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Generation 7.5: From Wii to Kinect and the End of Videogame Consoles
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Generation 7.5: From Wii to Kinect and the End of Videogame Consoles

The Big Three are extending the 7th generation of consoles indefinitely. But is the next generation the final frontier for consoles altogether?

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With the aid of Wikipedia, the People’s Encyclopedia, historians of the videogame industry have defined 7 different generations of all videogame consoles ever produced. These 7 generations somewhat correlate with the ever-strengthening types of technology placed inside of the consoles but this is not always a perfect correlation. More correctly, the generations relate to the intense market competition that defined those eras. Generation 1: Magnavox Odyssey and the PONG clones. Generation 2: Atari 2600 vs. Mattel Intellivision and the other Johnny-come-latelies. Generation 3: Nintendo Entertainment System’s domination after the 1983 videogame market crash. Generation 4: Super Nintendo Entertainment System vs. Sega Genesis. Generation 5: Sony PlayStation dethrones Nintendo 64. Generation 6: Sony PlayStation 2’s domination. Generation 7: Nintendo Wii upsets Microsoft XBox 360 and Sony PlayStation 3.

The generations tend to bleed into each other with no one clear defining break. While Nintendo and Sega fought it out with their 16-bit machines in the early 90s (4th gen), Atari formed its “64-bit” Jaguar and Trip Hawkins developed his multimedia machine of the future, the 3DO (5th gen). But the everlasting need for one-upmanship foretold that another competitive generation would dawn on the horizon. Not being able to compete on one plane, a competitor would raise the technological stakes in order to get the edge on the established hierarchy. Then the established ones—not wanting to look old hat—would play this risky game of catch-up trying their best to one-up the one-upper. And that’s how we got our 5-year tradition of upgrading to newer more deluxe consoles. Just when you were getting used to your well-invested machine, here comes a whole new set of consoles that you’ll ALSO be forced to trade up in another 5 years.

But there’s something different about this current era, Generation 7. Graphical technology hasn’t paid off the dividends it had in the past and the leading console of the era, Wii, runs directly against its competitors’ boasts for high-definition displays. In fact, both the preachers of the HD gospel have adopted Wii’s approach playing catch-up with the leader’s technological edge in motion control (360’s Kinect and PS3’s Move). Usually around this time, the gaming world would be getting ready for a brand new selection of consoles from the big time manufacturers. Microsoft started this current era in 2005 and here we are in 2011 with not a single sign in sight of an XBox 720, PlayStation 4, or Wii R Uss. Instead we get rebirths, remodels, and redesigns of the existing consoles. We hear firm commitments to 10-year plans and support all the way to the year 2015. Heh, you might as well call this Generation 7.5.

And in this uncharted territory, historical market trends can only give you half of the story. The XBox 360 is defying the “conventional wisdom” about natural product decline as it unbelievably jumpstarts its performance in its 5th year on the market. The once-doomed PlayStation 3 is trying its best to realize the analysts’ proclamations that PS3 will do better each year until it is #1. Wii, once the epitome of ‘Sold Out/Out Of Stock,’ continues to frustrate those looking for fulfillment of the 5-year console cycle tradition by merely releasing a new color (Mario Red). This is not a sprint, this is a marathon and long-term strategies are the ones that will pay off the biggest in this competition. It’s almost like this current scene says the first one to move to the next generation loses. Like a bizarre game of Chicken.

Microsoft

Will Microsoft move first? If the current sales trends mean anything, not anytime soon. The new corset-waisted design of the 360 and the introduction of Kinect seem to have given Microsoft’s box a second life. At least in North America, they have been consistently besting Wii in console sales. Even raising the price of XBox Live Points Cards in the middle of the generation, Microsoft has not scared away a significant amount of customers from the platform. Perhaps the 360’s biggest glitch all this time was its shoddily manufactured design that destroyed both itself and customer confidence in what is infamously known as the Red Ring of Death. With that omen out of the way, the sky’s the limit for the 360!

