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THQ: Future consoles will drop discs for cloud gaming

"All the money spent by the consumer would go to the developer or publisher," says Farrell

For his keynote presentation at Cloud Gaming USA in San Jose, THQ CEO Brian Farrell spoke of the various opportunities that come with gaming in the cloud and what that could mean for THQ.

He predicts that future consoles won't have disc drives, hypothesising that this "will result in a lower cost for the hardware manufacturer, which will result in a lower cost to consumers and therefore a lower entry point, thus driving more mass market adoption."

Furthermore, this would save money for game developers and publishers since there'd be "no physical goods cost for game makers. No inventory, no markdowns, and all the money spent by the consumer would go to the developer or publisher."

Farrell also thinks cloud gaming will help build a stronger relationship with the community by delivering more custom tailored content. "Our games are always on and our players are always connected....We have the opportunity to interact with players in new ways that can be reactive to their desires, play habits, and buying habits."

"The box, ship and done model is transitioning to: observe, measure, and modify," he added, explaining this as "a games as a service model where direct consumer feedback allows the ability to operate in this always on, always connected environment."

This will put lots of emphasis on post-launch content. "We intend to create an online digital ecosystem with the consumer that keeps them interested for almost a year, perhaps even longer. And we expect most of our large console games going forward will extend the base experience with DLC packs. Things like online in-game storage, and consumables and other online items that will go on for at least a year post-release."

THQ's upcoming Saints Row: The Third will have more than 40 weeks of DLC, Farrell revealed, "which will grow and change the experience as the consumer engages with the game."

This focus on adaptation will open up lots of potential new business models. Farrell expressed lots of interest in the "freemium model" as well as subscriptions and episodic content. "Frankly we think the business model will vary based on the type of content being offered," though admitted it was too early to tell what these dominant models will be.

"We're starting to see a world where players can pay different amounts based on preferences with casual players paying a small amount, and more hardcore or passionate players investing more into their experience."

Farrell expressed THQ's willingness to experiment with new pricing models, citing MX vs ATV Alive as an example. Rather than selling a $59.99 game, THQ opted to sell the game for $39.99 with lots of optional content. "But what we found was unlike free to play, $39.99 just wasn't low enough to drive a big enough install base to push the level of DLC we had initially hoped for."

Not being tied to specific console opens up new possibilities for consumers as well. Farrell discussed the idea of playing variations of a game on multiple platforms. "You might primarily play a game on your PC, yet play subgames on your phone then share stats and improve your progress in the main game."

"Technology alone will not give a clear benefit to the consumer," Farrell cautions. "Cloud computing and data storage could potentially do a lot, but it's what we do with it as game designers and publishers that really matters most."

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Latest comments (26)

James Prendergast Research Chemist 5 years ago
"no physical goods cost for game makers. No inventory, no markdowns, and all the money spent by the consumer would go to the developer or publisher."

So... i guess i'm just imagining that the console holder/maker will not just up their licensing fees and access fees to their networks?

"will result in a lower cost for the hardware manufacturer, which will result in a lower cost to consumers and therefore a lower entry point, thus driving more mass market adoption."

Right... because the most expensive part in modern consoles is the disc drive....

This is either, at best, a misunderstanding or niaveity or, at worst, an outright lie to people who are listening to what he is saying.

I have to admit that i have no incentive or desire to be part of the always connected, giving feedback experience that some people in the industry want.
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Joćo Namorado Project Manager, Portugal Telecom5 years ago
If we speak of cloud computing, where the game is actually being executed on the server (like Onlive or Gaikai), that would drive the console prices down very sharply. But then again, there would be no actual console, or no difference between the console and a cheap PC: all you would need is a machine to show the video stream and send back the controller inputs. So "not being tied to a specific console" would mean no consoles in this sense. What is really required is interoperability: being able to save your game progress on the cloud and resume your game from another device.

Now if we speak of having the games stored on the network but then downloaded to the console to play, well that exists for years now and it didn't drive prices down. Buying a game disc on the store costs the same as buying the same game on a Games on Demand service. What matters here is the freemium business model: being willing to sell the game for a very low price (or free) to make it mass market and then monetize on users willing to pay for extra content or functionality. But that usually requires low development costs: I'm not sure it would be feasible for AAA console games.
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DVD's & BD's are also coming to an end because TV channels have the ability to transmit video straight into your home.

