Console hardware takes a backseat to serve this generation

More than two years have passed since the launch of the current generation of consoles, which got off to a rocky start at the end of 2020. You’d think it’s been more than long enough to understand what’s at stake, but confusion still lingers for many. That could change this year. As Tomas Franzese wrote earlier this month, 2023 could be the year we finally see which games define this generation’s consoles, at least in terms of exclusivity. He also noted that games could stop being cross-platform and only launch on current-gen consoles, instead of concurrently on last-gen consoles.

While that will finally get us some memorable games, it doesn’t get us any closer to defining the hardware itself. Aside from a few extra teraflops and new ultra-fast SSDs, there’s not much that helps the PS5 and Xbox Series X and S stand out from their predecessors. Sure, the PS5 looks like a giant spaceship, and the Xbox Series X is built like a fridge, but we didn’t see what these devices could offer that the PS4 and Xbox One couldn’t, aside from some neat lighting effects and practically non-existent loading times.

However, that does not mean that this generation is aimless; It’s just not one that relies on hardware and software like previous consoles. Instead, this generation of consoles will live and die by its services, from Game Pass to cloud streaming options.

What’s up with the consoles?

Moore’s law states that the number of transistors in a microchip will double every two years, and industry has kept pace with this trend for a long time. In recent years, however, technological advances have slowed, and video game consoles are no different. The PS5, for example, has seen some improvements over the PS4, with the ability to play games in 4K with a 120Hz refresh rate and much faster storage. It also has more teraflops, which is just a fancy way of saying it can compute more processes at once.

Future Release/Getty Images

While the PS5 is more powerful than its predecessor, most of what I said above doesn’t matter to the average user. Aside from faster load times, some visual improvements, and more ray tracing capabilities, there’s not much difference between last-gen AAA games and this one. And it won’t just be a one-off coincidence.

“We simply won’t see the revolutionary leaps in technology and content that we saw in the ’90s and 2000s, when a new generation of consoles meant a whole new range of content and technical capabilities not seen before,” NPD analyst Mat Piscatella said Group notifies Digital Trends via email.

The latest consoles are becoming less and less important for playing the most popular games. In the first few years, both Xbox and PlayStation released new games like Horizon forbidden west on last-gen machines, even if the older hardware struggles with the most intense titles. Sony has also successfully experimented with releasing its first-party titles on PC months or years after they were first launched, and says it will continue to do so. Meanwhile, Xbox has turned its attention to Xbox Game Pass and Xbox Cloud Streaming, which allow users to play games on their consoles, PC, or mobile devices. And thanks to cloud saves, they can play on one computer and pick up the game on another. Nintendo will continue to be a closed ecosystem on its own plane of existence, but even it can’t deny that the Switch needs games outside of itself and supports more ports, both locally and via the cloud.

They will continue to sell, but as video game companies try to best recoup costs as games become more expensive to produce and therefore more expensive to buy, they will look to other emerging technologies. This is where services like Xbox Game Pass come in.

The rise of services

At this point, there’s little difference between Xbox and PlayStation in terms of the consoles themselves, and until we see more exclusives in 2023, there’s little reason to buy a PS5 over an Xbox Series X, or vice versa. That doesn’t mean you can’t give these companies your money, though.

All of the major console makers, including Nintendo, are leaning more toward services, be it cloud gaming or game catalog subscriptions. The big name in this space right now is Xbox Game Pass, which gives gamers access to a massive catalog of games, including first-party releases, and cloud streaming for $15 a month. Last year Sony reinvented PlayStation Plus, which doesn’t go as far as Xbox Game Pass but still offers a back catalog of older games if you subscribe to higher tiers, along with a rotating list of free games and features like cloud storage. Nintendo has Switch Online, which allows people to play games online and offers access to a growing catalog of retro titles. you get the picture

PlayStation Plus, Xbox Live Gold and Nintendo Online logos

Consoles have been serviced for years. Think of Xbox Live Gold, which was introduced on the Xbox 360. For a fee, users could opt into online multiplayer and free games per month. These companies have been thinking about ways to get more money from their customers than just selling games and hardware, but this generation is about getting money from gamers in other ways. As long as customers shop into their ecosystems and buy their products, they win.

When Microsoft bought ZeniMax Media in 2021, it gained access to Bethesda’s massive library of games, including Elder Scrolls, Fallout, the upcoming exclusive starfield, and so many others. It wasn’t just that Xbox would have more exclusives though – although that’s certainly part of it. What people focused on was their addition to Xbox Game Pass. You could play future Bethesda games on day one, but you could essentially play them for free with a subscription.

Microsoft is all-in on Xbox Game Pass. You can see this with the release of the Xbox Series S, which is almost identical to an Xbox Series X save for a few features and a disc drive, making it essentially a cloud gaming box. Executives have said as much, promoting inclusivity and their mission to make their games accessible to as many people as possible. In marketing materials, you can see that Xbox Game Pass is being played as much as consoles or first-party titles.

And it works. In early 2022, the company said Xbox Game Pass had around 25 million subscribers. It’s also a lot. For $15 a month, you can try games you wouldn’t otherwise have and move them from your TV to your PC or even your phone. That’s how I played Buses while at the same time using my subscription to skip to some older titles such as Halo: Master Chief Collectionwithout having to worry about my budget.

A television shows the new Xbox Game Pass coming soon to the Samsung Gaming Hub.

PlayStation is attempting something similar with PlayStation Plus, but also in expanding outside of first-party games. Thanks to the acquisition of , the company plans to launch 10 live service games over the next four years destiny 2 Developer Bungie, and it will continue to dabble in movies and TV, mobile gaming, PC gaming, and more.

Granted, it’s not all services, but what the major console makers are showing is that while the hardware itself is still important, it’s no longer at the top of the list. Player needs are increasing and so is the way we play games.

“Back in the PS2 era someone bought a box, hooked it up to a TV and had to buy games on a disc. The way people interact with these boxes has expanded in so many ways. It’s about playing what you want, when you want, where you want and with who you want. It used to be about playing what you have where you are, and that was it,” says Piscatella.

What will the future bring?

We’ll continue to see big console releases. There’s no way these companies are going to jettison the hype cycle around a new hardware release and the competition that can boost sales. Plus, they’re still selling really well. As inventory becomes more stable (at least compared to what it was immediately after launch), manufacturers are reporting stronger sales. Sony just announced at CES 2023 that the PS5 has reached a third of its lifetime sales target with around 30 million units sold worldwide, and according to VGChartz there isn’t much of a difference between it and the Xbox. At the other end of the industry, the Nintendo Switch continues to dominate almost six years after its launch.

This isn’t just the case in the US, where console sales tend to be the strongest. Manufacturers are investing more in Asia and players are responding. According to Darang Candra, analyst at Niko Partners, this is the case even in the Asian markets, where PCs and mobile devices are leading.

“The current generation of consoles has been plagued by hardware shortages, game lag, and a lack of next-gen-only games. However, we continue to see strong demand as consoles continue to be a key entry point for the latest HD-AAA games,” he emailed me.

However, games and consoles are becoming more and more expensive. Sony has just announced that it will increase the price of the PS5 by around $50 in major markets, and many big games are now $70. Engaging in video games is an expensive hobby, so gamers will naturally look for cheaper alternatives, such as subscription services or cloud gaming, that don’t require an expensive console. Or, as Candra says, target platforms players already own, like phones, tablets, and PCs.

When people complain that this generation of consoles hasn’t come into its own, it feels like they’ve yet to see the bigger picture. This is a generation of services, subscriptions, and technologies that aren’t tied to hardware, and we should watch where it leads.

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