Quick Thoughts: What Do New Gaming Console “Iterations” Need to be Successful?

Xbox One PS4

 

Quick Thoughts: Now that major gaming hardware manufacturers have hinted at iterating on their existing consoles rather than using the “traditional” model of 6-8 year generations, what do you think a new version would need in order to be successful? What features should be required in order to cater to both existing and new owners? Should console makers even take this route at all?

With a recent report from The Wall Street Journal, in addition to earlier articles by gaming-focused media including Kotaku and Polygon, rumors are solidifying that both Sony Corp (6758) and Microsoft Corporation (MSFT) will be iterating on their existing gaming consoles, the PlayStation 4 and Xbox One respectively, to release more “powerful” versions rather than waiting out the traditional console cycle period which can be anywhere from 6 to 8 years approximately. I’m not going to speculate on what the specs will be or when they will be released, but rather I want to ask how can these be successful when gamers are used to the traditional longer-term cycle?

Consumer sentiment around these rumors has been mixed leaning mostly towards the negative, especially existing owners that are worried they might be “left behind” if the newer console iteration offers much better graphics or software that isn’t playable on the older machines. To put these concerns in perspective, estimates for current user base for the three major gaming consoles are below which indicates the risk of alienating these bases if manufacturers don’t approach these iterations properly.

 

Estimated Console Install Base

 

So, what’s the right approach? I think it comes down to three factors, in no particular order:

Transparency: Of course this is quite general, but it’s still essential. Console makers need to be explicit in their communication on what these iterations are, how they will be done and honestly they need to do it soon. Are the iterations going to now support 4K output or VR capabilities let’s say, or will they involve more significant upgrades to hardware that will noticeably impact how games and videos perform and look? Will there be software that’s only available on the newer version a la Nintendo’s New 3DS handheld? Which leads me into my next two points..

Forwards Compatibility: There’s been a lot of talk about backwards compatibility this generation, but if these companies start iterating on existing consoles then they need to assure existing players that they can still play their favorite games on the latest version. I think this is less of a concern with the first iteration, and more with the second or third down the line. Similar to how mobile phones are constantly updated on an annual basis these days, if consoles are upgraded every couple of years, at what point does newer software outpace the specs of the original machine?

Upgrade Path for Existing Owners: This goes hand-in-hand with the previous point. To alleviate worries of current users, there needs to be a specific path by which these users can upgrade to the newest boxes and carry-over content and apps that they have paid for using hard-earned dollars. If this means charging them the difference in price between the original version and new iteration, that might suffice. However as a show of goodwill, I think manufacturers should go further and offer some sort of bonus or free content to those loyal customers that bought their earlier product version.

Sony LogoMicrosoft Logo

 

 

 

 

 

 

 

 

 

 

It will be interesting to see how and when both Sony and Microsoft communicate the future of their console businesses. Microsoft has been moving towards unifying its platform under the Windows brand, and executives including Phil Spencer have hinted that hardware upgrades are likely incoming for the Xbox One in the article I linked above, so it’s imperative that they form a more concrete message for the marketplace to digest. Sony has less of a structure in place at present. All in all, gamers like us will have to play the waiting game until we hear what the future of this console generation will be.

Sources: Sony Corp, Microsoft Corporation, Nintendo Co., Ltd., The Wall Street Journal, Kotaku, Polygon

-Dom

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