Console hardware takes a back seat to this generation’s services

More than two years have passed since the inception of the current generation of consoles, which launched with a rough start at the end of 2020. You’d think it’s been long enough to understand what it’s all about, but for many, it’s still confusion. That may change this year. As Tomas Franzese wrote earlier this month, 2023 could be the year we finally see the games that define this generation’s consoles, at least in terms of exclusivity. He also noted that games can stop working across platforms, being launched on current-generation consoles only instead of simultaneously on last-generation hardware.

While this will finally give us some more memorable gaming, it doesn’t get us any closer to defining the hardware itself. Besides a few extra teraflops and super-fast new SSDs, there’s not much that helps the PS5 and Xbox Series X and S stand out from their predecessors. Sure, the PS5 looks like a giant spaceship, and the Xbox Series X is built like a refrigerator, but we didn’t know what these could offer that the PS4 and Xbox One couldn’t along with some beautiful lighting effects and non-existent load times.

But that does not mean that this generation is aimless; It’s not just a hardware-and-software-based device like previous consoles. Instead, this generation of consoles will live and die on their services, from Game Pass to cloud streaming options.

What’s the deal with consoles?

Moore’s Law indicates that the number of transistors in a microchip will double every two years, and for a long time, the industry has kept pace with this trend. However, over the past few years, technology gains have been leveling off, and video game consoles are no different. For example, the PS5 saw some improvements over the PS4, with the ability to run games at 4K with a 120Hz refresh rate and much faster storage. It also has more teraflops, which is just a fancy way of saying it can compute more operations at once.

Living room with Microsoft Xbox Series X (L) and Sony PlayStation 5 home video game consoles along with TV and soundbar.
Future Publishing/Getty Images

While the PS5 is more powerful than its predecessor, most of what I said above is of no interest to the average user. Besides reduced load times, some visual improvements, and more ray tracing capabilities, there isn’t much difference between last-generation AAA games and this one. This will not be a one-time fluke.

“We will not see the revolutionary leaps in technology and content that we saw in the 1990s and 2000s when a new console generation meant an entirely new content slate and technical capabilities not seen before,” Matt Piscatella of the NPD Digital Trends group tells via email.

The latest gaming consoles are becoming less important as a way to play the most popular games. In the first two years, both Xbox and PlayStation released new games such as Horizon Forbidden West On last-generation hardware, even the older hardware struggled with the most intense titles. Sony has also successfully experimented with releasing its first titles on PC months or years after their initial release and says it will continue to do so. Meanwhile, Xbox is focusing its attention on Xbox Game Pass and Xbox Cloud Streaming, which allows users to play games on their consoles, PC, or mobile devices. And thanks to cloud saves, they can play on one device and choose the game on another. Nintendo will continue to be a closed ecosystem on its own level of existence, but even it can’t deny that the Switch needs games outside of itself and supports more ports, both locally and across the cloud.

They’ll continue to sell, but as video game companies try to figure out the best way to recoup costs as games become more expensive, and therefore more expensive to buy, they’ll look to other emerging technologies. This is where services like Xbox Game Pass come in.

The rise of services

At this point, there isn’t much difference between Xbox and PlayStation in terms of the consoles themselves, and until we start seeing more exclusives in 2023, there isn’t much reason to buy a PS5 over an Xbox Series X or vice versa. However, that doesn’t mean you can’t give these companies your money.

All the major console manufacturers, including Nintendo, are placing more of their bets on services, whether it’s cloud gaming or game catalog subscriptions. The big name in this space right now is Xbox Game Pass, which gives gamers access to a huge catalog of games, including first-party releases, and cloud streaming for $15 per month. Last year, Sony reinvented PlayStation Plus, which doesn’t access Xbox Game Pass, but still offers a back catalog of older games if you subscribe to higher tiers, along with a rotating list of free games and features like cloud saves. Nintendo owns Switch Online, which allows people to play games online and provides access to a growing catalog of older titles. You get the picture.

