PC gaming dominates content spending, but Xbox and PlayStation aren't out of the game yet

[Windows Central]

A new report claims PCs have overtaken consoles in-game content spending, rising 65% from 2011 to 2024 to $30B, whereas consoles only saw an $18B increase.

PC gaming dominates content spending, but Xbox and PlayStation aren't out of the game yet : Read more

 

[fjtorres5591]

Quick question, Mr Hoglund: Have you ever owned an Original XBOX?
Preferably while it was being built and marketed, say circa 2002.
You ever hear of KODI? It started out as XBMC: XBOX Media Center App.
Or maybe the XBOX Media center Extender kit?

I suspect not.
See, the Original XBOX was a PC.

INTEL CELERON PROCESSOR, NVIDIA graphics coprocessor. Built-in hard drive.
DVD Drive. Built in ethernet port. FullHD graphics support. Today those are expected features. Back then the only gaming boxes that had those were XBOX and PC. Because the XBOX was a PC. Locked down true, but an entry level gaming PC nonetheless.

But it was a PC using standard PC components and, most important, its primary software development platform was DirectX on a stripped down version of Windows. In fact, when he saw, the XBOX prototype Bill Gates First Qurxtion was whether it could run OFFICE. It could. In fact, the primary use for hacked "jail broken" OG XBOXes was to run full Windows and/or LINUX. Long story there.

Many things have changed since those days but XBOX remains an entry level, locked-down DirectX gaming box. Hence XBOX.

The hardware has changed with each generation but today's XBOX still plays OG XBOX and 360 games. With enhancements from the newer hardware. Just like PCs. You change the hardware but keep the bulk of your games.

That too MS did first and best.

As they say, does that forget the past are doomed...to something or other.

If PCs continue to rise in market importance (which they will: you ain't seen nothing yet) it will have no negative impact on XBOX owners. Because not only will they get to take their existing games to the next generation (Windows compatible) hardware, but they will almost certainly get access to the new games (forward compatibility is promised). XBOX is already a subset of PC gaming and whatever the new hardware looks lie it will almost certainly remain so.

Because unlike the console obsessed XBOX owners are not, barring a few loud historically challenged fanboys, hardware fetishists. XBOX has gone from Intel+NVIDIA to PowerPC+AMD to AMD CPU/GPUs for two generations and throughout it all the games remain mostly playable. And the XBOX has historically drawn the vast majority of its library from PC game publishers. In fact, many of today's biggest console publishers entered the living room market via XBOX. Not Sony, not Sega, not Nintendo. XBOX. History is easily forgotten.

Not to be forgotten, Microsoft owns XBOX but they also own Windows. They make money off both and they have long done day and date for both segments, just as they have always done multiplatform third party style releases. In fact, their fondest dream since the first Xbox hss alszys been to unify software development for both sectors. Easier said than done because steering developers is way harder than herding cats.

But market economics are pushing developers and publishers just where MS wants them. And everybody from gamers to developers will benefit.

PC gaming isn't rising; its taking over, whether via full Windows or sub-set like SteamOS and the previously hidden XBOX OS. Game development is too hard, expensive, and competitive, too survive off locked-down boxes any more. It needs economies of scale only found on the PC variants.

Celebrate. The best is yet to be.

 

[Lurking_Lurker_Lurks]

I remember reports at the start of this generation of Sony and Microsoft working together to improve consoles overall as cloud gaming was set to overtake a gaming market that had never "really" taken off in terms of success (as in cloud gaming was poised to become as popular as mobile gaming and by pass consoles all together). This has since really gone nowhere, but I think the need for it has never gone away. The console market as a whole would be wise to acknowledge its precarious situation, even more so than it already has. I really think we'd see a bigger console market on the whole if exclusives were done away with and out on every platform. The fact that this has already happened on PC shows such hubris. Consoles need to be approachable and accessible pieces of hardware that stand alone in the value they provide to consumers. They can't continue to be this disjointed mess where in 2025 compatibility for the switch still makes headlines. They can't continue to withold value from consumers in things like free cloud saves and free multiplayer. They can't keep squabbling with each other for a piece of such a small pie when the wider gaming industry is so much bigger.

Now, if it's a company like Nintendo and they're good with being small, I'm sure they'll continue to find success there. On the other hand Microsoft and Sony are desperate to grow their gaming businesses. As such I don't think they can or should justify playing by the same rules which have regulated consoles to such a niche sales audience to begin with. Microsoft we at least know isn't (though the fact that gamers are pushing back against their strategy shows a deeper problem; maybe there is no path forward), but Sony is dragging their heels and playing tongue and cheek about it.

