Sony and Microsoft to end console wars after PS3 and Xbox 360?

Just last weekend, I spoke about the next generation of consoles and who is likely to be involved. I think all three current players, Sony, Microsoft, and Nintendo are likely to play again, but some feel differently. Could it be that the PS3 and Xbox 360 are the last consoles from Sony and Microsoft respectively?

Nintendo is guaranteed to be in the next generation console war. For starters, it is a company which only deals with video games, so even if the big N decided to get out of console manufacturing, it would still develop and publish games, much like Sega has done since the Dreamcast crashed and burned. But it’s unlikely to drop out of the console manufacturing business any time soon because the Wii and DS are both phenomenal successes.

But there are question marks over Sony and Microsoft’s long-term plans. And one person who thinks that both companies future isn’t going to involve consoles is Alex St. John, CEO & Founder of WildTangent, a PC game network.

According to GameTopius (no, me neither), St. John was recently part of a panel titled ‘Debate Club: Is the Console Entertainment Hub of the Future or Fighting to Stay Alive?’ at the first annual New York Games Conference.

The pro-console team first argued that consoles are the future thanks to the cost of high-end PC gaming, the ability to play from the comfort of your couch, and consoles becoming media hubs. But then it was the anti-console team’s turn, and the views expressed by St. John were controversial and explosive. He said:

Sony is not the company they use to be and the Playstation 3 is a market failure. Sony will never recover the billions they lost on the current generation of consoles. Sony says we’re not making another for ten years, which is code for we can never make back the billions we lost on PS3, let alone convince our executives to make one again.

Microsoft has a hole mile deep dug in the middle of Microsoft’s Campus to bury the billion dollars of broken Xbox 360’s they’ve got. The Xbox business is not a profitable business for them. It’s only become incrementally profitable for them after many years, and billions invested. To give you some perspective the Xbox 360, which is the second most popular console in the U.S; All Xbox revenues combined; create less revenue than World of Warcraft subscriptions. The entire 360 software business is minuscule compared to one PC game.

So the interesting observation, is that both Microsoft and Sony are in a position where they’re unlikely to ever have the motive to invest the billions into making another generation of consoles.

It’s easy to dismiss St. John’s comments either as the ramblings of a madman, or of a man whose business is solely reliant on PC gaming, of which the latter is ultimately correct. But, everything he says is factual, and deserves some thought.

The PS3 is a market failure at this moment in time. Although that failure may ultimately be turned around in the end, with Home and LittleBigPlanet possibly kick-starting a sales climb this Christmas, will it be enough to turn around the losses Sony has already made on the Playstation 3 hardware?

Microsoft has also lost a fortune on this generation console war, with the great Red Ring of Death debacle costing the company over $1 billion to fix. And with the recent price cuts across the board, each console unit sold is likely costing the company more than ever. Will the impressive software attach rate be enough to tempt Microsoft in to another round of console wars?

I foresee the Wii 2 making an appearance in the next couple of years, but then my crystal ball goes a bit cloudy and I’m not sure of the future. There could be another console generation beyond this one, but nothing is guaranteed at this point. I hope you’ll all be content to only own a Nintendo console in ten years time.

Info source http://gamer.blorge.com