I’ve been an avid gamer since, well, ever. Like many developers, an interest in video games (and creating them) is what first lured me to the world of programming. While I’m not a part of the game industry I follow it closely and have greatly enjoyed discovering such online video series as All Your History Are Belong To Us and Extra Credits this year. “Where Games Are Going” posts simply represent my observations and predictions about gaming and its future. This time, we’re going to talk about the next generation of consoles.

The current generation of consoles (Xbox 360, PS3, Wii) is going to be the last generation in which physical media (discs, carts, what-have-you) are the primary way in which new games are acquired. This is a large trend that can be seen especially in Microsoft’s full downloadable games which include AAA titles from this year, not just the older/smaller titles to which downloadable games have traditionally been relegated.

The company that wins the next generation console war will be the one who most wholeheartedly adopts the App Store model, specifically meaning a simple distribution system open to any and all developers with a constant revenue share model. I believe that Microsoft is currently best positioned to make this happen: Xbox Live is still far and away the most comprehensive console gaming community, they’ve shown that they’re willing to pull in this model with Xbox Live Indie Games, and they have Windows Phone 7 and Windows App Stores either here or on the way. That’s not to say that there aren’t a few kinks left to figure out:

1. Big Publishers Will Resist. The next generation of consoles is going to see content created by a single guy pitted directly against content created by a seasoned team of 100. Big established publishers will fight hard to keep themselves separate to avoid competition from smaller developers but, ultimately, they will lose. They’ve already had to accept this on iOS and Android devices, they will eventually accept it on consoles as well.
2. Price Will Be A Problem. A recent post on Signal vs. Noise called the physical disc/digital content price gap the Lazy Tax, but in reality the problem is monolithic price control. Microsoft and publishers alike are going to have to radically alter the game price structure to work in the new market. Games will either have to drastically lower in price at the outset or aggressively discount after the first few months. Otherwise, there will be a big swell of frustration from the gamers who are accustomed to the used and on-sale markets for getting their games. One way to get around this (but it isn’t pretty) would be to have unique unlock codes that can be purchased for games and sold by retailers. This would allow Amazon et al to discount games more like they do currently.
3. Non-Games Will Be Huge. The next generation of gaming consoles aren’t just going to be for games. This is already obvious with the huge push for video that Microsoft has done on the Xbox 360 but it will become even more so as the consoles from all major players will open their doors to non-game content. Even Nintendo, traditionally focused exclusively on gaming, is rumored to be jumping on the app train.
4. Google and Apple Will Enter the Fray. The interesting side effect of consoles becoming app platforms is that they will suddenly face competition from the existing app platforms of Apple and Google. Each platform will have to work hard to differentiate itself from the pack.

I think the next generation of consoles will be very interesting and there’s a lot that remains to be seen. Perhaps even more interesting, I think the next next gen will come from disruptive game streaming services like OnLive. As actually fast connectivity gets cheaper and more available it will make a lot more sense to stream games from big gaming rigs in the sky than to outlay a pile of cash on a home console. Once this happens, game platforms will go ubiquitous, no longer tied to any one device. Expect to be able to play full Xbox 1080 games on your Windows Phone and (maybe) even your iOS or Android device.