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The $1.6 billion threat to game consoles
The $1.6 billion threat to game consoles
August 10, 2012 | By Eric Caoili

August 10, 2012 | By Eric Caoili
More: Console/PC, Business/Marketing

Internet-connected TV devices that can play games are positioned to finally break out in the next few years, and traditional game consoles could take a big hit as consumers shift their spending.

Market research firm IHS iSuppli forecasts that worldwide consumer spending on video games played on Smart TVs, internet-enabled Blu-ray players and set-top boxes, and other devices (e.g. a games-enabled Apple TV) will reach $1.6 billion by 2016.

That growth would be immense for a market that's seemed negligible until just recently, and that is expected to reach only $88 million in 2012, but the group claims that the stars are finally beginning to align for connected TV devices.

IHS iSuppli predicts that adoption of these devices will explode thanks to advancements in hardware capabilities, the availability of free-to-access games, and reduced middleware fragmentation.

As smartphones and tablets have proven, several years is more than enough time for new platform to disrupt the game industry. By 2016, the number of connected TV devices around the world could hit 800 million, up from 100 million in 2012.

While that would be great for the companies making these devices, most of which are currently based in Asia (particularly Korea, as is the case with Samsung and LG), the console makers who have ruled consumers' living rooms up until now will likely not appreciate the competition.

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Matt Robb
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How do these people figure the usual Android casual games are going to harm the console industry? These improvements in TVs are only going to impact people who purchased the consoles for their non-gaming uses. It might hit Nintendo to some extent since they've been focusing on lower-tech specs and family-friendly games.

Not to mention I'm not going to buy one TV to play Halo and another TV to play Zelda just because they're made by conflicting companies.

Fabio Macedo
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It may harm in the sense that the console industry may lose a few casual customers, as all consoles have these in their user bases to some extent, not just the Nintendo ones. But I understand your sentiment.

Fret not, this is just one more case of gaming journalism trying desperately to be hip. It's funny because gaming is the only branch of the entertainment industry where I see the press getting hard-ons for non-dedicated devices and foreseeing the death of their own bread and butter. I don't see film critics predicting the end of theaters thanks to Netflix on tablets, for example.

Kris Graft
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When I woke up this morning, I thought, "I wanna do something 'hip' today. Let's publish a story about the internet-connected TV video game market, the hippest market of them all."

Frank Cifaldi
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It's hip to be 16:9.

Joe Wreschnig
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"I don't see film critics predicting the end of theaters thanks to Netflix on tablets, for example."

Been to a video store lately? How about a record store? What's your favorite music radio station?

Netflix on tablets isn't a theater. A box that can play games attached to a TV is a console, even if the box is actually inside the TV, and even if it's not made by Nintendo or Microsoft or Sony.

(Since when do film critics busy themselves with the kind of market wonkery game "critics" do? But the video enthusiast press has been all over the death of various video/film technologies and markets for years.)

Bob Johnson
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Nothing much new here. WE have had similar things like all the plug directly into the console games/controllers that have come out over the years. SAme difference here.

The experience with these things will be 2nd and 3rd tier compared to consoles.

Tom Baird
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That prediction by IHS is a 1700% increase from the current amount in 4 years.
To put that into a little perspective, 4 years ago is around the time the App Store on iOS launched, and one year longer since the release of Farmville (and the explosion of that genre of game on Facebook). If you asked someone 4 years ago to paint a picture of the gaming industry now, you would be VERY lucky to find someone who was even close to accurate on any front.

What happens if Publishers don't back it? What happens when OnLive sweeps in and finds a way to tether a sufficiently powerful smartphone to any TV via Bluetooth? What happens when that VR kit on the main page explodes into the "new thing"? What happens when the tech being announced tomorrow completely changes the console environment to the point we don't need or want smart TVs?

We are currently in an industry where trying to predict ANYTHING that could be big or bust in 4 years is a completely useless endeavor due to the speed of change, and trying to predict monumental, unprecedented growth in a currently somewhat fringe product strikes me as being about as reliable as predicting the End of the World (It's coming in December, right?) .

Ian Uniacke
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Well actually back around 2004/2005 people were predicting the rise of mobile. You can't necessarily predict the exact product, but you can to an extent predict trends.

Tom Baird
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I take issue with their amounts more than the prediction that Smart TVs will be a growing business.

There are FAR too many variables that could stop Smart TVs in their tracks prior to 4 years time, as well as many variables that could cause them to just explode in popularity, and it would be a pretty significant phenomenon if the business grew 17x over in 4 years. That would require it to over double each successive year. While certainly not unprecedented, it would require some very heavy targeting by manufacturers, developers, publishers, and marketting, as well as a healthy dose of luck.

I'm not saying their prediction is impossible, but I'm saying their prediction is about as valuable as anyone elses (which isn't very valuable), due to the massive number of potential disruptors and unforeseen conditions.

People did predict that mobile would be large back then, but there were also a vast many predictions that didn't come true. When looking backwards it's important to note that incorrect predictions are often forcefully forgotten. For example, the massive amount of pessimism surrounding the Wii prior to launch.

Leon T
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"As smartphones and tablets have proven, several years is more than enough time for new platform to disrupt the game industry."

Only they didn't disrupt the gaming industry. They did disrupt the computer (PC/laptop) industry though.

