Is The Netflix Model The Future Of Video Games?

A few articles have popped up recently on WSO about the newly-announced PlayStation 4. If you follow video games, you'll know that this bad boy will make or break Sony's struggling video gaming division, which has suffered over the past six years as Microsoft's Xbox 360 beat it in sales, game selection, and online security.

Well, the PS4 announcement was certainly impressive, at least for "my" generation of gamers -- feels weird to say that. People who are now 22-24 and grew up with the last three generations: PS1/N64, PS2/Xbox/Gamecube, and PS3/X360/Wii, are sure to be looking forward to the PS4. But what about the new bloods who have grown up with only this generation alongside iPad and Android tablet games?

Full disclosure: I haven't really "gamed" since freshman or sophomore year, and I own an Android tablet that I don't use for gaming.

Every time I'm at an airport, or somewhat sadly, a restaurant, I see teenagers glued to iPad screens playing games. Most of these games, at least judging by looks, appear to be extremely linear -- like Temple Run -- with no real world or game development during their course. "Play the game to pass the time." In the console world, anecdotally-speaking, these kids play Call of Duty: _insert description of current or next CoD game here_ or Madden _insert year here_. It seems that demand for games that don't simply "pass the time" is waning in favor of games that are not necessarily plot-driven.

My question to you all is, where do you think streaming games fits into all of this? There has been an increased effort to force the Netflix model into gaming by some companies, which will appeal more to your average "let me just pass the time" gamer who might be connecting in from an iPad or even their iPhone. What this means for the next generation of consoles could very well be what Netflix meant for your old DVD player: obsolescence. With game trade-in values as low as they are -- sometimes as low as 20% of retail value -- it makes sense that people don't want to spend $60 on a game that lasts 10 hours and shelf it for eternity. Couple that with the fact that games have become increasingly shorter and more cinematic, and suddenly the prospect of paying a flat monthly fee to stream games instead of purchase them becomes much more appealing.

Where could the next generation consoles fit into this world? In 2012, the ten top-grossing apps for the iPhone were games...most of them costing no more than $1.99 (and many, of course, have free counterparts). Tablet and phone technology are already extremely impressive -- you can easily play N64-quality, and then some, on your iPad, which is incredible. As it becomes even more capable, do we eschew the old-school RGB-connected consoles that require a TV or monitor (who even has either of those these days...?) for a complete transition to mobile gaming?

Did you game as a kid or in college? Do you continue to game? If no longer, what would it take for you to get back into it? Do you think an army of mobile applications can overtake the Big 3 of Nintendo, Sony, and Microsoft?

Thanks for reading.

Comments (73)

Feb 25, 2013

Maybe I'm behind, but didn't PS3 recently pass the Xbox in total units shipped? Did Xbox really dominate this market? I was under the impression it was the other way around.

In terms of the "Netflix" model for gaming, I'd be absolutely shocked if we were still using a hard storage medium to transmit games in a few years. Online distribution is way more efficient and allows for faster, more convenient sales.

Feb 25, 2013
NorthSider:

Maybe I'm behind, but didn't PS3 recently pass the Xbox in total units shipped? Did Xbox really dominate this market? I was under the impression it was the other way around.

http://www.destructoid.com/ps3-exceeds-xbox-360-in...

The main problem the PS3 had was that its success came relatively late, once prices had dropped, and I'm almost positive it lost the battle in the US. Outside of the US, it's different story, good luck finding an Xbox 360 in Asia. Reliability issues and the Blu-Ray player gave the PS3 the upper edge once the PS3 reached the same price point as the Xbox 360.

What should be noted is that the X360 did gain a significant market share for Microsoft. The PS2 is the most successful console of all time, over 155 million units were shipped. Seeing those numbers again seems nigh impossible and the PS4 will be lucky if it reaches the long-term success of the PS3, including for some of the reasons outlined by the OP.

Feb 25, 2013
NorthSider:

Maybe I'm behind, but didn't PS3 recently pass the Xbox in total units shipped? Did Xbox really dominate this market? I was under the impression it was the other way around.