Same logic, but would it happen?
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Show all comments (26)
Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.5 years ago
Anyone considering how far away we are to having the online infrastructure in place to flat our remove physical media?

Sure, future consoles might drop physical media...but we have a few generations to go before that's a reality.


I thought one of the major goals of the industry was to expand into emerging markets. The fastest way to completely reverse that notion is to commit to a means to excludes them completely.
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Gareth Donaghey Customer Support Agent, Blizzard Entertainment5 years ago
Sometimes when I read these kind of predictions, I wonder if the suits actually realize that the rest of the world doesn't have dedicated 1000000 GB/s connections like they do at work.
Until the world infrastructure can handle the 10's of GB downloads per game with no extra charges or limits by ISPs, there will always be the need for physical copies.

You only need to look at the US itself, parts are still on 56k and limited downloads.
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Kingman Cheng Illustrator and Animator 5 years ago
Increase in Cloud, sure. But pure Cloud? Not so sure about that, at least not for many more generations...
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Console + cloud = syntax error

Cloud + any platform would be a more accurate prediction
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Brian Lewis Operations Manager, PlayNext5 years ago
This is the classic discussion of the thin vs thick client. This argument has been made over and over again in different forms for a long time. There is no best solution, there is only the solution that works best for now.
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Gareth Jones Software Engineer (Contract), Cisco Systems5 years ago
I wish I lived in this guy's utopian world. I bet even the trees are polite and friendly.

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Ronan Price Assistant editor, Irish Independent5 years ago
Brian makes it all sound so wonderful but he does ignore certain little flies in the ointment, such as the need for high-speed broadband, which isn't a reality everywhere and is a cost in itself.

Not to mention the lack of trade-in options, nor anything like loans from friends and rentals from video stores. The future isn't always automatically better.
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Andrew Goodchild Studying development, Train2Game5 years ago
He seems to be blurring lines between "Cloud Gaming" and "Digitally Distributed". Most of the points he made, apart from "always connected" could still be made of downloadable titles, (which still could be always on if you want to piss off single player gamers).
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Dave Knudson Sr. Technology Manager, Electronic Arts5 years ago
"No inventory, no markdowns, and all the money spent by the consumer would go to the developer or publisher".

Well except for the cut that goes to the console manufacturer or the digital retailer. For some reason I also think that the increased need for bandwidth for large downloads or streaming will also have internet providers looking for ways to somehow get their cut.
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Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster5 years ago
Erm, has anyone noticed that Sony released the Blu-Ray Disc format with their PS3? Or that the Xbox's DVD feature haas been mentioned as 'requiring some serious black magic to fit [thier games] on" (Rockstar). Or that most consoles have been trying to be 'Media Centres for 2 generations now?

BD can hold 45GB in single layer format, and I very much doubt that Sony would want to step back from that in the near future and downgrade their next console. in the UK, 45GB is 15GB above more than pretty much every ISP's fair use limit, which usually stands at 30GB. No gamer will able to even download the games that come with the launch of the device let alone buy any more.
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Rick Lopez Illustrator, Graphic Designer 5 years ago
I just dislike and hate the whole idea of cloud gaming. To play video games in the same manner as flipping the channels on the TV... I wonder how many AAA games would come out for that. Besides I like owning my games in some sort of fisical media. What will happen when many of these developers go defunct or sieze operations. The games wont exist anymore.

Besides the more games evolve the more requirments they need to be played, such as memory space I dont think I will download or stream a 65GB game on my 4mb DSL connection anytime soon.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.5 years ago
Andrew, single layer Blu-ray discs on the PS3 are 25 GB, not 45 GB.
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Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster5 years ago
@ Jimmy
Double-checked, my bad. Point still stands, thats still only about 1.2 games a month!
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Patrick Frost QA Project Monitor 5 years ago
Problem with everything he has stated here is that it is focused on what his company as a publisher and his developers want, not what the consumer wants. But it is nice to see that there are bigger game companies that want to explore different business models.

That would be the biggest gift for the next generation. The ability for companies to explore those models.
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Ben Hewett Studying MA Philosophy, University of Birmingham5 years ago
In his defense, he does refer to "future consoles", which could refer to any point in the future. For all we know, he's talking about consoles in 20 years..
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Nicola Searle Senior Knowledge Exchange Associate, University of Abertay Dundee5 years ago
I think there is no question that we will see a move away from product and towards service, and therefore increased use of cloud gaming. However, the idea that developers and publishers are going to get a bigger slice of the pie is off.

