Cloud computing,
enough, it shows the threat streaming can be to the console gaming industry,” says Mr. Smithers. “The company that has to be most worried by this is Sony.”
If true, he argues that the promised next-generation PlayStation takes on an importance that Sony had hoped to avoid. Having beaten Microsoft, it had hoped to enter the next cycle as the console of choice for serious gamers. As it now stands, he says Sony must prove itself in an era when, among other challenges, “gaming power may well lie with cloud servers, not console processors.”
Hirokazu Hamamura, a games analyst at Famitsu Group, agrees that both Nintendo’s and Ubisoft’s Assassin’s Creed experiment and Microsoft’s stated ambitions on cloud gaming are signals that streaming services are poised to expand. But the longer-term threat to consoles, he says, is that a company such as Netflix or Hulu might expand their offering to games. Others see Apple TV or Amazon as likely entrants in a non-console era.
“When that becomes possible, the position of being a platform for home video game consoles will be a different one. The size of platform will be based on how much of a community it has as a content service provider,” says Mr. Hamamura, noting that both Nintendo and Sony have spent years developing extensive in-house games studios.
That may be where releases such as Red Dead Redemption 2 help in prolonging the life of consoles, even as streaming chews into the market. The game, for which fans of the original Red Dead game, Red Dead Redemption, have been waiting for almost a decade, is so lavish that at one point during its production it was the largest single employer of actors in New York. When it launched last month, it sold 17 million copies in 12 days.
Such epics are a big part of the reason consoles have survived: global sales of individual packaged games have, according to industry data, fallen from about 600 million in 2008 to a forecast 290 million this year. But the triple-A titles have their money-generating lives extended by downloadable add-ons and other “service”style income.
For now, the console represents the most cost-effective way to deliver that content at the level of quality its users want at home. Sony’s machine is, underneath all the trappings, a specialist gaming PC whose cost has been distilled to fall within the budgetary reach of an ordinary household. The console makers, meanwhile, have spent decades ensuring that the biggest and best games are designed for their machines.
While streaming poses a threat, Mr. Smithers says consoles have absorbed years of threats from rival technologies and changes in consumer behavior. The extreme global popularity of Fortnite — a lower-quality but intensely addictive game playable on consoles, smartphones and PCs that pits all comers together in a mass battle — is seen by many as a huge threat to consoles. In a big concession in September, Sony began offering a version of Fortnite that allowed PS4 players to compete with users of other devices — a ceding of control over which the company is outwardly sanguine.
During Black Friday sales last month, Sony had its second-best year on record for PS4 console sales in the US. The heavily discounted $199 price tag was a factor, but the presence of must-have games such as Red Dead Redemption 2 also mattered, says Jim Ryan, Sony Interactive Entertainment deputy president.
“Given the history of console cycles, [for the PS4] to have such momentum in the sixth year means there is something going on,” says Mr. Ryan, arguing that Fortnite has been good for his business because it has acted as a gateway to the sort of triple-A games that hook a new generation of gamers on consoles.
“Consoles will still be around. They are an institution for people who grew up with them,” says Evan Amos, the author of The Game Console — a history of home games devices. “They have an ecosystem around them that will not just suddenly go somewhere else. Sitting on a couch, playing Red Dead Redemption 2 on a console and a big TV — that is a pretty unbeatable experience.”