In terms of the "Netflix" model for gaming, I'd be absolutely shocked if we were still using a hard storage medium to transmit games in a few years. Online distribution is way more efficient and allows for faster, more convenient sales.

I believe I read that as well, the PS3 just recently passed the Xbox 360 in total units sold.

Been gaming since I came into this world, started with a basic Atari and NES systems all the way up to my current PS3. I agree, I think buying physical copies of games will be a thing of the past. Everything will be cloud based and distributed online. You will download any game you want and all saved games and data will be saved to the cloud. This will allow you to use the games across different platforms. Sony could allow you to buy a game on PS4 and have everything saved to the cloud, you could access the games on a PS Vita, maybe even Sony with a certain type of app. Can instantly share your saved games with friends or your social network.

Maybe its because I am a little older now, but everything being integrated online annoys me. Recently tried to play a quick game of Madden and NHL and it is honestly a process to get going. Numerous sign-ins, downloads and updates...trying to find a simple play now offline game option was a process. I miss the days of putting a game in and just playing.

Portable gaming seems like it is threat to the consoles, but man...how many times can you play temple run, tower defense, zombie shooter, angry brid type games. Graphics have become impressive but gameplay and creativity is still lacking. Though I have gotten emulators on my phone and played some classic SNES and N64 games, thats always fun. I've pluged my phone into into my TV and connected my PS3 controller to my phone via bluetooth and you don't even realize you are gaming on a phone....there are some great possibilities

Feb 25, 2013
NorthSider:

In terms of the "Netflix" model for gaming, I'd be absolutely shocked if we were still using a hard storage medium to transmit games in a few years. Online distribution is way more efficient and allows for faster, more convenient sales.

The problem with cloud gaming is that, compared to film streaming, it is currently prohibitively expense to the point that the economics don't really work...even for companies like Sony or Microsoft. Additionally, from a consumer perspective it just creates a bad consumer experience when you have to wait 48 hr for a game to DL or if the game is fully cloud-rendered the lag is so bad that it impacts the consumer to the point of almost being unplayable. As server costs come down and broadband speeds improve across the globe (remember these are global products and at the moment this would likely only work in a few markets with high BB speed like Korea) over the next 5 years I think you will start to see cloud gaming become the norm but for now it is still too expensive and limits the TAM of these products due to shitty BB speeds in most countries (even developed ones). I think this next generation PS4/Xbox 720 (or whatever they call it) will be the last HW-driven generation. I would predict that the next generation will be lightweight HW or embedded chipsets in smart TVs etc with cloud-rendered gaming clients.

Feb 25, 2013
harvardgrad08:
NorthSider:

In terms of the "Netflix" model for gaming, I'd be absolutely shocked if we were still using a hard storage medium to transmit games in a few years. Online distribution is way more efficient and allows for faster, more convenient sales.

The problem with cloud gaming is that, compared to film streaming, it is currently prohibitively expense to the point that the economics don't really work...even for companies like Sony or Microsoft. Additionally, from a consumer perspective it just creates a bad consumer experience when you have to wait 48 hr for a game to DL or if the game is fully cloud-rendered the lag is so bad that it impacts the consumer to the point of almost being unplayable. As server costs come down and broadband speeds improve across the globe (remember these are global products and at the moment this would likely only work in a few markets with high BB speed like Korea) over the next 5 years I think you will start to see cloud gaming become the norm but for now it is still too expensive and limits the TAM of these products due to shitty BB speeds in most countries (even developed ones). I think this next generation PS4/Xbox 720 (or whatever they call it) will be the last HW-driven generation. I would predict that the next generation will be lightweight HW or embedded chipsets in smart TVs etc with cloud-rendered gaming clients.

Agreed, but I think you're significantly underestimating the progress of internet D/U speeds over the next few years.

