Breaking it Down: Console Evolution

I am likely somewhat biased, but I thought the E3 Xbox briefing was well done. Not only was there a nice mix of hardware and software announcements (with launch dates!), but more clarity was provided on the vision and roadmap for console hardware.

But wait, that’s been the focal point of much hand-wringing and teeth gnashing. Here’s one from Engadget, speculating that Xbox One sales will dry up, because something better will appear next year.

At the macro level, here are the critical take-aways on where the industry is headed:

  1. Expect console hardware to iterate more rapidly.
  2. Expect great developers that make great games to tune for the few “click-stops” of consoles and their respective capabilities, not unlike supporting N and N-1 console generations or cross-platforms, today.
    1. Consoles and PCs are becoming more and more alike, so assets and content should be sharable, but with an extra layer of closer-to-metal API access and specific settings to be tuned for consoles.
    2. Over time, the top-of-line AAA games will raise the min-bar, but expect studios to support N, N-1 and possibly N-2 iterations, to hit the experience-install base sweet spot.
  3. And, like nearly all other industries (TVs, phones, even your toothbrush and home furnishings), potential customers will have a cost-benefit trade-off to make. A novel concept.

For the Xbox family, specifically, the One S is the natural cost and form-factor reduction version of the original One. This time, the deal has been sweetened with additional functionality and hardware (UHD Blu-Ray). The change for next year is that both the One S and Project Scorpio will exist, side-by-side, and unlike compatibility breaks of some previous generations, there won’t be one here.

Some may postpone purchases until next year, for Scorpio, but given the S is incremental and a year earlier than the typical mid-cycle refresh, I doubt there will be significant overall sales cannibalization due to the Scorpio announcement. Instead, the S maintains the new entry-$299 price-point and entices new users with a smaller, nicer-looking console, riding the wave of 4K marketing. There isn’t remotely close to 100% TAM overlap, as some allude to, nor the even more outlandish claim that someone eying an Xbox will now suddenly buy a PS4. Because, why?

Change is challenging for most to accept. So while one might question why console gaming is the anomoly in consumer electronics (recall all those bemoaning that smartphone GPUs were more capable then previous-generation consoles), the fact that it’s about to change is the most anxiety-inducing part.

Leave a Reply

Your email address will not be published. Required fields are marked *