Published as part of our sister-site GamesIndustry.biz's widely-read weekly newsletter, the GamesIndustry.biz Editorial, is a weekly dissection of an issue weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.
Towards the end of this year, the PlayStation 3 will celebrate its fifth birthday, with the Xbox 360 blowing out six candles on its cake about a week later. By this stage in the lifespans of their predecessors, these consoles would already be well on the road to replacement - five years after the launch of PlayStation 2, Sony was talking openly about the PS3, while five years after the launch of Xbox, Xbox 360 was already on shelves.
It's unsurprising, then, that speculation about the next generation of hardware is rife - especially given that Nintendo has fuelled the fires by deciding to unveil its next home console platform, codenamed Project Cafe, at E3 this year. In the past week, attention has also focused strongly on Microsoft, based on rumours that the company has sent very early development kits to close business partners. It's even been suggested that the company might decide to rock the boat with a surprise teaser for the new platform at E3.
This latter notion is something of a far-fetched idea, since right now it's Microsoft more than anyone else who stands to gain from prolonging the present console hardware generation. After taking huge losses on the original Xbox, it ended its lifespan prematurely in order to steal a march on its rivals in the current generation. Now the Xbox 360 is maintaining a (not terribly big) lead on Sony's PS3, consistently reporting very comfortable software tie ratios and even seeing very solid early figures for its much-hyped Kinect motion controller.
"Microsoft is right now doing something it never had an opportunity to do with the first Xbox - it's enjoying the harvest."
In other words, Microsoft is right now doing something it never had an opportunity to do with the first Xbox - it's enjoying the harvest. It must now strike a careful balance between keeping consumers interested in its present hardware offering in order to make this generation as profitable and successful as possible, and beginning to build excitement around what's coming next, to avoid being leapfrogged by a rival.
In this instance, however, Microsoft can sleep a little more soundly at night thanks to the knowledge that Sony is unlikely to have the stomach for much leapfrogging right now. PlayStation 3 took a kicking in its early years on the market, struggling to establish itself at a market-friendly price point and to build a solid catalogue of software - while Sony's business overall had the rug swept from under its feet by Nintendo, with the Wii poaching many of the consumers who could, in theory, have kept the PS2 profitable for even longer.
PS3 is now a business with a tidy operating profit, and despite being behind Microsoft overall, is presently the strongest-selling home console worldwide - Sony, a company faced with serious challenges in many of its other businesses, has little interest in jeopardising that by starting to talk about a new hardware generation so soon. These rivals are eyeing each other warily, but neither of them is actually prepared to draw just yet.
More than anything else, though, both Microsoft and Sony would probably like to get a good look at whatever Nintendo is planning before they commit themselves publicly to a specific direction for their future hardware. Everything we've seen so far about Project Cafe suggests that it's a system with graphical power not dissimilar to the present generation of HD consoles. Its games should look comfortably as good as PS3 or Xbox 360 titles, then, but the real selling point will be the control system, which reportedly builds a screen onto the controller itself.
Speculation about what exactly that means, and what functionality it will enable, is somewhat pointless - a lot of people already know what Nintendo is planning, but have been tightly wrapped up in non-disclosure agreements. What's more interesting is to think about the market reaction to a console which will launch six or seven years after the other HD systems, but only slightly out-match them in terms of graphical prowess.
We're all so used to the idea that new hardware is a straight-up fist-fight between sets of specifications that it's hard to imagine such a strategy doing well - but of course, it's a fairly direct repeat of exactly the strategy which has given Nintendo a Wii installed base of almost 90 million units. That isn't to say that it'll necessarily work again, but it's interesting to look at some of the advantages it confers.
For one thing, working with older, more well-understood and reliable chipsets gives a direct advantage in terms of manufacturing. It's cheaper to get up and running and you're far less likely to hit major production bottlenecks and shortages. Moreover, since you're not dealing with hugely expensive prototype silicon, you can seed tons of fairly advanced development kits to your partners early in the process, which should greatly benefit the early software line-up for your console.
The advantages to developers don't stop there, of course. Admittedly, by all accounts, direct ports to Nintendo's next-gen system will be just as pointless as they were on the Wii - the system's unique controller and interface should ensure that, although there's no doubt that plenty of publishers will defy such basic logic and demand shovelware ports aplenty, all the same. Developers wanting to do a good job on the console will need to think seriously about its advantages and disadvantages and tailor their software for the system.