Feb 25, 2013
harvardgrad08:

I think this next generation PS4/Xbox 720 (or whatever they call it) will be the last HW-driven generation. I would predict that the next generation will be lightweight HW or embedded chipsets in smart TVs etc with cloud-rendered gaming clients.

I agree, it really is all about getting the network "up to speed". There exists game streaming services, but like you said they extremely laggy to the point where they are unusable. But, if the lag were to not exist (not sure if this is possible, purely given the physical distances involved), streaming could be a great model for both consumers and providers.

Feb 25, 2013

The problem with this argument is the assumption that consoles will continue to put out games that are one and done types. The realistic future of gaming is in multi-player and the sole reason consoles will not go anywhere for quite some time. On top of this, a generation of a new console is like 8 years so this mobile gaming only era is not in the urgent future but maybe moreso down the road.

Multi-player games like Call of Duty are bigger than ever right now with competitions for millions in prize money, demand for consoles might be down for the everyday person but mobile gaming is a fad in my opinion. It is the convenience factor and the need to be doing something that people participate in mobile gaming. However, that is not an alternative to the true "gamers" and as long as there is a market for it, it will exist.

Feb 25, 2013

Are these kinds of video games going to go away completely? I think as people realize how much of a waste of time they are, we'll see them fade out. I think we've hit a brick wall when it comes to graphics and capabilities for the consoles, and there's definitely a finite amount of changes you can do to a sports game, or Halo/COD.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

    • 1
Feb 25, 2013
BTbanker:

I think as people realize how much of a waste of time they are, we'll see them fade out.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

This is just too opinion based for a conversation such as this. I don't think this thought has anything to do with people's "realization" that gaming is a waste of time. I highly doubt public perception has changed to that. Sure many people believe it and many people are adamant about it but it's just an entertainment source. Same as TV, same as sporting events, etc. Hell, sometimes it's more thought provoking and interactive than TV is so maybe it's less wasteful time spent.

Streaming games is going to become the big thing no doubt. I have an immediate family member who works in a division of one of the big 3 where he's exposed to the new stuff first. Like he's the guy who gets to play with it before anyone even knows its coming out. He's expressed concern about these same thoughts and I think it's very valid to say console gaming is declining and along with your 60hr RPGs.

Feb 25, 2013
BTbanker:

Are these kinds of video games going to go away completely? I think as people realize how much of a waste of time they are, we'll see them fade out. I think we've hit a brick wall when it comes to graphics and capabilities for the consoles, and there's definitely a finite amount of changes you can do to a sports game, or Halo/COD.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

I'm not sure why you are always so antagonistic. "Waste of time" is the most arbitrary designation for something. Any leisure activity can be loosely defined as a waste of time -- golf, watching movies, gardening, etc etc etc. What matters are a person's preferences and whether, based on those preferences, he or she derives pleasure and comfort from an activity. Skiing, yachting, fishing -- guess what: all wasting time. I also think it's fairly easy to argue that video games are useful for society.

    • 1
Feb 25, 2013
DonVon:
BTbanker:

Are these kinds of video games going to go away completely? I think as people realize how much of a waste of time they are, we'll see them fade out. I think we've hit a brick wall when it comes to graphics and capabilities for the consoles, and there's definitely a finite amount of changes you can do to a sports game, or Halo/COD.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

I'm not sure why you are always so antagonistic. "Waste of time" is the most arbitrary designation for something. Any leisure activity can be loosely defined as a waste of time -- golf, watching movies, gardening, etc etc etc. What matters are a person's preferences and whether, based on those preferences, he or she derives pleasure and comfort from an activity. Skiing, yachting, fishing -- guess what: all wasting time. I also think it's fairly easy to argue that video games are useful for society.

+1

Feb 25, 2013
DonVon:
BTbanker:

Are these kinds of video games going to go away completely? I think as people realize how much of a waste of time they are, we'll see them fade out. I think we've hit a brick wall when it comes to graphics and capabilities for the consoles, and there's definitely a finite amount of changes you can do to a sports game, or Halo/COD.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

I'm not sure why you are always so antagonistic. "Waste of time" is the most arbitrary designation for something. Any leisure activity can be loosely defined as a waste of time -- golf, watching movies, gardening, etc etc etc.

