During the current abnormally long 7-year console life-cycle, console manufacturers have witnessed a paradigm shift in the games industry. Publishers were caught on a back-footing thanks to iOS and Facebook, forcing a re-allocation of resources towards social and mobile gaming, partly by the emergence of new revenue streams and models, partly by plunging share-prices and shareholder accountability, and partly by the removal of barriers to entry in game development which has lead to rabid competition on mobile. The phoenix-like rise of the indie studio is once again introducing creativity and risk-taking back into an arguably stagnant gaming industry, with a focus on quicker development times and miniscule budgets in comparison to their blockbuster console-cousins. Revenue models have evolved from high-ticket price boxed physical SKUs in retail stores to freemium digital downloads.
The days of fewer, bigger budget, "lower risk" churn of the same intellectual property has seemingly peaked and now appears to have entered a slow decline. The film-industry style business model is no longer without risk in this brave new world, with the rapid decline of EA's The Old Republic and the medium-term downward trend in publisher share prices serving as evidence. The most exciting developments are in the indie space - specifically mobile, social, and web MMO ( mostly Asia ) - which is where venture capital is currently finding it's home.
Many indie developers will be keeping an eye on Sony, Microsoft and Nintendo's next moves in the console space. Will PS4, XB720 and Wii U herald the next era in indie development, or will console makers make the mistake of sticking with outdated, inaccessible business models? Apple succeeded with the AppStore because it made development accessible ( iOS SDK ), and allowed developers direct-to-market distribution. Apple nearly made a critical mistake in banning third-party development tools such as Unity, but thankfully saw the light and made a U-turn. By contrast, the Japanese manufacturers seem the most draconian of all, and most likely to sign their own death certificates with closed SDK's and huge dev-kit costs.
My hopes lie with Microsoft, Apple, and to a much lesser degree initiatives such as Ouya.
Hopefully Microsoft will look beyond XBox Live to the wider indie scene, see the domination in iOS development that Unity has, and tap into the huge pool of existing Unity developers. I will dance naked in the streets the day Unity sells a $1500 XBox720 license in the same accessible form as the iOS, Android and Flash plugins.
Apple is making interesting moves with AppleTV. Mobile development is moving so rapidly that we already have console-quality graphics on iPhones ( Shadowrun, Infinity Blade ). Being able to play them on your 52" TV with an iOS device as the controller is exciting stuff, and will blur the distinction between mobile and console game.
Ouya is a mixed bag. The price target will severely restrict the quality of the GPU, and therefore the visual quality of the games it can play. If Ouya receives critical acclaim, I predict the rapid release of Ouya 2 with a higher price and significantly better GPU, becoming the Android competitor to the Apple TV gaming experience.
PS4 and Wii I fear, are lost causes.
Update 11th June 2013
Oh my. Since I first wrote this blog a lot has changed on the console horizon. With today's E3's reveals, Sony just completely and utterly won my respect for directly coming out and addressing Gamer's concerns. No Always-On DRM. No constraints on used games. A continued show of support for Indies. $399 price point. Sony, totally and utterly awesome guys. I'm totally blown away.