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Gaikai's Reeves predicts one platform holder to quit at E3

Thu 12 Jan 2012 8:43am GMT / 3:43am EST / 12:43am PST
PeopleHardware

"Not all of the current console makers will have one more generation"

Gaikai's Nanea Reeves has predicted that one of the platform holders will bow out of the console business this generation, announcing it at E3.

Speaking at CES, the executive was clear in her prediction, leading some to speculate that perhaps the streaming company had been collaborating with either Microsoft or Sony on a machine which would stream content in the way that OnLive's service does.

"Not all of the current console makers will have one more generation. That will be the big news at E3," said Reeves.

Kaz Hirai has openly reiterated previous Sony statements about the future of the PS3 at CES this week, and today added that he didn't feel that network infrastructure was ready for a download only machine.

With Microsoft's Xbox business booming, and Sony's PlayStation division actually being one of their better performing sectors, either company throwing in the towel seems unlikely. Whether either would transfer that business to a service-operated model in the mould of OnLive or Netflix remains to be seen.

34 Comments

Bruce Everiss
Marketing Consultant

1,692 594 0.4
This is exceptionally interesting.
The Sony and Microsoft business model in this platform generation seems to have been about owning the living room rather than making a profit. Yet they have failed with what can only be described as disappointing sales figures. And in many ways technology and the customer base have passed them by.

If Apple did a TV box that could play games and used the App Store business model it would bury Xbox and Playstation.

So given that introducing a new platform generation is a multi billion dollar bet a cynical look at the realities might indicate that it is one not worth taking.

Also for Microsoft Live is the real product. There are many ways this can be used other than with a new platform generation. For instance semiconductor technology has advanced to the point where the 360 could quite cheaply be integrated into a mass production TV.

We live in interesting times.

Posted:2 years ago

#1

Terence Gage
Freelance writer

1,288 120 0.1
Interesting comment. It's also as though she has a competing product which would benefit from the disappearance of the PlayStation or Xbox brand...

Posted:2 years ago

#2

Dan Pearson
European Editor

109 295 2.7
I'm not sure that Microsoft would call 66 million 360s "disappointing", Bruce, but I see what you mean by Live being the product. Transition to a service model seems almost inevitable at some point, but I think the switch will have a slighter gradient.

Posted:2 years ago

#3

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@Dan
Playstation 1, 100 million units. Playstation 2, 150 million units. This looks like a trend. Then oops, Playstation 3, 55 million units. OK it still has some sales life left, but it is never going to catch up.
If you look at the profitability of these three platforms for Sony the graph is even more pronounced. PS3 has been a disaster when held up against expectations.

Posted:2 years ago

#4

Tommy Thompson
Studying Artificial Intelligence (PhD)

110 0 0.0
I still can't see any digital-only/cloud-based service surpassing the current business model at this point. The infrastructure is not there to support the vast majority of users. While certainly the likes of Onlive, Gaikai and a potential Apple TV will begin to take more of the market, any suggestion of Sony or Microsoft (as let's face it, it won't be Nintendo) stepping down is premature. Perhaps the end of the next generation of systems will see one company step down.

It's interesting that many are keen to proclaim Sony or Microsofts demise due to new competitors with their technologies and business models, when arguably Sony's greatest threat this generation was themselves. This continued emphasis on pushing technology that the wider consumer base is not ready for impacts consumer interest and subsequent investment.

Posted:2 years ago

#5
@ Bruce - Apple already have a box that connects to your TV and play games - AppleTV. It just needs a software upgrade. Alos, when Apple launch connected TV sets, probably this year, they will do what you say and connect to the app store, your iPhone/iPad is the controller and so there you go. If they included something like OnLive there would be no reason to buy a console (other than platform exclusives).

Posted:2 years ago

#6

Klaus Preisinger
Freelance Writing

1,129 1,161 1.0
@Bruce

PS1: no real competition, Nintendo way different type of gaming experience and target audience, Sega failing.
PS2: Even less real competition, Dreamcast DoA, Xbox struggling, Nintendo still way different.
PS3: Competing with 360 for same audience with same type of games. Nintendo on a different planet audience-wise.

Toss together 360 and PS3 and you have back your 150 million audience more or less. At $200 there are still plenty of millions to be sold, before a new generation arrives. At the end, this market might not have skyrocketed in terms of users, but will still have shown solid growth.

The PS2 was successful enough to allow a second direct competitor to be viable. Just as the Wii was successful enough to force MS and Sony into dabbling with motion controls to take a chunk out of that market. That is why the PS3 is not selling as many units than the PS2; plain old competition. If either the Xbox or the Playstation do not get a successor, we will not see the downfall of consoles, we will simply see one manufacturer dominating the market again, selling 150 million units in the process. Monopolies crumble, markets remain.