XBox is Microsoft’s best opportunity for expansion as its Windows computer operating system monopoly prepares for its inevitable disruption. Because Microsoft faces so many competitors from all corners willing to undo its Windows empire, it will do whatever’s necessary to bolster its next best successful brand. By dominating America, the biggest market in the world, the 360 will continue to maintain developer support which will feed new games to extend the platform’s life. Microsoft needs America badly since without a handheld platform they have no chance of impressing Japan where handhelds are king. Microsoft’s consoles have always performed poorly there and Japan’s recent natural disaster only makes progress more impossible. In Europe and the other smaller markets of the world, the 360 still falls behind the PS3 and Wii overall. But not until they lose grip of the American market will you see Microsoft raise stakes. With all the billions of dollars they have invested in the XBoxes the past decade, it is in their best interest to make the platform successful in all aspects—especially the financial one. Time makes sure they make good on that finance.

Sony

Will Sony move first? Not so clear. Though in less dramatic fashion than that exaggeration-prone chart from the IDC (International Data Corporation), the PS3 has INDEED improved in sales each year it has been on the market. Since 2009, it has been trading blows with Wii in Japan and is getting closer to Wii’s yearly home console lead every year. In Europe and friends, the story is exactly the same with the PS3 taking the fight to Wii since 2009 and getting closer to Wii’s yearly home console lead. America—and its direct rival the 360—is the PS3’s hangup. This generation has been defined by the 360 undercutting the PS3’s every move even before launch. But what if PS3 makes that one last cut—that price cut—and cuts in on the 360’s American turf?

Getting rid of the XBox 360 is the PS3’s best chance of holding onto that professed 10-year plan. With its HD rival out of the way, it gets all of that developer support solely to itself and can better prepare for the next generation jump. No forced hand situations where crushing competition inspires desperate moves. Sony would be able to repair the financial destruction caused from its fall from glory and ease into the next generation with more control over its destiny. However, if they can’t stop the 360 and leverage its Japanese and European strength into worldwide advantage, Sony may be the first to Chicken out. Appearing as the 360’s sidekick does the PS3 no favors and the earlier it eliminates this perception the better. In this universe all things must come to an end and there’s no exception on console generations. The period of natural decline may be delayed this generation but it is inevitable. One day it won’t matter if the PS3 finally outdid the 360 in America once Generation 8 emerges. In worldwide yearly totals, the PS3 has beaten the 360 since 2009 but not until it does it in America can it rest easy.

Nintendo

Will Nintendo move first? Many expect them to. Wii while still the leader is the only console to erode sales in all major markets each year since 2008. Now those were record-setting heights to fall from, sure, but Wii is still gradually falling. Unlike the other 2 competitors, Nintendo has never made any firm commitments to 10-year plans. In their trademark cageyness, they remark that the public will only see Wii’s successor “when we run out of ideas” with Wii. And as they say the timing of that release may be anywhere from 2012 to even 2017! But tech bugaboos insist that Wii’s graphical ability will force Nintendo to Chicken out first. They say that Wii’s outdated tech got away with murder in its first years but it can’t contend with the HD Twins in the long run. Especially now that they have motion control tech too.

However, Wii has proven this entire generation that high-definition graphical flair doesn’t really matter. Proved it so well that its competitors are reluctant to advance to the next-generation in the first place. Also, Wii hasn’t undergone any rebirths, remodels, or redesigns like the others. It only gives you new colors like black and red. Wii didn’t go HD like everyone wanted but 360 and PS3 went motion control like everyone expected. In its nearly 4 ½ year existence, Wii has only had one price cut with one permanent value addition in the Wii Sports Resort pack-in. The 360 and PS3 have had numerous price cuts and value adds in their lifetimes. And Wii has proved quite well how they can get along without significant quality 3rd party developer support. That lack of support prevents them from fully obtaining the role of “Everybody’s Console” but they have persevered in spite of it. No, what hurts Wii most is the lack of support from the 1st party, Nintendo themselves. When Nintendo gives Wii its proper attention, the console thrives. When they don’t, it runs on fumes.

