270°

The Death of the Video Game Console Market

At the New York Games Conference this week, Alex St. John CEO of WildTangent, claimed that both Microsoft and Sony are not developing next generation consoles. "Sony is not the company they use to be and the Playstation 3 is a market failure. Sony will never recover the billions they lost on the current generation of consoles. Sony says were not making another for ten years, which is code for we can never make back the billions on we lost on PS3, let alone convince our executives let's make one again. Microsoft has a hole mile deep dug in the middle of Microsoft's Campus to bury the billion dollars of broken Xbox 360's they got. The Xbox business is not a profitable business for them. It's only become incrementally profitable for them after many years, and billions invested..."(Alex St. John CEO of WildTangent) More after the jump.
M3rkMast3r - contributor
Published: 451 days 10 hours ago | News | PlayStation 3 | Xbox 360 | Gaming | PC | Industry News
 
 

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Timesplitter14 - 451 days 17 hours ago
1 -
well.... if they can bring everything to PC I wouldn't be SO sad even if consoles have a charm of their own
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Tempist - 451 days 7 hours ago
1.1 -
Wasn't it just 6 months ago they were calling the death of the PC? So if PCs and Consoles are both going to die... what are we going to have left? Apple? is the iTouch /iPhone going to save gaming?!
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Silver360 - 451 days 7 hours ago
1.2 - this guy just wants to sell his games
so he hates on the console market. It is just spin
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soxfan2005 - 451 days 6 hours ago
1.3 -
The next generation of consoles cannot exist under the same model that it does today. The only certainty is that Nintendo will continue to be extremely successful when they produce the next Wii. If Nintendo follows the same strategy and introduces the Wii 2 in 2010 or 2011, and uses 5 year old technology, then the specs will be something like this: PS3/XBOX 360 quality graphics running at 1080p high definition. Pretty impressive. More impressive is that they will probably sell it for $249 and still make a profit on each unit, because of the reduced cost of the technology needed.
It will be extremely difficult for Microsoft and Sony to introduce new consoles. The leap in graphic quality from PS2/XBOX to PS3/XBOX 360 is nowhere near as much as from PS1 to PS2/XBOX. The leap to the next level will be even less. How will MS and Sony convince consumers to spend $500-$600 on a new console that will provide a barely noticeable upgrade in game quality?
I just don't see a three way race next time around. With the extremely high cost of game development, exclusives, both first and third party, will begin to disappear. Why would a developer produce a game that 20 million people can buy when they can produce a game that is available to 40 million?
One of two things will probably happen next generation. Either MS and Sony join forces and produce a super console to compete with Wii 2, or either MS or Sony will drop out of the hardware race and concentrate on software only. As exclusives disappear, there simply will be no reason to have two extremely expensive systems on the market that play the same games.
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Blasphemy - 451 days 5 hours ago
1.4 -
As long as there is money to be made on licenses fees there will always be more then one in the console market. Sony and Microsoft will never join forces.
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iceman2885 - 451 days 5 hours ago
1.5 - @1.3
There are a couple of holes in your argument.

First of all, if the Nintendo releases a Wii 2 that has the same graphics as ps3/xbox360 and 1080p output in 5 years at $249, what will that be? It will be 7 year old technology copied from ps3 and 360, not actually impressive at all. Furthermore, I imagine in 5 years, when you propose the wii 2 would come out, the 360 and ps3 will probably be about equivalent or lower price. Say what you want but there is a big enough market for people that want to use the most high end technology to give whatever graphical advantage they can, and you can't really predict what the difference in gameplay and graphics from this gen to the next gen, since that is probably about 10 years in the future.

Secondly, you mention why would a company/developer create/release a game to 20 million when they can release it to 40 million...well ask yourself that question right now. There are many more Wii's on the market than their are ps3s or 360s yet all the big games that most gamers want are released for the ps3 and 360...odd.