You're going to compare active sports and agriculture to sitting and staring at a screen for hours on end?

MRIs of frequent gamers show that they have more gray matter in their brain, which contributes to addictive behavior.

Feb 25, 2013
DonVon:
BTbanker:

Are these kinds of video games going to go away completely? I think as people realize how much of a waste of time they are, we'll see them fade out. I think we've hit a brick wall when it comes to graphics and capabilities for the consoles, and there's definitely a finite amount of changes you can do to a sports game, or Halo/COD.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

I'm not sure why you are always so antagonistic. "Waste of time" is the most arbitrary designation for something. Any leisure activity can be loosely defined as a waste of time -- golf, watching movies, gardening, etc etc etc. What matters are a person's preferences and whether, based on those preferences, he or she derives pleasure and comfort from an activity. Skiing, yachting, fishing -- guess what: all wasting time. I also think it's fairly easy to argue that video games are useful for society.

You beat me to the punch. This exactly.

Feb 25, 2013
BTbanker:

Are these kinds of video games going to go away completely? I think as people realize how much of a waste of time they are, we'll see them fade out. I think we've hit a brick wall when it comes to graphics and capabilities for the consoles, and there's definitely a finite amount of changes you can do to a sports game, or Halo/COD.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

1) They're not a complete waste of time - there are numerous benefits, the primary one being that they're an enjoyable leisure activity. You could make the same argument for shows/movies and it wouldn't hold any ground either.

2) The world doesn't work like that. Most people aren't obsessed about maximizing the productivity of ever y portion of their lives...

Feb 25, 2013
BTbanker:

Are these kinds of video games going to go away completely? I think as people realize how much of a waste of time they are, we'll see them fade out. I think we've hit a brick wall when it comes to graphics and capabilities for the consoles, and there's definitely a finite amount of changes you can do to a sports game, or Halo/COD.

It would be nice to completely get rid of TV and video games, so we can create new useful things for society.

I think gaming has started to wane a little bit. At least from what i've noticed people are not as excited for new games anymore because the technology is not advancing as vastly anymore. The expectations are so high and they cannot be acommodated. For me I started to realize how big a waste of time gaming was. A lot of friends of mine are realizing the same thing. It could be a product of aging but I see it in younger kids as well.

Feb 25, 2013

Actually, Wii dominated last console rounds by far and I'm quite sure PS3 beat X360 in 2012.

I don't see consoles being replaced by mobile. There will always be the core gamer set that comes up and wants that console experience. A tablet can't compare to the experience of a console for gamers.

I'm not sure on the NFLX streaming model in gaming. Blu-ray discs in gaming use up to 50GB compared to movie DVDs or blu-rays which, at most, use up to 7GB. You'd spend a lot of time loading or blow an internet cap or something. (Canada has net caps and not everyone in the USA has quality broadband to stream.)

I think you will see higher DLC rates and possible charging for some major multiplayer components or companies trying to extend game life through multiplayer components. Ultimately, it'll be content generation that'll define what happens with the consoles.

Feb 25, 2013

I'm worried about netflix. Ultimately the hardware manufacturers are getting squeezed for margins, but they are the output device. If they decide to get cosy with the suppliers of In home entertainment, they can cut out the middleman (netflix et. al) completely. They're a great business, and I love the model, but they dont offer anything that a few big bucks can't also do, and there are some much bigger companies out there looking for new ways forward. Look how many people still use IE just because it's preinstalled.

Feb 25, 2013

Alright, I'm not going to win this one. Just curious though, how do you guys even have time to play video games?

Feb 25, 2013
DonVon:

? Do you think an army of mobile applications can overtake the Big 3 of Nintendo, Sony, and Microsoft?

Thanks for reading.

I think the questions between the lines here is, when will the difference between "mobile" and "console" games become immaterial? Already Playstation is hoping with PS4 to stream all PS4 games to the handheld Vita. Without knowing what tech they have up their sleeves, I see latency as being the major issue.