Posted:2 years ago

#7

Jim Webb
Executive Editor/Community Director

2,270 2,439 1.1
Bruce, while individual figures for the PS brand are down, the pie itself is much larger. Sony also controlled 70+% of the market with PS and PS2 hence the insane sales of those generations. Much stronger competition, stronger emphasis on the western market and the expansion of the market have hampered that dominance but it's hardly a reason to just bail out the market altogether.

4th gen - 79 million (SNES + Genesis/Megadrive) at 8 years on the market.
5th gen - 145 million (N64 + PS + Saturn) at 9 years on the market.
6th gen - 206 million (GC + PS2 + Xbox + DC) at 10 years on the market.
7th gen - 217 million (Wii + PS3 + X360) at 6 years on the market.

As for profitability, most console makers don't actually do very well in profits. The PS and PS2 were not nearly as profitable as one would imagine they were (better than Sega and MS to be sure but far less than the sales would suggest).

Posted:2 years ago

#8
Bow out? Not a chance.

The only possibility would be Microsoft - and the only way they would "bow out", is to replace the 360 with a non-games dedicated machine (that still plays games) - a PC/TV/Kinect thing for the living room. But that isn't quite bowing out.

Sony are only now launching the PSV, and will continue with the PS3 (exclusively) for another 2-3 years.

Nintendo will never bow out.

Posted:2 years ago

#9

Andrew Goodchild
Studying development

1,253 418 0.3
"Speaking at CES, the executive was clear in her prediction, leading some to speculate that perhaps the streaming company had been collaborating with either Microsoft or Sony on a machine which would stream content in the way that OnLive's service does. "

If Gaikai were working with MS or Sony, and therefore had first hand insider knowledge on this, would she not be under NDA to not make hints like this?

Posted:2 years ago

#10

Alex Wright-Manning
Talent Acquisition Manager

172 2 0.0
For me, the concern here is not whether one company drops out of the race (which I find pretty doubtful), but the wider effect on the industry that any new generation of platforms will herald. With AAA titles being the only product publishers want to back right now, and the ever increasing cost of developing these, a new generation of more powerful consoles will only serve to increase these costs even further. That's without even taking into account the required period of transition from an R&D and staffing perspective.

A new generation of consoles will only benefit the major publishers/developers, and even these guys will make big cuts to their portfolios in order to offset the spiralling costs of developing for the next gen. Making the jump to new tech is going to be a difficult road for a whole swathe of the industry, and I'm predicting that this next gen will be responsible for a lot of studio closures globally. I'd even go so far as to say that certain countries may lose the majority of their console games industry during this transition period.

Posted:2 years ago

#11

John Bye
Senior Game Designer

480 451 0.9
Bruce - As you say, those are lifetime sales. If you compare years from launch, the PS3 is only about 10% down from where they were at this stage in the PS2's lifetime. Given the PS2 had virtually no competition, whereas the PS3 has had not one but two very strong competitors, that's hardly a disaster.

I predict Nanea Reeves is going to have egg on her face after E3. Even if one or more of the big console manufacturers doesn't unveil a new console there, I don't see any of them publicly throwing in the towel. We'll see whose prediction's more accurate.

Posted:2 years ago

#12

Aleksi Ranta
Product Manager - Hardware

275 127 0.5
a comment on eurogamer sums it up pretty nicely:

"random unfounded comment from a nobody. "

Posted:2 years ago

#13
Signed up for Netflix when it launched this week, and it's pretty good on my PS3 and iPad. A 50mb connection helps, but I suspect even so it only uses a small bit of the bandwidth we have. The user interface is a bit clunky though, IMO. Am waiting for OnLive's iPad app to be approved, if it ever is.

Having said that, I seriously doubt streaming-only will dominate for a while yet.

@ Andrew - "If Gaikai were working with MS or Sony, and therefore had first hand insider knowledge on this, would she not be under NDA to not make hints like this?" Maybe, or maybe they decided to throw out a comment like that to start generating interest and rumours:)

Posted:2 years ago

#14

Matt Martin
Editor

173 113 0.7
Nanea's hardly a 'nobody', with plenty of experience at EA before joining Gaikai. My interview with her at E3 was one of my favourite's of last year: [link url=http://www.gamesindustry.biz/articles/2011-06-23-gaikais-nanea-reeves-interview
]http://www.gamesindustry.biz/articles/20...[/link]

She might need a bit more media training though, has a habit of saying things she really shouldn't in front of the press...