Andy Mussell
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depends on how you look at it, maybe...

edit: sorry for the bad link formatting, not sure if it's possible to either get it all in one line or as an actual link

Maria Jayne
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I was saying to someone a few weeks ago the biggest threat to console gaming is if the tv companies that sell you cable and satelite tv start putting gaming systems inside their reciever boxes.

I don't know how it works in the US, but in the UK we have two major tv providers, Sky and Virgin Tivo, both require an internet connection to access their services, both recievers now contain hard drives for storage. If you could access video games on these recievers by downloading them, plugging a controller into the box and then playing them through Sky or Virgin Tivo you could kill the need for a console.

wes bogdan
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Well the $99 roku 2 does argry birds,pac-man and simple games but until it has @ least nes -ps2 level games all held by console supporting companies i doubt there's much to fear.

I don't have the roku 2 as they stripped it of 5ghz support though the roku-xr and xd/s don't play games or have micro sd card slots i'd be only impressed if there was 5ghz support.

As for apple tv shunting ipads to a hdtv and having 5ghz it's shocking how limited the current box is which lacks : hulu plus,crunchyroll,you tube,mog,radio,play on which only works on pc's is a way to send websitesand stuff on the pc to the roku and play later turns your pc hard drive into a dvr to stream content to roku later.

Bottom line apple people buy apple tv and have less than 1/3rd of what roku can do i can even stream my itunes music over a cloud on my roku's.

I provided that my full southpaw is possible on the next boxes will buy them but if not and there's no guarentee that my modder still does that work so with each new box i'm back to square 1...though i hope ps4 @least continues to function with my custom thrustmaster 3-1 dual trigger and if so i'm golden though if not i'm screwed as i simply can't play the games then.

nicholas ralabate
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Ralph Baer gets snubbed again, for the fifth decade in a row. He called "television games" before he invented Pong!

Seriously though, I've had a little hands-on time with GameTree (Transgaming's smart TV subsidiary) and while the hardware is capable enough and the game selection menu is attractive and accessible, everything still hinges on the controller. If this article was headlined: "The $1.6 billion threat to game consoles: using your television remote as a gamepad"... well, cock-a-doodle-doo.

wes bogdan
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As for changing the console market sony/ms/nintendo could all stream full aaa games over a superfast network and be about as small as a $99 roku 2 with no cd/dvd or bd drives or moving parts. That's where i see gaming consoles headed.

I hope there'd be a few usb 3.0 ports that would allow various attachments like an external hdd or to charge gamepads ala ps3 or 360 and of course a micro sd slot for gamesaves,music or your gamerprofile.

Why would you want a hdd so if ever a psn size crash happened you'd be able to install games on a hdd and play offline-sure it would be more streamlined to just netflix games but even netflix has been unable to reach servers so fade to black.

Ps4,720 and wii u are likely the last physical consoles where we need put media in a box to play.

I just wonder how many are ready for that future.

Charles Doty
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There are two systems on the market that would seem to indicate this trend is still 'coming'. Google TV still hasn't taken off, despite a very inexpensive box, that's widely available (Logitech Revue at $99). The Roku 2, widely available for $99 with a very popular game, is nearly unheard of. It would also be easy to add LG and Samsung Smart TVs and Blu-ray players to the list; I would guess most people aren't even aware they can play games on their TV or Blu-ray players.

I think having one person monopolize the shared family TV would be a problem. Jr. has a TV dedicated to the XBox that he can play as long as he's allowed to.

The one place this could potentially work would be preschool aged children (3-6). The games probably would need to feature licensed characters (Dora, etc.) and possibly allow them to play the games while watching the show; this was a big market on the DS. The problem is the current input devices; remotes would confuse the kids, and are difficult to use (even for an adult). The Roku one is simple, featuring only a directional pads and two primary buttons, like the DS. But, it's missing the direct touch screen and microphone inputs.

Mike Lopez
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Keep wishing for the mass market not to evolve away from your beloved, hard core console AAA titles, people. Keep denying that smart phone mobile gaming with digital distribution has already disrupted console retail as it is more accessible, cheaper and better suited to the short attention spans of the mass market. Keep denying that Freemium is overtaking Premium and Digital Distribution is overtaking retail. Keep denying Apple and Google will have huge incentive to bring their platforms and app stores to internet-connected TV devices - "devices", not just Smart TVs - in the very near future. Apple TV is already 90% of the way there and the recent content deals are set up for the app store to debut in the very near future.

I imagine there will still be a few AAA titles produced for the next, next gen consoles for what will then be a niche of hard core console gamers. Still I have zero doubt that the game platform and distribution landscape will be vastly different in 4 years and my money is on Apple and Google to evolve and disrupt, not Microsoft, Sony, or Nintendo to evolve.

Matt Ployhar
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I've always theorized about the Consoles 'converging' into the SmartTV space. It's feasible to give all the Console MFG's a 'sand-box' to play in simultaneously. The nice thing then is that you wouldn't need ~1-3 different Consoles all dongled off the side of the TV. (Device Creep is an ugly thing in my books). By doing this.. you'd also be changing Consoles into being somthing a little more like a 'TV Channel'.

I doubt it'd ever happen; but fun to fantasize about.

Keep an eye on Xbox & or Sony. They could easily converge a Console into TV's if they so chose.