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GCDC: Dyack Predicts A One Console Future
by Rene Sickel, Staff
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August 20, 2007
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At his GCDC lecture, Silicon Knights' Denis Dyack presented his case that with an unsustainable current business model, a 'one console future' was not just possible, but probable as early as the 'next round of hardware' -- describing how the shift would be good for both creators and consumers.
Dyack kicked off the session with the wikipedia definition of 'commodification' -- the crucial underlying theory behind where he sees the industry heading -- a move from a 'monopolistic' model of unique, branded products to a 'perfect' market where multiple manufacturers create identical goods.
Said Dyack, "There's always commodification. It always happens," adding that it can either be the desired outcome of one entity in the market, or a completely unintentional outcome that no one actively sought to achieve.
Some related technological examples of commodification at work are cell phones, the printing press, cameras and cinemas, VCRs / DVD players -- all have had significant social influence, and all have caused technological and political change.
Dyack says that certain indicators point to the fact that the industry is at the cusp of a paradigm shift, such as the cost of software surpassing the cost of the hardware, and the industry still following trends established by old business models that no longer hold: christmas release rush, marketing of video games, proprietary hardware, consumer shows.
In today's monopolistic model, three proprietary hardware manufacturers have gone in three different directions: the PS3 with its Cell processor, the Xbox 360 with its 3 CPUs and Xbox Live, and the Wii, with its 'socialized interface hardware.'
In the current business model, first parties establish a market with hardware, while third parties pay a royalty to profit from this model, with first parties recouping their hardware investments through royalties from licenses.
This leads to a number of development issues: fewer games comprising most sales, a hit driven industry, rising costs of development, and in general rising difficulty of being successful.
Dyack says this is leading to an event horizon, a a perceptual threshold where the average consumer won't be able to tell difference in advances in technology, as it already has with fewer perceptible differences between the Xbox 360 and PS3 compared to the Xbox and PS2, but advances themselves rising exponentially.
This too is leading to a number of negative effects: rising development costs and production values rivaling Hollywood, hardware becoming more difficult to develop for, and first parties spending tremendous amounts on R&D that's becoming noticeably harder to distinguish from platform to platform.
Increasingly, says Dyack, it's becoming difficult for hardware manufacturers to get third parties to work exclusively on a certain platform, with significant dollars now paid for exclusive products.
On the other hand, it's becoming harder for third parties themselves, with still no clear market leader this cycle, and "way too many games," according to Dyack -- some 6000 released every year. "There are not enough consumers to play all those games," he added.
And so, said Dyack, because the games were most important, he posited his theory of a single console future, combining Nintendo, Microsoft, Sony, and PCs into a unified gaming standard, with better hardware at lower prices.
Sony, Microsoft, Nintendo, Toshiba, Samsung, Sharp, Dell all could take part in the hardware process, with each making sure they are compatible to games, not the other way around.
The industry would take on universal specifications for hardware and content, with 100 percent market share for games, no first party product approval process, and one-SKU games seeing lower game prices, better products, and lower production costs.
So when might this happen? Dyack says "as early as next round of hardware," with many publishers and developers likely to merge or simply cease to continue in the industry, as the current business model does not seemly likely to be sustainable.
"I think we will have a one console future," proclaimed Dyack. "Commoditization happens in technology. It does not matter if the people want it or not."
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