Posted:2 years ago

#15

Andrew Goodchild
Studying development

1,253 418 0.3
@Matt, yeah, I bet you guys just ply her with Long Island Ice Teas and Sour Skittles until she starts saying random clangers ;)

Posted:2 years ago

#16

Craig Burkey
Software Engineer

199 365 1.8
As ever it'll be about the games, a platform is only sustainable if it has the portfolio to support it. Myself with a 360 the investment I've made in DLC and Arcade games have tied me to the Xbox brand for the foreseeable future as long as they support the transfer of my purchases to the new device, but they'll still need that "Killer App" for me to make that leap, its why kinect is having issues, if you haven't got the games, you haven't got an audience

Posted:2 years ago

#17

James Boulton
Tools & Tech Coder

133 171 1.3
This whole shift is really making me feel quite uneasy. I cant believe either MS or Sony will bow out of the "console war", and Nintendo consistently make money on their less powerful, but more family friendly machines. So I cant see them going either.

The whole concept of streaming games just doesn't seem to be "there" for me at the moment, either. The concept of playing any game off some streamed server just strikes me as mad. The network infrastructure just isn't there (at least in the UK) -- it would be like playing on the lowest possible spec machine, with extreme control lag.

In pretty much all the games I have worked on, we strive to deliver 60fps and at most about 3 frames of control delay. Gameplay is always running at 60fps, just very slightly behind the audio visuals. If you have a game with twitch gameplay like this, it will be destroyed by being streamed.

And an iPad or Apple TV as a main gaming device? Hmm. Neither powerful enough to do anything like what gamers expect. COD on iPad or Apple TV? Nah.

Perhaps after the next generation of proper high spec consoles it will go the way of client / server streaming as the network infrastructure continues to improve, which I guess means a return to powerful PC's, albeit in some data centre somewhere rather than in your lounge.

Everything seems to be in flux at the moment -- exciting and daunting all at the same time.

Posted:2 years ago

#18

Brian Smith
Artist

196 85 0.4
'If Apple did a TV box that could play games and used the App Store business model it would bury Xbox and Playstation.'

Man what a dreary sounding future that'd be. If it wasn't for the fact that they rip every cent out of their customers then I might actually believe that statement was possible.

It is good that the software on app store is cheap I guess, makes up for the stupid price of an I-phone.

Posted:2 years ago

#19
Well, we have only a couple of months imminently to enjoy this popcorn event via live streaming!

Posted:2 years ago

#20

Tommy Thompson
Studying Artificial Intelligence (PhD)

110 0 0.0
@Andrew: Is that really the secret to gathering inside information in the games industry? Man, I'll remember that next symposium I attend. :-D

Posted:2 years ago

#21

Chris Walton
Account Manager

2 0 0.0
why are you all assuming Sony and MS here, Nintendo's Wii has hardly set the world on fire, yes they are talking about Wii U, but who's to say that it hasn't been canned?

Posted:2 years ago

#22

Jim Webb
Executive Editor/Community Director

2,270 2,439 1.1
Chris, the Wii didn't set the world on fire? And why would they can something they just demo'd at CES? Something they've already had several months of active software development for?


I hope that was all sarcasm and my sarcasm detector is just low on batteries.

Posted:2 years ago

#23

Antony Carter
Senior Programmer

85 47 0.6
Have to say id put alot more money on Gaikai or Onlive bowing out in the next 2 years than MS or Sony.

Posted:2 years ago

#24

Dominic Jakube
Student

92 13 0.1
Nintendo - Games are all they do and with the 3DS not going cazy the only way they can stay in bussiness is with a new console.
Micro-soft - With the 360 they in the last 2 or so years are just starting to make a profit on their xbox brand after 10 years as they lost big time on the 1st. xbox and had teething issue's with the rrod on the 360, I don't see them quiting now.
Sony - The playstation brand is proberly Sony's biggest asset apart from maybe Blu-Ray,but remember how the HD format was won?And I doubt they would luanch the vita if they planed on giving up gaming.And I think they will want to chase the dragon of former near monopolies, remeber whwn the PS accounted for 40% of Sony Corps profits.
IMO all three players will luanch a next gen, some maybe later than others.I think MS will falter somehow with the xbox3 just as Nintendo faltered with the N64 and Sony with PS3, both those companies got arrogant after 2 sucssess and went against the market, Nintendo by sticking with caet's and Sony pricing themselves out of the market.

Posted:2 years ago

#25

Nicholas Pantazis
Senior Editor

1,020 1,467 1.4
@ Chris Er... the Wii was outstandingly successful, in spite of abysmal 3rd party support, and they brought the Wii U to CES.

@Dominic Have you been following 3DS sales since the price drop? They are absolutely "going crazy." It's far outpacing every first year handheld record, and in Japan it's being torn off shelves as fast as they can make them. That said, obviously they won't can the Wii U.

