Alex St. John has seen the light at the end of the console gaming tunnel and it's not shining on an Xbox 720 or Playstation 4.
"I think we're looking at the last generation of consoles. There's not going to be an Xbox 720 or a PS4, I'll make that bet, not going to happen," announced St. John, the Chief Executive Officer at online games developer and distributor WildTangent.
St. John is not just any industry executive making bold claims on the rise of digital distribution. Having worked at Microsoft, co-creating DirectX and convincing the upper brass to enter the console gaming business, St. John has knowledgeable insight into the future progression of technology.
"I made several observations about the console business and why it would be strategic for Microsoft at that time. What's interesting is that the assumptions that got Microsoft into the game business are also reasons why I think consoles may be at an end," he said.
Consumers are currently trapped in a frame of mind that has them purchasing consoles, something St. John sees changing in the near future as they break the binds of digital right management.
The first is that from a consumer's point of view the console is an enabling game service. That's not correct. A console is a game-disabling experience. The console's job is to prevent you playing games you didn't pay for. The principal reason that Sony and Microsoft get a cut of everybody's games is because they prevent piracy. This allows the publishers to invest more money in a game because they can be confident that it won't get stolen and will have to be paid for at a premium. In a world where that is a driving factor affecting the economics of a game, you need a console. In a world where games are MMOs (massively multiplayer online) or community based that can't be pirated, I don't need a DRM (digital rights management) console any more.
The second major shift is from the relevance of graphics to multiplayer gaming.
"The era of consoles defined by graphics and high-production values is over," he says. "Sony and Microsoft took the bet that prettier graphics would be the huge differentiating feature for their consoles. They were wrong. Everybody expects things to look good, so making it look 10 per cent better doesn't have a big impact on its value. Since that's changed, we now live in an era where community defines the value of a game, not production values. So the community dynamics of an MMO are more valuable to a user than how good the graphics look."
In tune with his statements at Casual Connect last month, St. John says the Wii's reliance on peripherals is similar to how arcades diversified to stay alive once systems matched their graphics and technology. "When consoles came along and matched them for graphic capabilities, it destroyed that differentiator for the arcade business. The only arcade machines you can find left today are ones based on big input controllers which are expensive to put into the home: dance pads, steering wheels, guns," he noted.
When will we see the industry shift to focus on online distribution of games and the burial of consoles? St. John says it'll be when publishers get dollars from their digital distribution ventures.
He explains, "What we get today is publishers saying they'll try it and if they like what they see, they'll give us a lot more. I think it will take a few years for this model to mature with the big publishers but I would expect that eventually the ad-supported PC market will become analogous with the Xbox 360 and the PS3."