Microsoft and Sony will not make another console, predicts Alex St. John. The CEO and founder of WildTangent, and former Microsoft game evangelist, forecasted the death of the video game console as we know it in a debate, titled "Is the Console Entertainment the Hub of the Future or Fighting to Stay Alive?" at the New York Games Conference.
St John's opponents in the debate (which was carried out in a formalized format) were Justin Townsend, CEO and co-founder of IGA Worldwide and Robert Stevenson, vice president of worldwide publishing at Atari Group, who both proposed that the video game console is and will continue to be the hub of entertainment.
Alongside St. John defending a shift toward using PCs as the electronic powerhouse in the living room, was John Welch, CEO and co-founder of PlayFirst. Mike Vorhaus, president of Magid Advisors, moderated the debate.
St. John claims that Sony has announced it will not make a new console for 10 years. He also says that when asking representatives at Sony and Microsoft who is the head of the next console development, they will not name a name.
The major reason neither Sony nor Microsoft will make another console, according to St. John, is because the business does not make financial sense. It's not news to anyone in the game industry that current generation hardware is sold at a loss to the company.
And at Microsoft, that business model is unlikely to float any longer now that Bill Gates has retired and Steve Ballmer -- whom St. John calls "a money guy" -- is leading the company. Consoles just aren't profitable, he says, and the motive to repeat those failures just isn't there.
On the other hand, Townsend and Stevenson argue that the install base is already there. With millions of Xbox 360s and PlayStation 3s already hooked up in people's homes, it already is an immovable element of the modern living room. Game consoles will drive the high-definition entertainment experience, says Stevenson.
One of Townsend's points is that a consumer is able to put together a fairly grand entertainment set-up on about $1,500 with a large screen, HD television set, a handful of cables, and a modern game console.
On other hand, to have a high-functioning computer, a consumer needs to spend at least $1,000, and then $1,000 every year thereafter to upgrade and maintain it.
Stevenson added that the difference between PCs and game consoles is, "A console doesn't need to be connected to be very powerful... For the PC, a lot of what people are doing these days relies on connectivity."
John Welch, St. John's proponent in the debate, pointed to another important building block: developers. Welch previously worked on the Dreamcast network, and while doing so, read and studied how Sony, which was historically an electronics company, became a successful force in the video game business.
What he found was that Sony courted great developers. The developers then provided great content, and that's what made the business successful.
Welch says there is value in having independent developers make innovative software. Looking forward, there's more room for those kinds of developers to succeed in the online and PC space than in the console space, he says.
Welch's assertion seems, at first glance, to overlook initiatives such as the XNA Creator's Club or Xbox Live Arcade. But, he says, no one buys an Xbox 360 to play Geometry Wars or Uno.
Stevenson still maintains that no other device is as well suited to provided high-def experiences as modern game consoles. The quality of the experience is unparalleled.
But St. John says consumers care less and less about graphics; graphics are not what's driving the user experience. The larger user experience is driven by social connectivity, but also other forms of entertainment, like playing music, and watching television programming and film.
"Nobody buys a console to play music. Nobody buys a console to watch movies. The only reason people buy a console is to play God of War," says St. John.
As long as those other experiences are not being provided by consoles, consumers will not buy them, he says. All the biggest movements have been online, and community-based, and says St. John, "the console doesn't add any value in that world."
The outlier in the debate was the Nintendo Wii. Stevenson and Townsend say the success of the Wii is evidence that game consoles are not only thriving, but that they are adapting to the marketplace.
St. John and Welch, on the other hand, see Nintendo as opting out of the console race. "It took five-year old hardware and innovated on the input device," says St. John.
When asked if St. John thought Nintendo would make another console in the future, he answered he wouldn't be surprised if it did.
The New York Games Conference is taking place in lower Manhattan September 25 and 26.