Wii is still selling strong enough to outdo the other two despite its maker’s overall lack of attention the past 2 years. Neither 360’s Kinect nor PS3’s Move have eliminated Wii as a purchase yet. If it can sell like this running on fumes, then imagine what it can do with some gas in the tank. And while predicting Nintendo’s next move is an exercise in frustration, what if they TOO go the remodel route should sales flatline between now and next year? Besides they haven’t even gotten Wii’s price to that super mass market level of under $200 (which usually causes massive sales). While the 360 and PS3 have been steadily improving, they are not the leader yet. Like both competitors have already shown, Wii has the potential to jumpstart itself mid-generation and improve over last year’s performance. In this aspect, it’s solely the House of Mario’s whim to make that next-gen jump.

But…what if there are no more generations to jump to? What if this is the last generation of consoles? Or maybe Generation 8 is already here only started by the not-so-usual suspects? Don’t know. You begin to get a twilight feeling when observing this current period of time. The OnLive Microconsole TV Adapter delivers an on-demand gaming service to your television. Cloud computing becomes cloud gaming and the actual gaming content is stored in a mysterious ether of computer servers. Those servant computers spray this gaming mist into your TVs (among many other devices) creating the console with no form. An ethereal console of vapors that if successful could render the solid consoles obsolete. Is this the next generation or the end of generations?

Apple’s worming their way into the TV set by way of their digital AV adapter effectively projecting what’s on iPods, iPhones, and iPads to your boob tubes. That includes games and what you would have is effectively a portable console that doubles as a home console. If people become comfortable with Apple’s gadgets gaming on their TV sets, then where does that leave the console makers? iPods have already infiltrated stereo systems shoveling the CD player into the grave with the cassette player and 8-track player. Does such a small portable device have the power to end the era of consoles as we know it?

In the videogame universe, what happens in Japan soon spreads to the rest of the world. Handheld consoles became the primary systems over home consoles in Japan within this generation. As handheld power gets more comparable to home console power, it could do the same to home consoles as home consoles did to arcades when they reached a certain plane of power. Do the once-considered secondary handhelds represent the beginning of Generation 8 themselves? Is that why Apple and the Androids of Google are such an important threat to the future of console business? Does that explain the emergence of Nintendo’s 3DS, Sony’s NGP (Next-Generation Portable), and Sony Ericsson’s Xperia Play? Nintendo, the invincible king of handhelds, seems especially focused on protecting their hallowed unsoiled turf.

Apple’s retail disruption attack (through the cheapo App Store) forced Nintendo’s hand making them cut away from the still-popular DS to create the defensive 3DS. Faced with a more agile competitor than ever before, Nintendo refused to be caught flat-footed waiting it out in their usual cagey manner. The N’s business model is built upon the reciprocal nature of their handheld and home console arms. When one falters, the other one props it up. When both succeed, it’s a Phenomenon! But take out Nintendo’s handheld strength when handhelds are seemingly arriving as primary platforms and that’s a declaration of WAR! It’s no surprise at all that Nintendo focuses on Apple and the rest of the smartphone gaming bunch through their 3D portable marvel.

DS sales will overlap 3DS sales for at least the next 2 years but the 3DS shows that Nintendo is not above cutting a hot system short in the face of special market circumstances. While Apple tries to shake down Nintendo’s handheld relevance to the core, imagine if OnLive’s cloud gaming service materializes into more than a dream. On both ends Nintendo would be faced with competitors that could disrupt their entire business model. Nintendo, Sony, and Microsoft fight each other with swords but Apple and OnLive fight with mustard gas. Blades won’t cut it in a gas fight. Microsoft and Sony might not be able to make Nintendo Chicken out but disruption can surely move Nintendo. It can move them all. A new competition may be on its way but if the established can hold their ground then in this generation they will stay.

Welcome to Generation 7.5! The twilight before the dawn of a new era. While Nintendo, Sony, and Microsoft remain in this holding pattern trying to fend off each other and potential outside competition, customers will get the most out of their videogaming purchases. And developers will maximize the potential of the platforms. Good riddance to the 5-year console cycle! It was a bad tradition anyway. How can these companies justify us re-investing all of this money into their machines every half-decade? Not many people buy a new stereo system or a new living room set every 5 years. Who buys new refrigerators or washing machines every 5 years? It should be no different with videogame consoles. As far as I’m concerned the next generation can wait.

About the Author: John Lucas