Feb 25, 2013

I think the future will be a subscription service where you can download a certain qty of games to your console and play. Once done, you 'send them back' (i.e. delete) and download some new ones.

Granted, bandwidth isn't nearly there for 100m people to be downloading 50g+ games at once. But, in a few years time when fiber is more commonplace and companies utilize bittorrent-style file distribution methods, it could certainty be possible and cheap.

Yes, there's a nightmare of licensing/copyright/etc legal agreements to work out. But, if Netflix can do it with movies and spotify/pandora/turntable can do it with music, why not someone else with video games? Valve appears to be tackling these problems now:

http://www.livetradingnews.com/will-valves-steam-b...

Feb 25, 2013

i streamed ff7 to my ps3 in 2010 and found it very convinient that way. however it was a ps1 game. for ps3 size games, srsly, a very fast downloading internet, a very fast read/write hard drive, and a very large hard drive are needed to make the gaming experience good.

Feb 25, 2013

Thread successfully diverted it seems. Whether top golfers are in shape or not is besides the point. Among activities which can truly be called a sport, golf tends to be at the lower end of the scale in terms of 'activeness.'

Feb 25, 2013

In my opinion, I don't think its easily possible to play a real game, such as COD, Madden, GTA, etc. on a tablet device. You can never get a touch screen to be as receptive as buttons or a joystick, and for that reason alone, consoles with game controllers will be around.

I've tried to play some of the old GTA games on a tablet; it absolutely sucks. Plus, some games just don't work on small(ish) screens.

Feb 25, 2013

OP: "My question to you all is, where do you think streaming games fits into all of this?"

I was having a discussion with a HF manager a few years back regarding a similar issue; will brick and mortar stores be replaced by digital distribution. My answer to him applies here as well. "Not anytime soon." The infrastructure isn't there just yet. Many ISP's have data caps. If you're watching youtube, using facebook, streaming games and streaming movies you will run over the cap real fast. Many areas don't have high speed but they have a wal mart. This is just if you want to distribute software digitally, not even scratching the surface of computing all this stuff for end users in real time.

Now if we remove the data cap barrier we are still presented with the problem of how do you economically deliver and render these games in real time for the consumer?

Delivery: Every time the user issues a command in the game a signal has to be sent from the user to the streaming service provider, the provider then renders the outcome in the game and then has to send it back to the user to be displayed on their screen. Now instead of bandwidth we are talking about latency. Latency is determined by the location of the two devices interacting (think hft setting up shop across the street from exchanges for decreased latency). In order to deliver an experience that is on-par with what is currently available you would need to setup many small "processing hubs" for users to connect to as opposed to 1 or 2 regional massive rendering locations.

Rendering: The most economical way to render all of this stuff in real time would be a mega farm of servers cranking out calculations 24/7. Instead of using some off-site collection of xboxes or playstations (the users would basically just be renting a console and this would be extremely cost inefficient for the provider) everything would have to be done with PCs. 1 Mega PC might render 3-4 console experiences simultaneously. So instead of a user renting 1 cpu, gpu, power supply, memory etc the user would be renting a fraction of 1 computer. The problem with this is coding. All of these games are written based on idea that they will be used on one form of hardware. Each line of code addresses something in game and the instructions are sent to a particular resource of the console - would the developers need to write code that allows for this server farming setup? What if 2 users both trigger an event that causes the software to access the same portion of memory simultaneously - would the game crap out? This is more feasible with emulating a PC experience and is being done currently with 'OnLive' because software written on PCs are developed with the idea that the software could be running on many different iterations and combinations of hardware as opposed to a console where the software is written to just run on that 1 device with a fixed set of system parameters. You could swap parts out as better ones become available but just keep your fingers crossed that the growing library of software will all be compatible on the new hardware. I doubt a developer is going to spend money to update a piece of software that is no longer generating any revenue and the users who purchased that software are going to be upset if they lose access to it.