I'm not saying you don't make some valid points, I'm just saying some of your argument is flawed.
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dale1 - 451 days 13 hours ago
2 -
the market is growing by billions a year and they have no plans to make another console, yep that seems logical.sony will get most of them billions back in the form of bluray and license fees alone, ms on the other hand will not
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gamesR4fun - 451 days 9 hours ago
2.1 -
yeah n if theirs one thing sony does its make great hardware then make better and cheaper. No doubtr in my mind well see the next version b4 10 years up tho they will keep supporting the ps3 for at least ten years like they said...
as for ms cant say but they dont seem to b shy bout throwing good money after bad so we may just see another box yet... lets just hope they get it right and make some money next time lol
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Kratos Spartan - 451 days 8 hours ago
2.2 -
I just hope it's not too soon. Give me one around 2014. The PS3 is too much a technological beast for them to spring a new one on us too early. Give the devs the time to figure this monster out, so they can tap, tap, tap that power that lies within.
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Sarick - 450 days 11 hours ago
2.3 - @gamesR4fun Are you sure about that.
When PS3 was first launched it had nearly full compatibility. After losing money on the chips and having the prices higher they decided to remove the ps2 hardware to save money.

If they make the next ps4 who's to say it'll have any BC?

The PS2 chips aren't easily emulated. With the Cell your talking a lot more hardware will be requared to make the system BC.

The thing I see here is MS, did something using near PC hardware instead of creating a new CPU. This makes it easier to develop for as people have said before. If you look at the early console markets such as the ps1 you'll see how that easy of use helped that product gain marketshare.

If anything the next generation consoles will probably not have as much proprietary hardware in them. Look at how this gen the PS3 and 360 had some hardware derived from PC's. Even better the PS3 had compatibility with standurd memory cards hdd's, wi-fi and usb devices.

I see the next gen consoles becomming more like scaled down PC's with more bang for the buck.

I think bill gates had it right when he said something like.

"Computers don't sell software. Software sells computers"

If you look at it that way a console with great capabilities will only so well if people like the software on it.
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R_1993 - 451 days 10 hours ago
3 - Yeah right
Yeahhhhhh and i also heard a a ton of people say Nintendo failed the gamecube and won't be coming back into this market. I'd like to hear those people tell me the same thing again now.
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jamesrocks3147 - 451 days 10 hours ago
4 - what a load of
F*ckin Cr*p!!!!!!!!!!!!!!!!!!!!!!!!!! ! agree with the microsoft bit tho ;)
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Gam71 - 451 days 9 hours ago
4.1 -
thats funny because i agree about the sony bit.
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cheapndirty - 451 days 7 hours ago
4.2 - Crap?
Are you aware of how a pubicly traded company works? If one of your divisions is losing billions and those billions wipes out the earnings for the year from your other profitable divsions, then why would the shareholders allow more money to spent on yet another conole?

MS lost 2 billion on the first xbox and so for is about 1 billion down on the 360.

Sony has lost 3 billion on the ps3. Even if they make 500 million a year profit it will still take 6 years to break even.
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Blasphemy - 451 days 5 hours ago
4.3 -
Actually Microsoft lost 4 billion on the first Xbox and anywhere from 1-2 billion on the Xbox 360.
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comm13 - 451 days 4 hours ago
4.4 - lol so closed minded
Maybe sony lost billions on PS3 but the division will not get shut down.

1. Costs will be recuperated with future games and licenses

2. PS was crucial to the victory of Blu-Ray which if it is successful, it will bring billions of dollars into the market, and the adoption rate for it is pretty good.
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OOG - 451 days 9 hours ago
5 -
I callbullsh!t

This industry is becoming on the biggest in the world and is growing at a rapid pace..........you really think comanies would give up the profit possibilities........um no
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M3rkMast3r - 451 days 6 hours ago
5.1 -
Profit possibilities do not equal profits.
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thesummerofgeorge - 451 days 1 hour ago
5.2 - What's your point M3?
Or do you have one? So you honestly, or anyone, honestly believes this is Microsoft AND Sony's last console? And all it took was this moron to mention it for everyone to believe it? It's amazing the kind of asinine crap people will just go with cause some faceless knob writes it on the net. The losses from leaving everything these companies have built behind, leaving the market and possible profit open to be raped by anyone who wants to make a console with no major competition, would far exceed any current losses. Believe it or not, as dumb as these companies are sometimes... They might just have a gameplan that just maybe you aren't completely privy to from reading crap articles online.
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poindat - 451 days 9 hours ago
6 -
Sorry, I don't trust the opinion of someone from a company that bogged down my computer with spyware.
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meepmoopmeep - 451 days 9 hours ago
7 -
so, Wii2 next gen only?

weeeeeeeeeeeee!
get it? wee? wii?
forget it,
damn, tough crowd.