Take a look at the music industry - the record labels (combination developers and producers) are flagging as the new regime (iTunes) takes hold. As bricks and mortar shops selling cds close down, Apple is dominating the digital download markets. Instead of having lots of retail options, the music industry is now facing the prospect of a single, dominant option. This change in the market structure has hugely decreased the bargaining power of record labels. New streaming services such as Spotify are launching, but how profitable they are is unclear. Will games be any different?

One thing that doesn't seem clear is what will happen to console manufacturers. The mobile phone manufacturers and services thought they were going to get a huge slice of the digital media pie, but that doesn't seem to be happening. Will the same happen to consoles?
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Raphael Honore Localization Assistant Manager, Blizzard Entertainment Europe5 years ago
I, for one, am really inspired by what this guy is saying, but for different reasons. I'm just dreaming of a perfectly silent and cool gaming environment! Ever tried sauna in a jumbo jet? You're welcome to sit with me in my office while I run graphic-intensive apps on my "war beast" from May to October. If cloud computing allows me to make my dream come true, then I'm all for it!

Edited 1 times. Last edit by Raphael Honore on 9th September 2011 2:46pm

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James Prendergast Research Chemist 5 years ago
@Nicola:

I think the main problem with the games industry (and without Apple's intervention, the music industry as well) is that their definition of "service" is not what the dictionary states... or what people/consumers expect.

I do not see how getting less for my money and having to buy or lock the extras to my account is a service... Nor do i see how being "allowed" to redownload something i've paid for at the usual prices is either... though they'll also help themselves to my personal information and not apply common sense to security protocols protecting that information.... and they'll lock my account if they *think* i've done something untoward (like have someone steal my credit card and hack my account) or if i've been inactive for too long....
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Nicola Searle Senior Knowledge Exchange Associate, University of Abertay Dundee5 years ago
@James - I agree that the consumer perception of service (e.g. service with a smile) is not the type of service that the industry is moving towards. I'm referring to service as in software-as-service instead of the more traditional software sold as a product. (I should also note it's not a binary choice - DLC is a service type option that goes with the product sale of the original game.)

That said, I don't think that the bargaining power of consumers is enough to temper pricing, access to personal information etc. that we're seeing now. That might change - especially as consumers become more savvy to the new regime.
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The more advanced a civilization is, the faster it tends to get annihilated in a major catastrophe. Cloud computing relies on the simple fact of persistent connectedness. The fact is, with simple things like power outages or loss in backbones of internet providers/DNS eg. http://www.bbc.co.uk/news/technology-148... as the recently demonstrated lack of access to Microsoft services proves that the weakest link is the main advantage of Cloud computing. Unless there is redundancy built into this system or some sort of temporary local storage, then cloud computing can be a transient convenience at best.

This obviously bodes a stark warning for companies like Apple where the jump to cloud may lead to interesting times
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Yiannis Koumoutzelis Founder & Creative Director, Neriad Games5 years ago
and then something else which I was reading in a nice article... something that concerns me as a gamer! cloud gaming and digital distribution with always on DRM schemes etc would be the death of retro gaming.

it is true that even today I can plug my n64 or my gamecube or ps2, hook it up and play my favourite games, even unearth old cd rooms and play pc games from the 90s and early 2k. I seriously doubt these games will be available to me for redownloading after 5-6 years... or if their license server will be online... and so on and so forth.. you get my drift... many gamers are concerned about this.
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John Burns Studying Game Software Development, Westwood College5 years ago
So what happens when my ISP goes out? There wouldn't be any more crappy ports but we would have to worry about how far we are away from the servetr and what kind of hardware they are running...
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Chris McKay5 years ago
Although I agree with cloud gaming to an extent I still think that although it leaves no limitations to the developer it leaves a lot of issues with sales.

Not everyone has internet and that will continue throughout the ages until 1 internet prices reduce dramatically and 2 internet service reliability including speed goes up. Not to mention the fact that if your ISP has issues or needs to update equipment then you have no access to your paid for games.

I honestly hope that games will not just become a thing of the cloud and store sales will still exist in times to come.

Yes it will mean all the money goes to developers but I would expect a HUGE slump in sales if they try to force cloud without hard copy sales.
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