So in order to deliver an experience that users are accustomed to (fast, responsive) you would need many small data centers. In order to render this stuff with our current technology costs favor a few massive data centers churning out petaflops of processing. To get a perspective on how far we are from a petaflop machine (1 quadrillion mathematical computations per second), the world's fastest supercomputer today, the Blue Gene Supercomputer has a top speed of 360 trillion operations a second. The problem is exacerbated with mobile devices as latency is increased exponentially while operating on that form factor (mobile satellites in space and congested data capped 4g/wifi networks).

I could go on for days (the argument with the HF guy was like an hour long, he wouldn't let me leave) but with the current state of infrastructure and technology the benefits do not currently outweigh the costs. Ideally, sometime in the future there will be a setup that would deliver the same exact experience that users are accustomed to without the need to buy expensive hardware or drive to a store and when that comes it will be a hit. When it comes is another thing.

google 'onlive' nvidia shield and some other thing from nvidia which is going to compete with onlive but I forget the name.

Feb 26, 2013
Cookies With Milken:

So in order to deliver an experience that users are accustomed to (fast, responsive) you would need many small data centers. In order to render this stuff with our current technology costs favor a few massive data centers churning out petaflops of processing. To get a perspective on how far we are from a petaflop machine (1 quadrillion mathematical computations per second), the world's fastest supercomputer today, the Blue Gene Supercomputer has a top speed of 360 trillion operations a second. The problem is exacerbated with mobile devices as latency is increased exponentially while operating on that form factor (mobile satellites in space and congested data capped 4g/wifi networks).

I could go on for days (the argument with the HF guy was like an hour long, he wouldn't let me leave) but with the current state of infrastructure and technology the benefits do not currently outweigh the costs. Ideally, sometime in the future there will be a setup that would deliver the same exact experience that users are accustomed to without the need to buy expensive hardware or drive to a store and when that comes it will be a hit. When it comes is another thing.
.

I think one of the biggest issues for online gaming is not pure bandwidth or computational power, but really it's with latency. You'd really need servers physically close to the gamer in order to reduce latency. I think it could be thought of in the idea of high frequency traders paying top dollar to get their servers close to the exchange, same thing goes here only to reduce lagg.

Not sure where you're getting that there are not supercomputers that can compute a petaflop, pretty sure that had milestone had been broke a while ago. http://www.top500.org/lists/2012/11/ All of those are calculating over a petaflop, granted they're the best in the world but the technology is there now.

Feb 26, 2013
Bankn:

I think one of the biggest issues for online gaming is not pure bandwidth or computational power, but really it's with latency. You'd really need servers physically close to the gamer in order to reduce latency. I think it could be thought of in the idea of high frequency traders paying top dollar to get their servers close to the exchange, same thing goes here only to reduce lagg.

Soooooo are you quoting me or did you miss an entire paragraph of what I wrote? I even gave hft as an example. I need to write less.

Feb 26, 2013

The model for games in the future is the Steam model. Games can be purchased through online store and saved locally to be played later. All your friends, groups, socialization happens through their service. You can also trade and gift games between friends. Xbox and PS will be looking to create a steam-like platform for their games.

Feb 26, 2013

In my opinion, streaming has a long way to go, but the seeds are being sown as we speak. Cloud services such as Steam (allows you to browse, buy, store all your games online) are being brought to consoles.

The Valve Steam Box is a good example of how the boundaries between physical and online games/gaming rigs are being blurred. The details are not ironed out, but it may allow users to stream games from their home computer to their TV.

Recent article from the Verge on VSB:
http://www.theverge.com/2013/2/6/3958162/valve-ste...

This + HL3 would surely lead me to fail my last year in engineering.

Feb 26, 2013

I'm not sure how much revenue game sales generate outside the US, but I really don't see a streaming model as a radical overnight thing, just because of the state of Internet speeds in the lesser developed economies. Maybe that's why Sony didn't roll out this business model on the PS4.

Feb 26, 2013
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