I think for the most part current users are locked in and no immediate major losses will ever happen, but gaming is growing. The question is will consoles grow with the industry as a whole? And I'm not sure they will. I saw a gaming journalist make a post suggesting the price of the Switch 2 and claims were made of a $400 price tag. If that's true (I say $300 personally), then I'd say there's major competition for first time gamers. The Steam Deck only starts at $400 and the Steam OS powered Lenovo Legion Go S is only $500. Both are poised to be significantly more powerful than the Switch 2 (little more iffy for Steam Deck, but definitely the Go S) and won't be that much more. Additionally they'll have a library including Xbox and PS exclusives even just considering the steam deck supported games. There will be Steam OS powered devices with low entry points as time goes on. Even on the more expensive Windows PC gaming side, consoles for whatever reason are chasing them. It's hard to pitch consoles as a cheap way to play high performing games in great graphics, when the machines that do that are costing as much as building a PC yourself (arguably more especially adding in the cost of paying for cloud saves and multiplayer). The PS5 Pro is treading thin ice that I think Sony will continue to let crack when the PS6 launches and it's price is revealed.

With the current landscape, I don't see why new gamers would buy a console to game. PC is offering a native experience that is becoming more similar to consoles with lower price points. Mobile will always be mobile. Cloud is offering an experience that still lacks the infrastructure but one day will possible dominate. Consoles continue to be disjointed walled gardens with minimal benefits after you purchase one.

 

[fjtorres5591]

The console industry is under stress for three main reasons (platform holder screwups aside) and none is going away.

First and most basic is that consoles are supposed to be gaming appliances, not computers that can game. Way back in the first generation, Atari got it and they had both the 2600/5200/7800 line on the low end and the separate 400/800/XL/XE line. With the ST and TT line surviving to end of the home computer wars with Commodore.

Consoles were appliances out of the consumer electronics world like TVs and stereos. Does anybody care what CPU a TV or stereo runs? The OS makes a bit of difference but does anybody really know/care what a VIZIO or SONY runs as long as it has the right features? That was the rules for the first five generations.

Then Microsoft got back into the console business. (Let's not forget MSX). They took their cues from Atari and built a locked-down low-end gaming PC and brought in PC features plus full HD support. The PC nature of the OG XBOX turned out to be a double edged sword because it was by far the best gaming platform of the day offering experiences no other box could even attempt but on.the flip side getting a PC for $300 was a big incentive for "jailbreaking" and buying XBOXes but not XBOX games. (ATARI and Commodore had similar problems even without hackers chipping in.) Subsidized hardware is a dangerous game to this day. More later.

Next generation, MS stole a march on the competition and built a more appliance-like device. The HD drive was optional. The processor was a PowerPC chip.and security was beefed up. No incentive to hack the box. Plus, it actually asked game developers what features *they* wanted, notably EPIC who was creating GEARS OF WAR as an XBOX exclusive. They asked for 512MB of RAM. UH, OK. To get there they used a UNIFIED MEMORY architecture with a fast video cache. It worked like a charm. Because it arrived a year early, was reasonably priced and (still being DirectX based) easier to code for than the competitors, it sold extremely well despite an embarrassing manufacturing oversight.

Consumers barely noticed that the 360's PC base was the key to its success but developers did and, tired of porting from x86 to RISC, particularly the funky Toshiba CELL processor they "requested" a move to x86. Music to Microsoft ears.

Sony also took note of what made the 360 successful and made their next box a locked-down low-end PC without Windows. dropping all the gold plating that made the PS3 launch a disaster and focusing solely on hosting games. Microsoft, however, stayed on the appliance side and since they already had the PC side of the box nailed, focused on adding features to the box. They added HDMI IN, TV tuner and cable box comparability and since KINECT had been successful, made it mandatory. The fact that they box was a actually a good game box with an eye to the future was missed in the griping over price and competitor FUD. New management came in, Scorpio arrived, and the feature-based philosophy went away, replaced by a focus on technology. Just like PCs.

The only platform holder sticking to the consumer electronics model of features over tech is NINTENDO. It worked beautifully in the Wii era, failed miserably in the Wii U days, and has done well with the Switch by changing the debate from living room to handheld. Will the trick work one more time? TBD.

Second, having transitioned from gaming appliances to tech driven low end PCs, the remaining living room boxes inherited the strengths and weaknesses of gaming PCs. Marketing moved from capabilities to spec numbers and Pixel Pimping. And the supply chain got...complicated.

