In a normal year, I’d be knee-deep in my coverage of gaming’s annual extravaganza, E3.

Months of preparation would have given way to several days of live video production and analysis, along with an inundation of written articles dissecting some of the bigger, and many of the less visible announcements emanating from the big show.

But alas, as we all know 2020 is anything but a normal year.

E3 is of course canceled; its future in doubt, and a week that normally would see me personally scrambling to do an insane amount of work for no pay has suddenly transformed into just a regular week off.

Remember when we had nice things?

Unsettled probably is the best way to describe how I’ve felt this week.

However, there is hope on the horizon!

The next generation of gaming consoles is rapidly approaching. As I write this, we are on the eve of the reveal of the PlayStation 5, perhaps the first major battle in the war of the new consoles.

This next generation will be very different though. That’s because in addition to the changing of the guard in terms of hardware, we are also about to witness an event that has only come along a few times before in the history of the gaming industry – a complete technological shift which will fundamentally alter how we interact with games.

This technological shift is being spearheaded on two fronts:
• Service
• Accessibility

Or in other words: Subscriptions and Streaming.

It all stems from the gaming industry’s oligarchs taking a long look at the upheaval occurring in the movie and television industry thanks to subscriptions and streaming. It’s simply undeniable that Netflix and Amazon Prime have fundamentally changed the expectations that a consumer has in how they consume entertainment.

The subscription model of these platforms provides a vast variety of content to the consumer that they may not otherwise be aware of, while the emergence of streaming has provided a convenience level of content consumption that is unparalleled. This has led to an upheaval in the entertainment industry. Theaters, once the bastion of new, cutting-edge cinematic releases, are now suddenly much less important, with many chains eliminating screens and some in danger of going bankrupt.

And now in 2020, subscriptions and streaming are poised to become the dominating force in the gaming industry as well.

Microsoft has been the most outwardly forward-thinking in their approach to the coming technological shift in gaming.

Beginning in 2016, the company embarked upon a methodical metamorphosis to solidify its place in this new digital future:

• Play anywhere – the ability to purchase a digital copy of a game through the Xbox store, and play it on either PC or Xbox.
• Game Pass – A subscription service available on PC and Xbox.
• Day One Digital – All new first-party content from MS would be available on Game Pass.
• xCloud – Microsoft’s game streaming service.
• Smart Delivery – A scalability initiative, which we dubbed “forward compatibility in 2019. Smart Delivery allows some new Xbox Series X titles, like the upcoming Halo Infinite to be played on older Xbox One hardware.

What Microsoft was doing throughout these years was transforming the very idea of Xbox – from being a vision of a piece of hardware sitting under a television, to a service that could be interacted with on a variety of devices.

With this new philosophy comes the shedding of the old cares of the gaming industry.

Microsoft’s success will not be tied to how many pieces of new XSX hardware it sells. Instead it will be tied to how many consumers are engaging with Xbox as a platform – whether it’s a game that was purchased through the Xbox store, or something being played on Game Pass, or even a game being streamed through xCloud – Those are all unique ways to engage with the Xbox platform.

Simply put, Microsoft doesn’t care if you buy an XSX, if you’re engaging in any of those ways, you’re still “playing Xbox.”

And of course, Microsoft is not alone in this vision of a gaming platform as a service. Google has already entered the fray with Stadia, a service that allows users to purchase and stream games without the need for any hardware.

Xbox is not a console anymore – it’s a platform – a service that can be accessed anywhere.

Apple has also launched their own platform, Apple Arcade, a subscription based service that allows users to download a curated selection of games to a wide range of iOS devices.

These approaches are all fundamentally different than the more traditional one that Sony is taking with PlayStation 5.

Sony has stated their belief in distinct console generations; a statement that throws out any possibility of the scalability features of Microsoft’s Smart Delivery, and opens the possibility of the continuation of multiple PS4/PS5 sku’s for their releases. And while it’s true that Sony pioneered game streaming technology with their PlayStation Now service, its existence has always been treated as a side-project, rather than a core pillar of their strategy.

Instead, Sony has continued playing to their strengths – cultivating the most impressive lineup of first and second party studios in the industry, and letting the quality of those games push systems. All indications are that Sony is banking on continuing this strategy.

Sony’s position at the dawn of this technological shift is reminiscent of Nintendo’s position during another great technological shift – the introduction of the CD-ROM in the mid-nineties.

The arrival of CD-ROM’s as the industry’s preferred storage medium shattered the old order of the gaming industry. The low costs of producing CD’s, as opposed to cartridges, opened the floodgates for more developers to enter the industry. Plus, the vastly improved storage space afforded by CD-ROM’s allowed those developers a greater freedom to pursue their vision and advance gaming as an art form.

Standing as a bulkhead against the advancing technological tidal wave was Nintendo, who insisted on clinging to the control over publishers that the cartridge format allowed them to exert. Sony went with the tide and released the PlayStation – Nintendo stuck to their guns with the N64.

Nintendo refused to ride the tide of CD-ROM’s and paid the price with the N64.

They’ve never been the same.

So, while there are parallels between Nintendo’s past and Sony’s present, at least the existence of PlayStation Now allows them to pivot should the need arise. Sony is also showing signs of loosening their stance on certain games being only available on PlayStation hardware. A number of previous PlayStation hardware exclusive titles, like last year’s Death Stranding, as well as Horizon: Zero Dawn will soon be launching on PC, with rumors of more to follow.

