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Last week at DICE Europe, Wedbush analyst Michael Pachter spoke about the end of the console era. He believes that for there to be growth in the traditional game market, traditional consoles might need to be left behind.
Pachter said that the console installed base is not going to get any bigger this generation. It will stay about the same. All together the last cycle for the Wii U, PS4, and Xbox One was at 270 million units, this year will be at around 260 million.
He also said it will be the last real console cycle. The companies creating these consoles, however, will not go out of business or shut down. They will continue to make consoles, and consumers will continue to buy them. The difference is, the number of sales won’t reach or sustain the numbers sold in the past. For example, the 3DS sells about 15 million units a year, whereas the DS sold 26 million units for 5 years straight.
What Pachter means when he says that this is the last console cycle is that console games shouldn’t need to have a console (he’s not referring to the cloud either). In his opinion, games need a CPU, GPU, storage, controller and a display. Consoles will no longer be necessary as smartphone and set-top box hardware gets more sophisticated.
Around the end of this console generation, people are going to have CPU/GPU that will be connected to their televisions in their homes whether it be the latest iPhone or a Fire TV box from Amazon. The Fire TV box is much more affordable at $100 compared to a $400 console.
I think this shift to full-game digital downloads, where everybody has the opportunity to play a game without having to invest $399 is a huge opportunity. It’s an opportunity for everyone in the value chain, except the retailer and maybe the console manufacturer.
– Michael Pachter