malagao: special feature: Consolation Prize: The Game Console Is Dead ...

Gaming consoles have never found their very existence more threatened.
Illustration: Simon Lutrin/Wired

In November, Nintendo will release Wii U, the first update to the groundbreaking motion-controlled gaming console that took the industry by storm in 2006. Pundits and developers presume Sony and Microsoft will quickly follow suit with their own updated game consoles ? also the first in years ? though neither have confirmed it.

Assuming all of these new machines arrive as predicted, they?ll hit store shelves at nearly the exact moment when the venerable game console, and the business model that sustained it, became obsolete.

In the history of videogames, devices designed primarily to play games have dominated more versatile machines by offering more software and a significantly better gaming experience.

The last generation of devices has been bigger than any previous one. Microsoft, Sony and Nintendo combined have moved over 225 million home game consoles since their launches in 2005 and 2006. That?s a stunning success, especially when you consider the consoles were just a Trojan horse for the real business of selling billions of game titles at a wallet-thinning $40 to $60 a pop.

And that?s not all. In predictions about the race to own the living room, disrupt cable television and remake the entire entertainment industry, consoles often figure near the top of the list. Microsoft crows repeatedly that its Xbox platform, though not its biggest money maker, is probably its greatest success since Windows 95 and Office.

Nearly seven years have elapsed since Xbox got an update ? an eternity in hardware manufacturing. In that time, the $67 billion worldwide game business has shifted radically, forcing far-reaching changes in everything from pricing, game design, distribution, audience expectations and devices.

Anticipating the shifting sands for consoles, Microsoft this week unveiled a slate of new features for Xbox that aim to turn it into a new type of entertainment platform with hooks to mobile devices, cheap gaming apps, video streaming and music ? a move that comes even as it is poised to release the latest sequel in its blockbuster Halo franchise. The dual message couldn?t more clear: Consoles are bigger than ever, and they need to change immediately, or die.

???Consoles, in terms of the way that they???ve been operating and failing to evolve, have to change,??? says Mark Kern, head of the game developer Red 5 Studios. ???The console model is hamstrung by the whole box-model mentality, the idea that you pay $60 for a game and you go play.???

The most obvious disruptor has been mobile apps, which offer pretty good game play on cellphones and tablets for one-tenth or less the price of console games, and very often for free. Other trends include the explosion of social gaming, also mostly free, and the resurgence of PC games, which are now typically cheaper and more flexible than console games, tapping into new online distribution platforms that make them far more convenient to purchase.

None of the game industry insiders Wired interviewed for this story were ready to call the age of the consoles well and truly over. Cinematic graphics, intense play, stories with the narrative sweep and character development of a well-crafted novel: These will keep the fans coming, most argued, in smaller numbers, perhaps, but just as devotedly as ever. At the same time, all of the companies they work for are well underway with plans for radical overhaul, signaling a clear understanding of what is coming ? and more to the point, what has already arrived in the market full force.

The videogame console as we???ve always known it actually died a few years ago. It keeled over somewhere around the time that Microsoft redesigned the Xbox 360???s user interface so you had to tab through ?Bing,? ???Home,??? ???Social??? and ???Video??? before you got to the tab marked ???Games.??? Ever since, the big three makers have been bending over backward to show that their boxes aren???t just dumb game players but connected everything-machines that play more Hulu than Halo.

The pressure to evolve even further has become immense now that the quality gap between cheap-or-free games and full-price ones is narrowing. The best iPad games look like middle-of-the-road Xbox 360 games. Your smartphone is quickly getting to the point where its hardware could display good-looking games in 1080p on your television, and it won???t be long before your phone and TV can sync up without cables.

The result: Years from now, 225 million devices will almost certainly be seen as the point at which the console business peaked. Gamers are going elsewhere for their fix. The console???s time at the top of the heap is drawing to an end, and these machines won???t survive without radical change.

???Everybody who is paying attention is seeing the tectonic plates under the game industry shifting pretty dramatically,??? says David Reid of CCP Games, which is bringing a free-to-play shooter called Dust 514 to Sony???s PlayStation 3. ???The core model is eroding.???

Consoles used to do everything best, but those strengths are now being wiped away. Unlike PC games, which may require finicky custom settings, consoles ???just work,??? fans have long pointed out. Well, so does the iPad. Consoles are cheaper than PCs? Not when you factor in the growing disparity in game prices. Consoles have all the good content? Well, if you want Nintendo- or Sony-exclusive games, you???ll need to buy their hardware. But for many gamers, Angry Birds is becoming more attractive than Mario.

The ripple effects, if you can call a giant tsunami a ripple, are already washing over the game industry. These days, makers of high-end console games need to sell more and more copies, at higher and higher prices, because triple-A game development is getting exponentially more expensive. That?s creating sticker shock for fans, who are increasingly being asked to pay far more than the standard $60 to absorb crippling development costs. Game publishing giant Ubisoft???s plan to squeeze $150 out of its most diehard Assassin???s Creed III players on day one is typical: $120 for a ???limited edition??? game package and $30 for a ???season pass??? of downloadable extra game content, to be drip-fed over the next year.

Gaming aficionados will pay up, they say, because the bigger games are of higher quality. But only a handful of developers can now afford to play in this rarefied and risky space, and even for these few, the returns will be smaller. The new leaders in the game, insiders predict, will be those who can shift resources into less ambitious, higher-return products, leaving the future of high-end games in serious doubt over the long haul.

???In game design,??? says Red 5???s Kern, ???the optimal strategy for any game tends to fall to the player known as the min-maxer. A min-maxer quickly finds the advantageous parts of the game and optimizes by dumping all of their gold, all of their skill points into the things that allow them to win the game. And they put nothing into the other stuff.???

???Game companies can???t have it both ways. They???ve got to min-max.???