However, even allowing for that significant bump in the road (which may be a bit of a pain for developers but is arguably an advantage for Nintendo, since it gives them crucial market differentiation), the actual development process ought to be relatively painless. Older hardware is familiar hardware, for one thing, and Nintendo's unlikely to stray far from off the shelf components. More importantly, taking aim at a similar level of graphical prowess to the PS3 and Xbox 360 means that the asset creation process is already in place. The same expertise and even the same asset pipelines that have been employed successfully on the present HD consoles should work fine on Project Cafe.
So, when Project Cafe hits the market, it's going to be a console with an innovative, headline grabbing interface, the power of the Nintendo juggernaut behind it, comparable development costs to existing hardware, and the media hype of a brand new system at a time when its rivals are beginning to look long in the tooth. The downside is that it won't actually be any more graphically powerful than its rivals. The million-dollar question is whether anyone will really care.
This is another "boy who cried wolf" story, of course. We've seen the end of the graphical arms race predicted any number of times in the past decade, and it's always entertaining to look back at screenshots and videos of games from times when people were saying things like "is there any need for graphics to be better than this?", and marvel at how easily pleased we were and how far we've come since then.
"Project Cafe is going to have such a huge influence on Microsoft and Sony's thinking - even though both companies are already well into the design and development process for their next-gen systems."
Yet this time, there are a number of factors aligning which - while they don't add up to an end to the arms race - certainly suggest a slowing down, and even perhaps a temporary truce. As discussed in previous weeks, skyrocketing development costs, both for software and hardware, are no longer being justified by sustained market growth. Moreover, in recent years consumers have voted with their wallets - by no means rejecting the cutting edge platforms, but certainly showing that they're also happy with hardware that offers a much less graphically impressive experience, such as the Wii, the PSP and the DS.
So, as uneasy as I am about joining the ranks of commentators who have asked "what's the point in graphics being better than this?" over the years, it's a question that must be posed - with some caveats. It's not that graphics can't be better, or that better graphics wouldn't be jaw-dropping, beautiful and wonderful. Rather, it's a question about a trade-off.
We could make games look an order of magnitude more impressive than titles like L.A. Noire or its ilk - but it would cost a vast amount of money. and I suspect that we've hit diminishing returns on that kind of expenditure already. Even the most casual consumers can see graphical improvements - they're not blind, or stupid - but the better game visuals get, the harder it is to create improvements that are good enough to sell consoles.
Even the most basic yardstick for console improvements has become a little hard to read. It used to seem like a reliable idea that every five years or so, consoles would catch up to the PC - a platform which sees advancements every few weeks - and remain competitive for a while, before the PC's cutting-edge accelerated away. In recent years, though, it's been interesting to watch what has actually happened to PC gaming.
Certainly, the PC cutting edge remains exactly that - new cards are released on a regular basis by AMD and NVIDIA, each more power-hungry and extraordinarily advanced than the last, with the best cards boasting a price tag which would comfortably buy you both of the current-gen HD consoles. However, the upgrade cycle appears to have slowed considerably - with games that actually demand cutting-edge systems being few and far between, and core gamers far more likely to continue happily playing on two, three or even four year old PCs than they were in the past.
A few different factors have pushed us in this direction - one of which is the diminishing returns to which I referred above, another being the rapid growth in popularity of laptops and Apple systems as gaming platforms. Both of these are difficult or impossible to upgrade - for that reason and many others, both were conventionally scorned as gaming PCs in the past, but it's easy to see from the consumer sales data that the market has moved strongly in their direction in the past five years. PC game developers know this, and target their games to work on laptop graphics parts rather than top-end cards.
If not a halt to progress, this is certainly a slowing - and probably one which is welcomed in most quarters. Consumers love improvements in graphical quality, but most would probably prefer to see any major increase in development budget being spent elsewhere - more detailed content, more expansive storytelling, more progress in areas that have been neglected in the former headlong rush to cram more polygons and effects onto every screen. Developers, too, would welcome such a switch in focus - while publishers would breathe a sigh of relief if the next console transition didn't bring with it another step-change in development costs.
That's why the reception for Nintendo's Project Cafe is going to have such a huge influence on Microsoft and Sony's thinking - even though both companies are already well into the design and development process for their next-gen systems. If Nintendo can get by with current generation power levels, the option for Sony and Microsoft to reign back their graphical ambition and focus their efforts on other aspects of the console will be wide open. If that does happen, plenty of journalists and commentators will rush to lament the death of progress - but in reality, it could be the best thing to happen to the progress of videogames in decades.
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