:)
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f789790 - 451 days 8 hours ago
7.1 - He didnt mention the Wii
Lets say Microsoft and Sony got out of the console business (which they wont). Nintendo has made a crap load of money and I know there will be a Wii 2. Other companies would see Nintendo's monopoly and make their own consoles to get a share of the money. Consoles will never die out.
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meepmoopmeep - 451 days 8 hours ago
7.2 -
hahaha, yeah i know

Sony & MS make revenue off their other businesses.
they can afford to continue in the console business.

it's nintendo that has to worry if a platform fails since it's their only source of revenue.
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DarkBlood - 451 days 9 hours ago
8 -
i have one thing to say

SONY SONY SOOOOOOOOOOOOOOOOONNNNNNNNNYYY YYYYYYYYYYYYY

lol if you can guess where i got that idea from lol

sony created legend of dragoon so im with them they better stay alive
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Xi - 451 days 5 hours ago
8.1 - that was sega.
And the guy who made it then worked for Xbox japan and made panzer dragoon orta and phantom dust, 2 of the most underrated games last gen.
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Halo3Mgs4 - 451 days 9 hours ago
9 - wow
All this time I thought WildTangent was a virus that infected computers
(it always comes out when you use anitvirus scans)
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f789790 - 451 days 8 hours ago
9.1 - Wildtangent pukes spyware all over your computer
annoying to remove
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FReeDoM4ALL - 451 days 8 hours ago
10 - It's interesting
That they don't mention Nintendo. Are they implying that one company will survive and make a monopoly? No, there will always be competition.

Anyway, Crytek thinks differently if they are plannig for the PS4.
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Hellangelzx - 451 days 8 hours ago
11 - Yeah
I remember reading an article about this about...3 years ago. Someone was claiming sony wasn't going to make another system after the ps3. Yeah before the ps3 was even out.

And they didn't even mention Microsoft's name.

Why would either company back down? Who knows, maybe next generation will be really great for both companies. And they'll make back double what they lost.

All I know is, if that Nintendo is the only company on the market with a system, there will be some sad gamers in the future. At least, how the wii is going now is any indication.
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KingDizzi - 451 days 7 hours ago
12 -
PS1 and PS2 - Each over 100 million units

PS3 - 2 years and 15M units, it wont get to 100M but sure as hell is not failing. How can someone expect a company to not make another console when the first 2 hit over 100M and the other is not even 3 years old?
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dcbronco - 451 days 7 hours ago
13 - I think the anti-console people are crazy.
Microsoft will definitely be back in the next few years. Sony should be back at some point. If Sony is back in the next few years, it will be an upgraded PS3. If later, something new. Microsoft should have something mostly new soon, by 2011.

Sony has to be very careful next time. They are bleeding money and have a huge amount of debt. This Christmas will be everything for them. Sony needs to become profitable in the games division again as soon as possible since most of their divisions are failing right now. They also really need Blu to become profitable this holiday season, though I don't believe it has a chance in hell of doing that. The things that Samsung had said sound like they are looking for some money or discounts from Sony, which would make it harder for Sony to make a profit off of Blu themselves. And Sony doesn't have a choice, they have to give them something. The last thing they need right now is one of their Blu-ray partners backing out. Especially someone as high profile as Samsung.