This brings us to the second part of the technological shift: accessibility.

While the term “Netflix of gaming” has been brandied about repeatedly, especially when speaking of Microsoft’s Game Pass, I don’t think that the true gravity of that expression is being considered.

Yes, both platforms allow users to access an expansive array of content that rotates each month; however, the key that is being missed when making comparisons to Netflix is accessibility.

When you engage with the Netflix platform, you are able to do so on virtually any device. Whether it’s an app on your Smart TV, your phone, a gaming console, or simply logging into the website, a user never has to worry about arbitrary hardware in order to engage with the Netflix platform.

This same approach will be key part of the technological shift in the gaming industry, and what I mean when I said two years ago that Microsoft was transitioning Xbox from a piece of hardware, to a platform.

The emergence of streaming technology will only enhance the accessibility of games in the future.

So far, Microsoft, Google, and EA have all tested streaming services, (and of course, Sony’s PlayStation Now has existed for several years) and all three of those services are already very, very good. It’s amazing how little latency there is on any of these new streaming solutions, and it’s only going to get better as time moves on.

As streaming becomes a more viable solution, the devices that will allow users to access their streaming subscriptions will continue to expand. In the very near future, we will likely see Stadia and xCloud apps made available for Smart TV’s, blue ray players, and a host of non-traditional gaming devices. And as those accessibility choices expand, the importance of dedicated gaming hardware will begin to  decline until “units sold” becomes secondary to how many people are engaging with the gaming “platform”.

Another consequence the expansion of accessibility will be the crumbling of the closed architecture that we see in current gaming hardware.

What I mean is that in the not-too-distant future, I would not be shocked to see the availability of the xCloud app on your PlayStation hardware, or a PlayStation Now app on iOS, etc.

Simply put, as the idea of platform becomes tied to service, those services will begin to intermingle on all hardware.

Before you call me a complete lunatic for suggesting such heresy, consider this: Netflix and Apple both produce television shows and movies. In that vein, they are competitors. However, even though they are competitors, access to the Netflix platform is still available through an app on iOS devices.

This same type of cross platform accessibility, unheard of throughout these first 50 years of gaming history, will soon become the norm thanks to this technological shift.

There are additional ramifications as well.

The move to service-based platforms will spell the end of physical media within the next 5 years – As the accessibility of these digital platforms grow, the importance and need for physical media will diminish. Physical media will become too burdensome for software companies to produce, and its existence will go the way of physical PC releases.

New metrics for success – As more users access gaming content through subscription-based services, the need for content to fill those services will also grow. This means that many titles that would normally be released out into the wild will instead be scooped up by platform holders to pad out that lineup. The issue here is that a title that is offered on a subscription service day one, is not having sales measured, which heretofore, has been the key metric of success for the gaming industry.

Also, the philosophical shift to the idea of platform as a service will make hardware sales less important. So how do we measure success? – Two new buzzwords; “engagement” and “interactions”.

Engagement will measure how many people are engaging with the “platform”, again, whether it’s the streaming aspect, the subscription aspect, or just purchasing a title – it will all count as engaging with the platform.

Interactions will measure how many users are touching a title, and how long they are spending with that title.

So what does all this mean for the launch of the next generation of dedicated gaming machines?

Personally, I believe we are going to see a lower adoption rate for next-gen machines, compared to what we saw at the dawn of the PS4/Xbox One era.

Both the Xbox Series X and the PlayStation 5 have the potential to cross the $499 threshold, which makes them a very tough pill to swallow for a global economy still facing an unemployment bubble thanks to the COVID crisis. Although many areas are beginning to finally reopen, it will still be several months before the full economic impact of the pandemic is realized. (There is also a rumor, of a less expensive version of the new Xbox, called Lockhart; however, I expect that will be a digital-only device)

PS2 is still the best selling console ever, with over 150 million nits sold.

Even in times when economies are healthy, game hardware has a limited reach. Think about this – the magical number that is currently considered “platinum” in terms of hardware units sold is 100 million. In the entire history of gaming, that threshold has only been crossed six times.

Six times in 50 years.

With the cost of producing high-end games increasing and a potentially smaller reach for the next generation of hardware, platform holders will have to find a way to recoup that cost somehow. When you look at Disney Plus, and the 50 million subscribers they’ve achieved in just five months, as opposed to the very successful Nintendo Switch, which has taken 3 years to sell 50 million units – well, suddenly the idea of getting access to your content into a wider swath of hands doesn’t seem like such a crazy notion.

And now that the technological shift is here, the borderlines of closed hardware ecosystems will begin to fade away.

So enjoy this new round of console launches.

You won’t see one like it again.

Written by The Watchman

The Watchman is a journeyman gamer who has seen and played a good chunk of gaming history.
He’s also an actor, a reporter, a pro wrestling connoisseur, and some say he’s a cat whisperer.
If you have any questions or just want to drop me a line, hit me up at thewatchman@nerdbacon.com
Or follow me on Twitter @DavetheWatchman
You can also game with me!
Look me up on Xbox Live @ DJKhadoken
Or on PlayStation Network @ Eaglevision_dl