Are we facing a real console crisis?

Games are becoming more expensive and taking longer to develop, while console sales are falling and PCs are becoming more popular. Are we facing a disaster?

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If we go back to the generation that started with the Dreamcast, Wikipedia shows that about 210 million consoles were sold (Dreamcast, PlayStation 2, Gamecube and Xbox) - further boosted by 235 million sold Nintendo DS and PSP. The following generation, this grew substantially to 273 million consoles (Xbox 360, PlayStation 3 and Wii), which is the largest generation ever in terms of console hardware. Perhaps even the best in terms of games, prices and how the market worked - but that's another story.

The last generation (Wii U, PlayStation 4 and Xbox One) was much tougher though and only 189 million consoles were sold. Perhaps this coincided with the emergence of the PC as a hugely popular format that, towards the end of the era, was a standard for gaming, which Microsoft in particular, but also Sony gradually, began to support with its exclusives. The generation was also tough for portable formats and the PS Vita became a flop and the Nintendo 3DS became Nintendo's least sold portable format ever, even less than the Game Boy Advance, which was replaced by the Nintendo DS after only three years on the market. But despite that, some 90 million PS Vita and Nintendo 3DS were sold.

Are we facing a real console crisis?Are we facing a real console crisis?
Best generation ever? Quite possibly, actually.

The next generation, the current one, will be harder to quantify though, as the Switch is a hybrid console that has captured Nintendo's portable audience while also functioning as a fixed console. Including it, around 212 million consoles have been sold, while the PlayStation 5 and Xbox Series S/X will undoubtedly sell many millions more. So, at present, around 22 million more consoles have been sold than the previous generation, but as I said, we also had 90 million portable units.

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My point is that it is difficult to argue that sales of video game hardware is increasing. If anything, it seems to be falling, and if we compare it to just PlayStation and Xbox - both of which get roughly the same games, while Switch is a bit on the outside with a largely separate offering - it becomes even clearer how growth is lacking. Then we go from 179 million (PS2/Xbox) to 172 million (PS3/X360) and 175 million last generation to around 71 million today, where above all Xbox Series S/X but also PlayStation 5 is behind its predecessor.

Are we facing a real console crisis?
Microsoft's Xbox Series X is lagging well behind its predecessor in terms of sales, but the PlayStation 5 is also lagging behind.

Now there are more and more reports from several parts of the world that things are not quite right with console sales. The fact that Nintendo is slowing down is perhaps not so strange considering that "everyone" has a Switch that is also not getting any new games anymore, while a new device is officially waiting around the corner. But the plug has largely been pulled on Xbox sales, while Microsoft seems to have great difficulty communicating a new, clear strategy, and explaining how this benefits gamers, which feels all the more alarming. And Sony announcing that it is pausing PlayStation VR2 production and sharply reducing its own sales expectations by four million units the other month, and still slightly missed the revised target while claiming they expect sales to continue to drop is not a healthy sign either. Combined with actual reports of how much sales have slowed down (most recently from the UK where PlayStation 5 has fallen by over 25% since April 2023 and Xbox has fallen by just under 25%), we can actually talk about a crisis for the video game world.

Someone might scoff and point out that PlayStation 5 has sold almost as much as PlayStation 4 had at the same time, and they would be right. But being the the best selling PlayStation format is hardly what Sony was hoping for, and the fact is that PlayStation and Xbox share games and are more closely related than fans probably want to believe. If Xbox loses, it will be less profitable to make expensive games mainly for the consoles in this segment, and if PlayStation also drops the ball, it will be really difficult.

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Are we facing a real console crisis?Are we facing a real console crisis?
In the past, a whole trilogy of big games could be released on a single console, something that is now considered impossible outside Call of Duty.

Developing games is becoming more expensive and more complicated. We are already in a situation where it practically takes a whole generation to develop a game, so many studios only aim to release a single title this generation. Getting an entire trilogy into a single format like with Gears of War, Mass Effect or Resistance is something we can just forget about today. And for series like Grand Theft Auto and The Elder Scrolls, it seems to take so much longer than a generation that we can probably forget about The Elder Scrolls VII or Grand Theft Auto VII arriving on PlayStation 6 or whatever the Xbox equivalent will be called.

"Buy more studios then", someone might think. This is putting things bluntly, of course, but major games today often cost hundreds of millions to develop and market. Only a few publishers have that capacity, and games must be fully customised to be minimally offensive and focus group tested. No risks are taken, and there must be more ways to make money than just game sales. It is simply not enough.

Are we facing a real console crisis?
Will there be Grand Theft Auto VII for PlayStation 6, or will we have to wait until PlayStation 7? The question is well justified to ask.

The number of potential console buyers is shrinking, budgets are growing and development is taking longer and longer. It's easy to see that it's an equation that doesn't quite add up. PC simply has become an absolutely necessary piece of the puzzle - and at the same time allows us to have a format that gets everything exclusive to PC in the first place, but also all multiformat games in their best versions, as well as the exclusives from Microsoft and Sony - again in their best versions.

Another thing that is difficult to dismiss is the price of consoles. Previous generations have slowly but surely fallen in price and after five or six years you have been able to buy a PlayStation 3 or Xbox 360 for roughly $149. Last generation, however, this started to swing and although there have been temporary promotions, PlayStation 4 and Xbox One generally bottomed out at around $249. But even that is significantly better than today, where console prices have instead increased by quite a lot, especially in Europe. This means that after three years in the current generation, it's actually way more expensive to get a new console rather than the opposite.

Right about now, sales should be at their highest, but as I said, they are falling instead. If the consoles had cost a maximum of half as much, the situation would obviously have been different. However, it should be said that PlayStation 5 and Xbox Series X are both actually quite powerful devices in a way that neither PlayStation 4 nor Xbox One were when they arrived (and when PlayStation 3 and Xbox 360 were released, the PC market was not as mature and superior as today). The fact that they are more expensive considering how the market has developed is therefore logical, but it doesn't seem that the higher performance is something that actually pays off and perhaps it would have made sense to go for something lesser?

Are we facing a real console crisis?
Today, portable PC consoles exist that can run both God of War and Halo.

So, when will this turn around, or are video games as we know them today dead? Unfortunately, I have no good answer to that. What is clear is that something will have to give way. Increasingly expensive game development obviously requires higher game sales, and higher game sales require more consoles sold.

A not too unreasonable guess is that in the shorter term than you might think, we will get consoles from Microsoft and Sony that are significantly more PC-like than they already are. This will allow them to offer both lower and higher performance, and we may even see them launch their own gaming services for the PC. Microsoft already has that, but the Microsoft Store is pretty basic beyond serving as the Game Pass home. Maybe Microsoft and Sony could launch a store together and take on Steam? To just continue like today I think is simply not possible for another generation, something will have to change, but what?

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