Microsoft just needs to keep doing what they're doing, although doing it much better would be a huge bonus. They can afford the losses they've had and have started to make some profit. Microsoft will not make back everything they have lost on Xbox with the 360, but they are in a good position for the next generation.
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ForROME - 451 days 7 hours ago
14 -
This is the dumbest thing Ive heard in a while. I gurantee there will be new consoles. They make take a more nintendo approach (and nots forget nintendo isnt following the heard they will make another console) SONY and MS may realize tech is pretty good now just a small 25% increase in power may be enough going forward and just make more storage and increase online things etc Dont be silly there will be another console MS may try to break their digital no drive in their system but they are nto the market leaders they will not always be followed just because they say doesnt make it so. SONY learned their lesson dont price out of market get back to launching at 299 and they will.
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PimpHandStrong - 451 days 7 hours ago
15 - thats funny
1. Never heard of that site! Classic N4G

2. The game industry makes more money then the movies!

i wont read a article from a site called gametopius.com because i have never seen or heard of them!

Sony says were not making another for ten years, which is code for we can never make back the billions on we lost on PS3,

thats a classic

i like when ppl talk about a code! Like the bible code! Its funny
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dcbronco - 451 days 7 hours ago
15.1 - Would you believe him if he said read between the lines.
What he was saying makes sense. Sony saying that was just setting the ground work for a long generation. If Sony doesn't start amking money in the games division soon, it will be a long time before you see another Sony console. Or you'll see an upgraded PS3.

Peoples inability to read between the lines is what makes it so easy to take advantage of them. Look at politics, nothing gets done because people don't call bulls--- when politicians talk in circles. They just keep voting for them.
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M3rkMast3r - 451 days 6 hours ago
15.2 -
Destrutoid and Kotkau where once unknown sites, and at least this site is attending events, and reporting on them, and included audio, to back up their stories.
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robbo918 - 450 days 16 hours ago
15.3 - lol @ dcbronco
Nice how you only dissed on Sony in your "read between the lines" bs. Would that be like when MS spread the cost of the extended warranty over future years to make their X360 look profitable faster? It works both ways. Alex St. John is full of himself and biased. If he wasn't making PC software I might put more weight behind his thoughts.

Let me think here, trust someone who makes spyware infested crap and very little money or 2 companies that have been doing this for years and likely know a little more about their own business?

You just wanted to blast Sony and pretend to be insightful, nice try though. Also does the godly St. John mention that the PS2 is still selling like crazy and is over 120 million. Did it mention that the PS2 is essentially like printing money for Sony? I enjoy how you want to be so enlightened dcbronco but then fail to do so.
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dcbronco - 450 days 8 hours ago
15.4 - @robbo918
Saying that sometimes there are things to read between the lines is not bashing Sony. It's just a fact of life. People say things that have double meanings or are so vague that they have no meaning at all.

Microsoft didn't spread the cost of RRoD over time, they took a billion dollar charge last fiscal year to cover the cost. They did that to make themselves look more profitable later while looking like they lost a lot more money during that year. I believe the extent of the problem will cost well over a billion since the failure rate is far higher than 33% though.

As far as Alex St.John goes, this article was the first time I had ever heard his name that I can recall. But I don't care who he is, But what he said as far as the profitability of the two consoles is correct. I do crazy stuff like read financial reports. If you had read the last few for each company, you'd realize what he said is true. And while the PS2 and PSP make money for Sony, well over a billion a year I believe, Sony's games division lost money every quarter but one. Now if you were capable of reading between those lines, you would realize that that could only mean that the PS3 has lost over a billion. During at least two years over two billion.

So whether it was insight or not, I obviously know a lot more than you. Mainly because I don't substitute fanboy blindness for actual thought. Stop worrying about the companies and pay attention to the facts.

You are the one that has failed.
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robbo918 - 450 days 2 hours ago
15.5 - @dc
The point I made that you apparently missed despite your self proclaimed knowledge levels was that you bashed on Sony but not MS when the St. James article was about both gaming companies. Yet you then call me a fanboy. Nice.

I agree with you on the MS warranty hit, I had read that it was to be spread but since have read that it was taken at once, my honest mistake.