PlayStation Plus, Xbox Live Gold and Nintendo Online logos

Consoles have had services for years. Think of Xbox Live Gold, introduced on the Xbox 360. For a fee, users can sign up for online multiplayer and free games every month. These companies have thought of ways to make more money from their customers beyond just selling games and hardware, but this generation is about making money from gamers in other ways. As long as customers buy into their ecosystem and buy their products, they win.

When Microsoft bought ZeniMax Media in 2021, it gained access to Bethesda’s massive library of games, including Elder Scrolls, Fallout, and upcoming exclusives. starfield, and many others. However, it wasn’t just that Xbox would have more exclusives – although that’s certainly part of it. What people have focused on is adding them to Xbox Game Pass. You can play future Bethesda games on day one, but you can basically play them for free with a subscription.

Microsoft is all in on Xbox Game Pass. You can see this with the Xbox Series S release, which is almost identical to the Xbox Series X minus some features and drive, which essentially makes it a cloud game box. The executives also said a lot, promoting Inclusivity and its mission to bring its games to as many people as possible. In the marketing materials, you can see that Xbox Game Pass is getting as much play as consoles or first-party titles.

And it works. In early 2022, the company said Xbox Game Pass had about 25 million subscribers. It’s a great deal, too. For $15 a month, you can experience games you wouldn’t have otherwise, and you can transfer them from your TV to your PC or even your phone. That’s how I played quintet While also using my subscription to go to some older titles, such as Halo: Master Chef CollectionWithout worrying about my budget.

The TV shows the new Xbox Game Pass coming to Samsung Gaming Hub soon.

PlayStation is trying something similar with PlayStation Plus, but also in expanding beyond first-party games. It plans to launch 10 direct service games over the next four years thanks to its acquisition of Destiny 2 Developer Bungie is, and will continue to be involved in, movies, TV, mobile games, PC games, and more.

Granted, it’s not all services, but what the big console makers are showing off is that the hardware itself, while still important, isn’t at the top of the list anymore. Gamers’ needs are expanding, and so should we play games.

“In the PS2 era, someone bought a box, hooked it up to a TV, and had to buy games on disc. The ways people interact with those boxes have expanded in so many ways. It’s all about playing what you want, when you want, where you want, and with whomever you want.” “Back in the day, what you got was played where you are,” says Piscatella.

What does the future hold?

We’ll continue to see home console releases. There is no way for these companies to break out of the cycle of hype surrounding new hardware releases and competition that can drive sales. Plus, they’re still selling well. As inventory has become more stable (at least compared to where it was immediately after launch), manufacturers have been reporting stronger sales. Sony just announced at CES 2023 that the PS5 is a third of the way to achieving its lifetime sales goal, with around 30 million units sold globally, and according to VGChartz, there’s not much disparity between it and the Xbox. On the other end of the industry, the Nintendo Switch still dominates nearly six years after its introduction.

This isn’t just in the US, where console sales tend to be stronger. Manufacturers are investing more in Asia and players are responding. According to Darang Candra, an analyst at Niko Partners, this is the case even in Asian markets where PC and mobile reign supreme.

“The current generation of consoles suffers from a lack of hardware, game delays, and just a lack of next-gen games. However, we’ve continued to see strong demand as consoles remain a major access point for the latest HD AAA games,” he tells me via email.

However, games and consoles are getting more and more expensive. Sony just announced that it will raise the price of the PS5 by about $50 in major markets, and many of the biggest games are now selling for as little as $70. Getting involved in video games is an expensive hobby, so of course, gamers will look for cheaper alternatives, such as subscription services or cloud games that don’t require an expensive console. Or, says Candra, targeting platforms gamers already own, such as phones, tablets, and computers.

When people complain that this generation of consoles hasn’t even started yet, it seems like they haven’t seen the whole picture yet. This is a generation of non-device-related services, subscriptions, and technology, and we have to watch it to see where it goes.

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