Mark Androvich 18:35 (BST)
23/05/2008

Wild Tangent founder, chairman and CEO Alex St John told the Wedbush Morgan Securities annual Management Access Conference that game consoles will soon cease to exist as we currently know them.

"I think you're looking at the last generation of game consoles, and I think it's easy to defend that position," he said.

"The thing that's interesting is, a console is not a game enabling device - it's a game blocking device, unless you've paid for it. So, the principle value of a console is as DRM technology to solve the piracy problem."

St John said that graphics are now a commodity. We no longer need a game console to have pretty graphics on the screen - everything has pretty graphics, and they are cheap, so consoles will no longer be able to differentiate themselves on that basis.

Games in the near future are primarily going to be differentiated by community, St John said, recognising World of Warcraft and Pogo - what he called "the World of Warcraft for old people" - as examples.

"Community-based gaming is going to dominate the market and the economics. And community-based games don't need DRM, because communities can't be stolen, and therefore nobody needs to share any revenue with the console manufacturer.

"World of Warcraft is the most profitable game in history. Pogo is, I imagine, wildly profitable, and not a console game. World of Warcraft will generate 1.2 billion dollars this year in online subscriptions, and nobody can pirate it."

St John sees the invention of community-based games as a major revolution which has displaced graphics as a defining feature. In a world where community defines gameplay, there is no need to share money with console manufacturers and no need for retailers to carry a box in the store.

"I think the business model in ten years - and probably going to happen very quickly - there are going to be two left in gaming. It's going to be microtransaction based...And, again, because I'm a mathematician and an engineer, microcurrency-based economies are just the most efficient way to maximize revenue. They work really well.

"And second is advertising, because advertising is a great alternative payment type for kids who don't have access to online currency and are huge game players. So, if you don't have any way to take money from kids, then the only way to get kids to play is by advertisers marketing to them.

"So I think those will be the two dominant economies. I think that you won't see a lot of consoles."

St John also said the other reason he thinks that the PC will become dominant in the home in gaming is due to the large number of laptops being sold to kids going back to school.

"...And kids who must have a laptop in the next ten years to go to school do not pick their laptop because it is great at doing their math homework. That's not why they're going to choose that laptop. His PSP's going to be confiscated at school; no one's going to take his laptop away from him because they need that for their homework."

St John called laptops "fabulous gaming devices with Wii-like graphics, instantly tied to community, 100 per cent online and a vast volume of free play for kids who don't have credit cards."

"So, I think ten years from now, there is a consolidation of platforms, mobile devices, predominantly PC, probably nothing like consoles as you know them any more, and advertising and microcurrency-based economies," he concluded.

"Alex, I think that was brilliant and I agree 100 per cent," fellow panelist Nolan Bushnell remarked.

"He's right," St John replied, to laughter from the crowd. "I agree with Nolan."