Posted:2 years ago

#26
At first I thought BS to raise the price of their company however the more I think about it, it makes sense plus it's a very specific short term prediction.

Next generation is still a couple of years a way and there are already people using their iPads etc to play OnLive games. Who's to say in another few years even if it's 3 or 4 then the infrastructure won't have caught up, if it does then the games on OnLive will blow even the new generation out of the water technically so why put so much investment into a new console and sell it at a loss initially if by the time it starts making a profit it has been superceded.

Although there's a part of me that's worried. A lot of core gamers play online multiplayer almost exclusively and these games really depend on a good connection. Even fractions of a second can give a competitive advantage, surely the issues regarding controller lag haven't been universally solved.

Posted:2 years ago

#27

Adam Campbell
Associate Producer

1,178 967 0.8
I seriously doubt it based on my own predictions and the sorts of statements coming out of the big three, but hey? They say 'stranger things have happened'. She seems so sure though... Gaikai and OnLive are amazing yet flawed, but the flaws are just part of what makes this unlikely. I'll be looking forward to E3 and holding her to that statement. Another big Q is, will Apple show up? :p

Posted:2 years ago

#28
@Matt M - I am available to help with media training ;-)) competitive rates and all that. I really would love to write what I think. Will put in on paper and send it to you sealed to be opened in 2015

Posted:2 years ago

#29

Julian Toseland
games podcaster/website

23 6 0.3
A very brave or silly comment I must say, and one I just can not see happening at all, I actually made a very bold prediction myself in our podcast xmas show, to the effect I could seriously see the Wii U being canned completely, and Nintendo moving back to just software business for there hardware, just something about the whole last E3 went with everyone expecting a full console announcement and then they brought us the Wii U, wow what a let down that was..lol.
As for the other big 2, no chance, everything is moving forward and still console gaming has a massive place in the market judging by real gamers I come across on a regular basis over the years., I do think Xbox definitely will have another console, although I could see Sony staying with the PS3 if the Vita hits them hard in in the pocket like the PS3 has over the years.

I also don't buy all this mobile/onlive strategy/popularity either, I know you guys may not agree with me here, but I just see them as small quick fix's for the more diverse gamers we now have, if these kind of things came out years ago, I honestly dont think they would be half as popular as they now are, and I think we can thank the wii and it's "granny" generation for that....
...as for the others.....there will always be console gamers out there.

One final point, until the entire world has fast internet as standard then again the streaming stuff will just linger and be for the few, I know here in the UK it's getting better, but still way off the mark in both speed and price compared to the rest of the world.

I still say the Wii U may not see the light of day..:)

Posted:2 years ago

#30

Jim Webb
Executive Editor/Community Director

2,270 2,439 1.1
Julian, they had the Wii U at CES. You still want to hold to that prediction? Better yet, just ask most of the big developers how their Wii U development is going and most will tell you no comment but some will open up about receiving several hardware dev kit revisions and new tools. Not exactly the kind of talk for a console about to get canned.

Posted:2 years ago

#31

Patrick Frost
QA Project Monitor

400 196 0.5
@ Julian - I don't understand at all how you came to that conclusion. Nintendo is the only console maker that has a philosophy of making money on hardware, whereas MS and Sony lose money on them. If you go and look at the sales figures for the Wii, Balance Board and all forms of the DS and think that every single one of those units has made money, do you still think that Nintendo are still doing something wrong? And if so, how do you get from there to "Nintendo will can the Wii U"?

Posted:2 years ago

#32

Aleksi Ranta
Product Manager - Hardware

275 127 0.5
"Nanea's hardly a 'nobody'"

I agree, but making statements that, well, the whole gaming community reads....99% of the readers have no idea who she is and 99% of those dont have the interest of looking up peoples background. Im refering to for example the eurogamer article.

Posted:2 years ago

#33

Andrew Ihegbu
Studying Bsc Commercial Music

455 164 0.4
I think the only company that I could see 'bowing out' right now is Sony. They originally had a 10 year roadmap for the PS3 and they may well decide to see that through. That would would mean they would effectively miss the next generation, but if they could keep third party support strong for the PS3, then they would be able to hit the market the way the Wii did this generation by undercutting every new console significantly pricewise.


And furthermore, I am not against streaming, I just think that streaming and console are oxymorons. I mean why stream when you have a console? At least download the binary and game as you play so you don't waste all the available power of your machine and play with laggy, poor quality graphics all your life.

Edited 1 times. Last edit by Andrew Ihegbu on 18th January 2012 4:50pm

Posted:2 years ago

#34

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