According to Wedbush Securities analyst Michael Pachter, we’re witnessing “the last real console cycle,” future generations offering nothing but diminishing returns for hardware manufacturers.
At DICE Europe last week, Pachter delivered a presentation entitled “Gaming Life After the Console,” first brought to our attention by a GamesIndustry.biz report and now viewable in full on Variety’s YouTube channel.
Throughout the talk, Pachter expressed his belief that the industry will abandon dedicated gaming consoles in the coming years, citing current sales projections for the PlayStation 4, Xbox One, and Wii U as evidence the market is already beginning to slow down.
“The [present] generation is not going to be bigger than the last generation. We’re going to be about the same,” he said. “The Wii U is going to sell 20 million units compared to 100 million for the Wii. The PS4 will sell 120 to 130 million?that’s great. The Xbox One will sell 100 to 110 [million]?that’s great. Add that up, it’s 260 [million units], maybe, and the last cycle was 270 [million], so we’re not going to be bigger.”
Pachter explained that, in his estimation, the slight tick downward is more significant because it comes in spite of the fact that more people are playing games than ever before?just not necessarily on traditional consoles. That trend will continue into any future hardware generations, he said, ballparking a 50% drop in sales for any future successor to the PS4 or Xbox One.
In Pachter’s vision of the future, that change will be driven by steady growth in the number of the devices consumers buy for non-gaming purposes?tablets and set top boxes in the vein of the Apple TV and Amazon Fire TV?that include CPUs and GPUs powerful enough to handle big-budget titles.
To Pachter, the long-term result is that major publishers like Activision and EA will increasingly shift their business model to offering cross-platform full-game downloads on these multipurpose devices, perhaps with a monthly subscription fee in place of a single upfront purchase. Doing so will allow already huge franchises like Call of Duty and FIFA to earn a greater share of the profits and reach an even wider audience, one that currently skews casual not because of any aversion to meatier gameplay experiences but because of the high entry costs under the current model, he explained.
“There is a niche market of several million people who would never buy a console to play a game but they would absolutely buy [just] the game because they hear it’s great,” Pachter said.
While Pachter makes some compelling points, it’s important to note that prognostication is always a tricky line of work, even for routinely highly rated professional like him.
Exhibit A: In May 2005, Pachter predicted Sony would win the PS3/Xbox 360/Wii generation, relegating the Wii to a measly 10% market share (give or take 5%).
Exhibit B: In March 2013, he said Microsoft’s next console, what we now know as the Xbox One, would cruise to victory thanks to its emphasis on non-gaming features like TV and Skype.
Exhibit C: In 2009, he claimed that the Xbox 360 and PlayStation 3 would, in no uncertain terms, be the last generation of consoles.