<\/p>\n
Gaming hardware has never been a moneymaker for companies that make it, says former Sega of America president and former Microsoft gaming corporate VP Peter Moore. It\u2019s a means to an end, a way to get as many people as possible into a content spending ecosystem for as long as possible. Each new generation, console manufacturers go through excruciating discussions in which they estimate what the maximum amount people might pay for consoles is, how many games they might buy, what revenue they might make on DLC and microtransactions, how much advertising will cost, and how much the console itself will cost to make. All those numbers smashed together, plus a lot more, result in the final price of a console.<\/span><\/p>\n The trouble is, that last bit, the amount a console will cost to make, is skyrocketing thanks to the AI boom. AI companies are ordering out more chips than the games industry could ever hope to ask for, sucking up all the inventory for years out, and sending the people in the backrooms making these console pricing discussions into a spiral. \u201cChips are now priceless,\u201d Moore says. \u201cThese are gems.\u201d<\/span><\/p>\n I spoke to Peter Moore and former Sony Interactive Entertainment America CEO Shawn Layden recently, initially with an intent to focus on the rising price of game hardware, though the news cycle led me to ask Layden specifically about a few other hot topics as well. I wanted their takes, as former leadership of companies producing video game hardware, on what the heck is going on with consoles now, particularly with regards to rising prices and growing discussions about gaming potentially becoming a luxury hobby. And while they had very different perspectives on the specifics, they both agreed that gaming hardware companies have a hell of a job ahead of them in getting consumer buy-in on the next generation, whatever it turns out to be.<\/span><\/p>\n \u201c[Everyone] should be afraid of the thousand-dollar console,\u201d Layden said. \u201cThat\u2019s a whole lot of money. And particularly when a new console launches, you\u2019re not going to have a lot of games for it. You can have anywhere from maybe six to 12 that\u2019ll be out there in that launch window. And if you put a four-digit price tag on the hardware against that, I think you really slow the adoption curve tremendously.\u201d<\/span><\/p>\n Layden and Moore gave me very, very different answers on what they thought big hardware manufacturers like Sony and Xbox needed to do to keep gamers on board with increasingly expensive gaming consoles. But both their answers held a common theme: innovation. And not just as a buzzword. Something, they both said, <\/span>must<\/span> change drastically, or the gaming audience will find some other way to play games, one that doesn\u2019t involve a box under the TV.<\/span><\/p>\n Layden believes the change needs to come at the software level. We chatted about the history of PlayStation hardware, and its innovations and price increases over the years. For a long time, Layden says, there was a somewhat mythical $399 price point for hardware. \u201cYou can\u2019t sell a game machine unless it\u2019s $399,\u201d he said, remembering the mess Sony ended up dealing with when it announced a $600 PS3. The $399 console worked for a long time because it was affordable enough for buyers, and the improvements between console generations were significant enough to justify the cost.\u00a0<\/span><\/p>\n But even as consoles get more expensive, the leap from generation to generation is getting smaller and smaller. \u201cI mean really, how much more ray tracing can you put in there?\u201d he said. \u201cAnd will my eyes actually see 120 frames per second?\u201d<\/span><\/p>\n \u00a0<\/p>\n How much more ray tracing can you put in there? <\/p>\n \u00a0<\/p>\n So if a hypothetical (and it is hypothetical, Layden hasn\u2019t been at Sony since 2019) PS6 is going to be largely indistinguishable from a PS5, then what\u2019s left to sell buyers on a wildly expensive new box? For him, it\u2019s got to be software. And the current direction of game design isn\u2019t cutting it.<\/span><\/p>\n \u201cI think we\u2019re already kind of limiting our reach just because of the games we\u2019re building now. I mean, variety and range seem to be narrowing. Most games are falling into a standard set of buckets. It\u2019s a zombie apocalypse game, or it\u2019s a space marine game, or it\u2019s guys with really long swords and not much armor and dragons. So, you see those categories and coming around that, of course, <\/span>Grand Theft Auto<\/span> is going to be like an asteroid piercing the atmosphere and hitting the gaming universe with great force and power.<\/span><\/p>\n \u201cBut there are a lot of people in the world who really don\u2019t care about <\/span>Grand Theft Auto<\/span>, the non-gaming community. We talk about how big we are, $220 billion, $250 billion industry, but our social impact is the reverse. Everybody has a favorite song. That\u2019s probably the least revenue-generating entertainment category, music, compared to gaming and film and television. But yet it has the widest impact. And so gaming, it\u2019s huge on the revenue side of things, but it\u2019s a very select group that are doing it. We\u2019re getting more money from the same people all the time and not necessarily bringing in new people into the experience. And if these people who aren\u2019t in the gaming experience have already said \u2018we don\u2019t care about <\/span>Call of Duty<\/span>, we don\u2019t care about <\/span>Grand Theft Auto<\/span>, we don\u2019t care about <\/span>Gran Turismo<\/span>,\u2019 doing more of those same games is obviously not going to appeal to those people either.\u201d<\/span><\/p>\n Some of the issue, he thinks, actually comes from difficulties with that old chestnut, discoverability. Walking into a brick-and-mortar store and having an employee recommend a game to you is becoming an increasingly rare experience and is about to become even more rare as physical discs phase out. He also recalls the popular DVD player addition to the PS2, which made that console appealing or justifiable to buyers who might not have gone for it otherwise.