Consoles converge on home entertainment integration

17 Mar 2004

Next-generation video game consoles will come closer to the oft-promised integrated home media centre thanks to new features and functions, a new study from Juniper Research has indicated. Manufacturers’ plans for the devices include high-speed online gaming, wireless connectivity and other entertainment functions.

Sony, Microsoft and Nintendo, the ‘big three’ hardware developers, have announced new platforms which are due to hit the market from early next year. In addition, other new rivals will be hoping to grab a share of the market.

“The next generation of machines will take a leap into the world of convergence and offer gamers a home media centre rather than just a gaming machine,” said Keri Allan, games specialist at Juniper Research. “Graphics and speed will evolve, but connectivity between devices will also come to the forefront. This functionality will help consoles to finally become a mainstream entertainment medium, and put the stereotypical image of the ‘computer gaming geek’ to rest.”

Other findings in the study show that online gaming from games consoles will reach almost 28m regular users over the next four years, aided by further adoption of always-on broadband access. The downloading of new games and levels will also become mainstream, Juniper Research said. Online gaming should really come into its own in 2005 and 2006, the report found.

Allied to this trend, the nature of the games themselves are likely to change considerably, according to Juniper. “There will be a trend towards shorter games that are more episodic in nature,” the report says. It refers to “mixed feelings” within the industry for the current ‘monolithic’ game concept that can take upwards of 40 hours to complete. Juniper suggests that shorter, episodic games look set to grow in tandem with the rise in online gaming, as these types of games can be easily distributed online.

By 2008, Juniper has forecast that the market for new handheld systems will be worth an estimated US$25bn in revenue. The drivers behind this growth, according to the firm’s analysis, is that the market will widen as more consumers begin to consider gaming as an accepted hobby. In addition, greater numbers of people will own more than one console, allowing for much higher revenue streams across all sectors of the industry.

However, competition and price pressure will increase in this sector, as Nintendo faces new launches from Sony with its PSP device as well as other new machines such as the Gamepark and Zodiac.

Juniper has identified a drop in demand for the current generation of games platforms as a short-term issue that the games sector is already beginning to face. This problem will be exacerbated as the release of the new platforms draws closer. “Price drops, bundling and add-ons will continue to be in favour, but savvy users will increasingly be holding-off making a purchase until the new hardware is ready in 2005,” Allan commented.

By Gordon Smith