The point you are making I agree with in that the gaming divisions for both companies (MS and Sony) are hurting more than helping. MS is showing profits the last couple of quarters for gaming and Sony is showing signs of profit as well. The point I was making is that both companies are more than just a gaming company and both companies continue to make profits across the board. The Xbox original cost MS over $4 billion in losses yet it made X360. Why would either company not make another generation? They don't depend soley on the gaming facets of their companies. I think the odds are very high that both companies WILL release another generation despite your claims and St. Idiots. The life cycle of the PS1 and PS2 shows that Sony isn't going for the short sprint but rather the long marathon.

Either way I will step up and say I am sorry if my first post was testy. What I said you failed at was neutrality between the systems, but in the spirit of N4G diplomacy I will take that back as well. To each their own and enjoy the rest of your weekend.
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dcbronco - 448 days 18 hours ago
15.6 - @robbo918
Sorry for the fanboy remark. Just so used to them on this site. And most seem to be Sony fanboys. So again I apologize.
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PimpHandStrong - 451 days 7 hours ago
16 - this is game zone
so i wont call you any names!

fuk it

your a fewl

Sony has PS2 PSP PS3!

PS2 is selling very well for being 9 years old!

Trust me! Sony did not say they want a 10 year life span because thats the only way they are going to make a profit!

only a idiot would think that!

History will teach you a thing or two!

now do my a favor

stop reading between the lines because your not smart enough to read in the first place
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Twilightx7 - 451 days 4 hours ago
16.1 -
Not that it matters that much, but PS2 came out in 2000, and it's ALMOST 8 years old, not 9. The other poster was right about the long console lifespan, and you agreed with him but called him an idiot? Your post and it's formatting reek of fanboyism. Take it back over to the Open Zone where you can spout whatever nonsense you want.
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PimpHandStrong - 451 days 1 hour ago
16.2 - yea SO im clear
this is N4G and im not here to debate children!

i have been using N4G for well over a year now and i tried to play the common sense guy

well not no more

when i see stupid sh!t like 360 vs PS3 anything im going to toss gas on the thread!

if you dont like that then hit ignore!

I will not give a hit to a sh!t websties that i have never seen and would never use!

atleast IGN Gameinformer 1UP and a handfull of others have taken the time to not produce pure flamebait!

when i see flaimbait i dont care if im rude or if ppl dont like the tone i set

BLOW ME

PS:
im pissed because i went to one local blockbuster to get a PSN card and they didnt carry them! The Speedway i used to get them where out!

anyway
again

blow me
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dcbronco - 450 days 19 hours ago
16.3 - You're not debating with other children kid.
One day you will grow up and realize that business requires money and just because you brought a system, it doesn't mean the company is rich. Learn to read a financial report and then comment. Sony has money problems. When that is the case, you have to be careful and sometimes that means not doing things you want to do.

Stop pretending to be a pimp and get back on your corner.
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tharealest - 451 days 6 hours ago
17 -
Consoles will always be here noob. Only thing I see now is the death of the 360 and the rise of the PS3.
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bomboclaat_gamer - 451 days ago
17.1 -
u have so much hate for a piece of electronics lol. man u need to grow up
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clearelite - 451 days 6 hours ago
18 - Sony -
invested much money in the PS3 so that it WOULD last 10 years. It cost them over $800 dollars to make each ps3 when they launched and they were selling them at over $200 dollar loss EACH. They obviously had a long term strategy with the ps3 BEFORE it launched, otherwise they wouldn't sell it at a loss. That article = bleh?
19 bgdaddy6780 | 451 days 5 hours ago - comment has been reported as SPAM -
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M3rkMast3r - 451 days 4 hours ago
19.1 -
Whats a copanys, and a restrons? Please Spell Check before you post. Also facts were check and the writer was there, and posted the audio. Also Alex backed up his statements, you may disagree but he did back them up.
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juuken - 451 days 5 hours ago
20 -
I've read some stupid articles...but this one is the stupidest of them all. -__-
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SnakeShady - 451 days 5 hours ago
21 - this guy is crazy
there are a lot of a$$hole in the game industry, Alex ST. John is one of them.
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