<\/span><\/p>\n But Layden is adamant that the main issue at hand here is creativity. \u201cIf we just close ranks, we just make the same kind of shooters we\u2019ve always been making and appeal to that base user for what they want, yeah, we\u2019ll be all right, but we won\u2019t get any bigger. We won\u2019t bring any more people into the tent. And that\u2019s probably bad.<\/span><\/p>\n \u201c\u2026We need to bring out more games for more people, which means actually you have to have more people making games and in different places and different experiences. I want to find out what games from Uruguay look like and what kind of game designers we have in Bulgaria.\u201d<\/span><\/p>\n Moore came at the innovation idea from a slightly different angle. He thinks the necessary change lies in business models <\/span>rather than in software development. One possible path to that is bundling in services to tie users to a specific ecosystem, like what Sega tried to do in the late \u201890s by offering $200 rebates on a Dreamcast with a two-year SegaNet contract.<\/span><\/p>\n It didn\u2019t work then for a lot of different reasons, but he thinks improved technology would help similar models work now.<\/span><\/p>\n \u201cWe learned how gamers are very savvy at working the system and disappearing on us once they got their Dreamcast\u2026It\u2019s like printer ink, right? HP and these guys, Epson, you know, they\u2019ll sell you a $199 printer and then you\u2019re spending $70 every time you need ink. And that\u2019s where the money is. And so this classic, they call it razors and blades model, applies here and may apply to consoles if the threshold of paying is such that people go, \u2018I just can\u2019t afford it anymore.\u2019\u201d<\/span><\/p>\n \u201cWe did this 26 years ago at Sega\u2026and we figured out how you can justify putting a console in somebody\u2019s home in those days. Theoretically, it was very much that we\u2019re going to block the other guy. We\u2019ve got you and we\u2019ve got you for a number of years. And you\u2019re going to buy a lot of games as a result. It didn\u2019t work out. But I think that\u2019s probably what the hardware manufacturers are noodling right now is, the cost of making this stuff is now getting ridiculous. We can\u2019t compete. We can\u2019t even get supply for what we need because the chip manufacturers are fueling artificial intelligence demand. And they\u2019re looking at [consumers] and probably say, \u2018We can\u2019t make enough profit on you.\u2019\u201d<\/span><\/p>\n \u00a0<\/p>\n \u201cEvery generation, the last two or three generations, we\u2019ve all said, \u2018Is this the last console generation? Do we need a dedicated piece of hardware between us, the television and our controller?\u2019 And the answer so far has always been, yes, we do. <\/p>\n \u00a0<\/p>\n With that, Moore took it further. Hardware manufacturers, he said, know that they\u2019re not going to make money on the hardware in most cases. They make money on software. As a result, he believes that if these companies think they can get away from making hardware entirely while preserving their ecosystem, they\u2019ll do it.\u00a0<\/span><\/p>\n \u201cEvery generation, the last two or three generations, we\u2019ve all said, \u2018Is this the last console generation? Do we need a dedicated piece of hardware between us, the television and our controller?\u2019 And the answer so far has always been, yes, we do. But I\u2019ve always said since I got in the industry in my Sega days, eventually you\u2019ll just have a chip in the TV that will allow you to Netflix-style look at all the games that are available right now and how many people are playing and you\u2019ll jump in. And do you need something between that experience on your screen and your controller? The lag and latency will be close to zero. And so off you go.\u201d<\/span><\/p>\n But at the same time, if hardware companies can\u2019t get to that technology in time, Moore believes that gamers will solve the problem for them by simply abandoning consoles en masse. If PlayStation and Xbox can\u2019t get it together, gaming will persist\u2026without them.<\/span><\/p>\n \u201cI think this is a real test for the validity of a video game console,\u201d Moore said. \u201cEither technology will solve the problem or the gamer will solve the problem by saying, \u2018I can\u2019t afford 800 bucks for a console. I will play on my PC. Maybe figure out ways of streaming the game to my 4K TV. If I don\u2019t like to use a keyboard and a mouse, then I can get a controller that will work and off I go.\u2019 And the PC becomes your console. I think that is the challenge. Gamers will always find ways to play games.\u201d<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Gaming hardware has never been a moneymaker for companies that make it, says former Sega of America president and former Microsoft gaming corporate VP Peter Moore. It\u2019s a means to an end, a way to get as many people as possible into a content spending ecosystem for as long as possible. Each new generation, console<\/p>\n","protected":false},"author":1,"featured_media":10173,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[33],"tags":[3955,9335,4639,9336,364,5557],"class_list":{"0":"post-10172","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-console-gaming","8":"tag-consoles","9":"tag-exsony","10":"tag-heads","11":"tag-innovate","12":"tag-sega","13":"tag-survive"},"_links":{"self":[{"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/posts\/10172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/comments?post=10172"}],"version-history":[{"count":0,"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/posts\/10172\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/media\/10173"}],"wp:attachment":[{"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/media?parent=10172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/categories?post=10172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/beteja.com\/index.php\/wp-json\/wp\/v2\/tags?post=10172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Just add more ray tracing<\/h2>\n
The Next Last Console Generation<\/h2>\n