Xbox 360 is approaching its sixth birthday, and the Wii and PS3 their fifth. This is when a new console cycle would traditionally begin.
But the market has changed. The Wii U is on the way, of course, but a true next-gen console is at the very least two years away – and probably more.
The platform holders, of course, would argue that new cycles have begun thanks to the arrival of Kinect and PlayStation Move. Few would agree.
And now Robin Kaminsky, the co-founder and CEO of 1st Street Partners and former executive VP of publishing and the general manager for games at Activision, has said that the experiment has failed.
“Today’s traditional games market is in trouble. Already a longer cycle is resulting in fewer sales,” she wrote on IndustryGamers.
“The retail packaged video game market is down and has been declining for two years. NPD says the market will be flat to down two per cent this year. Many believe digital sales and the economy are the core drives of the decline. I believe a lack of innovation – actual stagnation in game development – is the real culprit.
“The traditional games market needs new, innovative hardware and content to grow. The question is can publishers afford to make games in the next cycle and can console makers afford either the R+D investment that is required to create truly innovative new hardware or the losses that accompany their launch?
Kaminsky also had a word of warning for publishers who are turning their back on console publishing to focus instead on the casual market.
“Even Activision only got 37 per cent of their revenue from digital sales last quarter, and Activision owns World of Warcraft, one of the largest and most profitable digital games, as well as Call of Duty, one of the most valuable games for digital downloadable content,” she added.
“EA’s digital sales are increasing rapidly, primarily via DLC/add-ons, mobile and micro-transactions. Yet EA, who has made significant investments to acquire digital scale, continues to rely on traditional game sales for the bulk of their business.
“Publishers need growth in console games to be successful, and those games remain primarily a retail business. Even including digital sales of these games, I suspect the market would still not show meaningful growth.”