Out of the Box: When Will the Gaming Console Biz Sunset?

Gaming consoles are dead. Long live gaming consoles!

For more than two decades, it’s been a regular topic of conversation: When might gaming consoles, the dedicated hardware that has been the core of the gaming biz, become obsolete — and be replaced by general-purpose platforms like PCs and smartphones? The debate has been stoked by the rise of cloud computing and mobile gaming, alongside dips in sales of the latest generations of Microsoft, Sony PlayStation and Nintendo devices.

Questions about the longevity of the console model are back. Among the factors driving the conversation are a drop-off in sales of Nintendo’s Switch, which debuted in 2017, amid a drawn-out wait for the reveal of its successor. After Microsoft made a new round of layoffs, cutting its gaming division workforce by 3%, it’s readying a rollout of Xbox Series X and S consoles with scaled-back features and discounted prices this holiday season.

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So far, Sony’s PlayStation has advanced the furthest in the latest console war, with the Sept. 10 reveal of the hardcore-gamer-focused PS5 Pro console, which will go on sale Nov. 7. But the news was met with groans over the hefty $699 price tag for a device without a disc drive or a stand. And the company’s strategy has received mixed reviews following the botched launch of “Concord” — with industry analysts and fans alleging the game was set up to fail with a bare-bones marketing campaign — and the more favorable debut of “Astro Bot.”

The upshot? The death knell for consoles isn’t nigh, according to Joost van Dreunen, a gaming industry professor at NYU Stern School of Business. “There’s always this imminent, existential threat around the console, and it just historically doesn’t happen that way at all,” says van Dreunen.

That said, just because the gaming console business isn’t going in the ground today doesn’t mean it has a healthy life ahead. Over the past decade, console makers haven’t grown their aggregate user base beyond about 250 million people, while the rest of the industry has experienced a growth spurt, van Dreunen notes.

It will be many years — at least a decade — be- fore consoles wink out of existence, says one top talent agent who is close to major developers and publishers. Google tried to launch a game business that eschewed consoles with its failed cloud gaming service Stadia; that was a “great product, but too early for its time,” the agent says.

For developers, an ongoing frustration with consoles has been the wait for the next iterations of the big platforms. The makers of the dominant consoles — Xbox, PlayStation and Nintendo — don’t like the lulls in game releases that occur between console launches any more than the developers and studios do. But when a console does debut, it can provide a significant boost for sales of titles created specifically for the new box.

With their proprietary platforms, console manufacturers have been able to build strong brand loyalty. Much of the identity for gamers has been based on which system they prefer; that also has dictated what games they can purchase and play.

To some regulators, that dynamic has looked like a strategy to lock in consumers. And Microsoft, as part of getting approval for its massive takeover of Activision Blizzard, has promised to release its own games on rivals’ console platforms. For example, Xbox plans to launch the much-anticipated Bethesda Game Studios title “Indiana Jones and the Great Circle” in December before rolling it out on PS5 next spring.

Other publishers have steered clear of console-specific releases to maximize their potential user base. Warner Bros. Games’ “Harry Potter: Quidditch Champions,” for example, launched Sept. 3 on multiple platforms.

If the industry shifts to giving major titles cross-platform releases, that stands to hurt console sales and potentially hasten their demise. NYU’s van Dreunen predicts a decline in the market share for consoles, but adds: “There will always be a subset of die-hard people that just want to have dedicated, high-definition gaming hardware.”