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Ngmoco's Cousins predicts the death of consoles within 5-10 years
Ngmoco's Cousins predicts the death of consoles within 5-10 years Exclusive
June 26, 2012 | By Brandon Sheffield




Ben Cousins, general manager of Ngmoco, formerly of EA DICE, Sony, and Lionhead, has not been shy about his support of the mobile space, or of freemium. He was the driving force behind EA's free to play Battlefield Heroes, and now Ngmoco's Swedish studio's triple-A iOS title.

At GDC Taipei, Cousins gave a keynote that shared his projections for the five big trends in the game industry across the next 5-10 years. Most interestingly, Cousins outlined how and why he believes freemium and mobile will effectively kill game consoles.

"When I'm talking about mobile, I'm talking about the operating system, not the device," he clarifies. "I believe these operating systems will start to appear in other classes of devices, other than just mobile phones and tablets. In the future I think mobile gaming maybe won't be so mobile, and we may need a new definition for them."

Trend 1: Mobile kills console

"There's a potential for mobile gaming to kill console gaming," he began. "I'm talking about a significant reduction of market share with no chance of return."

There are two ways this can happen -- either people can move from consoles to a new device, or the market can expand without you. An example of the latter might be the social game space, which as exploded beyond the reach of traditional consoles. Already in Japan, just two social and mobile game companies, Gree and DeNA, generate more money than the entirety of the console software industry.

"Your sales drop in relative terms because a new product or a new class of product enters the market, and expands the market so much that your marketshare shrinks," he says. Android and iOS are growing fast, and "Research shows that at least half of these devices are being used as game devices," he says.

In terms of installed base, the Xbox 360 is over 60 million, but iOS devices, even reduced by half to reflect that not all users play games on them, are owned by 160 million people. And as the average monthly payout since launch of app store has rapidly grown, revenue for the traditional packaged game industry is in a steady decline. "The cost of a traditional game company to transition into an online game company is extremely high," he notes. It's better if you "don't have to transform your business, you just start a new company."

Cousins cites the decline of dedicated hardware as a precedent; Blu-ray players, camcorders, GPS systems, mp3 players, point and shoot cameras, and even TV sales are down. Mobile devices serve all these needs, and play games, besides. "I believe consoles will be the next hardware to have a major reduction."

"I believe that sometime during the next console generation, globally, both the revenue and the marketshare for games will be larger in mobile than it is for console," he added. "I believe Microsoft, Sony, and Nintendo won't produce dedicated hardware past the next generation. ... Further, I believe traditional game companies like EA will be purchased by existing digital companies, or close entirely."

Trend 2: Mobile kills PC browser

"I think Facebook is losing its viability as a browser game platform," says Cousins. "This is because Facebook is becoming a mobile platform." In India for instance, 30 percent of Facebook users on mobile only -- they've only ever accessed it on mobile.

Then there's Facebook's close relationship between Zynga. Cousins outlined it like this: Until opening the platform, Facebook got $550 million annually through Facebook credits -- $375 million of that was from Zynga. Zynga accounts for 12 percent of Facebook revenue, and spends $70 million annually on ads in Facebook. Zynga has an exclusivity agreement to use Facebook accounts for games, and in return Facebook has agreed to help Zynga hit growth targets for some titles.

Facebook was a great hope, "But I believe that this special relationship between Zynga and Facebook makes it hard for anyone else to compete in this space," he says. But there's no better platform for browser games than that, so he feels that Facebook will cease to be a viable platform for browser games, and that audience will migrate to mobile.

"I believe that companies relying on revenue from PC browser games will need to compete to mobile or fail," he said. But he also believes core-oriented games like MMOs and FPS titles will remain on PC, because mobile can't yet serve their needs.

Trend 3: Freemium dominates worldwide

"Only a few years ago, the console was the dominant platform in Japan, but now we're seeing a much bigger transition over to mobile," he says, noting DeNA and GREE's market dominance. In Asia, freemium is all, he says. In the western world, it's not quite the case yet. The dominating revenue in the western world is still non-freemium. Even EA admits that free-to-play is an inevitability, he says, noting that EA's push to get into the digital space has only allowed the company to break even, not to thrive.

Cousins believes that in the Western world, revenue from freemium will be bigger than that from full priced packaged packaged and digital goods in the very near future.

Trend 4: 3D graphics become a commodity

The old world was proprietary 3D. Proprietary textures, their own 3D engine. There was no real middleware back then. Fixed business models meant differentiation with graphics. "There were a lot of small studios that didn't find it possible to pay the licensing fees [of existing middleware like Renderware], and were forced to roll their own technology," he says. This was costly and risky, and caused many games to get canceled.

"The new world is much more commoditized," he says, with products like Epic's UDK and Unity, that make the back end of 3D graphics very simple. "Your art assets can come as a commodity as well," he says, noting Unity's asset store and the proliferation of outsourcers. In 5-10 years, Cousins thinks that "the majority of top-grossing games worldwide will be developed on 3rd party engines, using significant pre-built commoditized 3D assets."

Trend 5: Asia rises (again)

In the earlier days of games, "Western game developers, the companies we looked to were all Asian," he says. "These were the guys making the best games in the world."

But in the 2000s Western brands became dominant. "As gamers in the western world, we shifted our focus away from Asia, to hardware and software that was developed in the West," he added. But now Asian companies have made huge investments in Western companies. Like Tencent investing in Riot and Epic. At this point, only Activision is bigger than Nexon, Gree, and DeNA in terms of market cap.

"Four our of five of the world's biggest gaming companies by market cap will be Asian," he predicts. "And I believe an Asian company will buy one or more of the big western game companies, like Activision, EA, or Take-Two."


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