As Mr Spencer made clear, the component supply chain that allowed consoles to launch with a subsidy, breaking even after a year, and dropping into more consumer friendly prices afterwards is no more. Prices aren't dropping significantly because they can't.

Back in the XBOX 360 days, DVD drive manufacturers turned them out by the billion. You could buy a low end DVD player for $30 in drug stores. No-name brand but the things worked and lasted years. Many are still working. A $30 DVD player meant the drive itself barely cost $5 and with dozens of manufacturers XBOX and Sony could secure custom designs in large batches at good prices. Fast-forward 20 years and you can get cheap dvd players but only because there is little market for them. And their successor hasn't turned out to be the BluRay drives Sony bet the ps3 on but digital video instead. As a result, BluRay players are a niche product, not cheap, and only have a few drive sources. Instead of a $5 OEM price, the optical drives in consoles run closer to $50. No price drop there.

The story on semiconductors--memory, storage, and SOCs-- is similar; where before the fabs making the wafers that went into those chips lost customers as newer fabs obsoleted their capabilities so it made sense to lower prices instead of rebuilding the fab, fabs these days are reconfigurable within a range of processes and have ample customers for trailing edge processes (you don't need 8nm chips for a fridge or stove) who are happy to pay more than the console makes can afford to *if* they are to lower prices.

And the newer high end processes? The fabs have more and more customers in newer sectors like additive manufacturing, drones, weapons, and AI. AI alone can and will suck up all the highest performance output and happily pay way more than even PC video card vendors can sell their wares for. The looming shortages are so critical that governments the world over are paying to get fabs built locally.

So by moving to a tech driven product model the consoles have given up the supply chain advantage that allowed them to reach the low end of the gaming market and bring in new gamers. Hence they have a stagnant market to sell into.

Now, make no mistake: the supply chain issues also impact Nintendo, PC builders, and video card manufacturers. And they will only get worse because of inflation now that the age of free investment money is over. And if that weren't bad enough, there's still the third challenge to account for.

The third challenge is the gaming media's big worry for good reason. They helped create it. Pixel Pimping, hyping exclusives beyond their real value, and over-hyping blockbuster releases while ignoring the elephant in the room: mega franchises and live service games. Not only are game development costs skyrocketing in order to meet graphical expectations and the quest for the big billion dollar release, but sales are going down because gamers are gravitating to known IPs and live service communities. Smaller games are marginalized and the sector is left to indies who eschew pixel pimping and blockbuster hunting, who of course don't sell well enoigh to be promoted in the gaming media, but then, they don't have to. They survive fine without big sales. (There is a similar scenario playing out in the book world where the big multinational publishers have been facing a stagnant market all century and failing to find new authors and franchises to replace their aging legacy names because the better newcomers and savvy veterans are gravitating to small presses, indie self publishing, and subscription services. All of which pay comparatively better than the big publishers without demanding copyright control.)

In the last year we have seen studios closing, consolidating capabilities within the parent companies, and laying off staff thus made redundant. We have also seen studios closed and staff laid off as a result of games underperforming after burning nine figure budgets over 5-10 year development cycles. There is worse to come. For starters, keep an eye on BioWare Edmonton. Rumors are getting scary. There will be blood-letting.

Add it all together and you get a high risk environment for consoles that even returning to a feature based appliance model can't stabilize, much less fix. Having adopted a tech driven model gamers, regardless of platform--living room, mobile, cloud or PC--are now firmly stuck in the PC world's Red Queen race of running as fast as you can just to stay in place.

PC gamers are doing well, for now.

XBOX is in good enough shape becauxe MS put its money into 100 studios, cloyd, and Game Pass, but none is a magic bullet. They still have to execute.

Nintendo is sticking to their old ways but that is no guarantee their supply chain can support the prices their market prefers. At least with their 25% net profit margin they can survive any degradation.

And then there is Sony.
They used to be big in online MMORGs but divested them to bet on one and done single player games and when those started to underperform pivoted back to online live service only to...shall we say, run into problems?
In the meantime, propping up console sales and paying for third party exclusives (also underperforming) have left them with supermarket sized profit margins (5% in 2024 with 2025 looking at 4%). Sure, they sell more hardware and gross more than XBOX or Nintendo but what they get to pocket in the end is significantly less than either.

The long prophesied troubles of the '20's are here.
For everybody.
In gaming it is the sins of the past catching up with the players.