Postcard from GDC 2004: Entering the Next Console Age

On Wednesday, March 24, 2004, John Schappert, general manager of Electronic Arts (www.ea.com), shared his insights on the future of the console market in his GDC 2004 keynote address, entitled Console Transition: Will You Be Ready?

Reviewing the current generation of game consoles, Schappert graded the Sony PlayStation 2, Microsoft Xbox, and Nintendo Gamecube A, B, and C respectively. Reflecting on Darwin's rule of survival, he went on to predict that "some players will adapt, some will die."

"New technology will make the current generation disappear," said Schappert. "But some players that we don't think much about will also become big players."

Moving on to things we could predict with relative certainty, he stated that Microsoft, historically known for persistence, could be gearing up for the next console era with a device, much improved with the lessons learned from its earlier days in the market. Sony's return to the market is not a question of "if" but "when," said Schappert.

In the list of things we could only speculate on, he included the timing and the manner of Nintendo's return to the console market, the specifications for the next PS or Xbox devices, and the plans of other hardware makers (for instance, Motorola, Intel) contemplating on entering the market.

Rules of Engagement

There's no "one-size-fit-all plan" to help a company navigate the transition to the next console era, Schappert cautioned; "You need to examine your size, portfolio, resources, and direction."

He outlined seven rules--a combination of principles and questions--to help prepare for the transition:

1. Drink deep from the oasis. A long draught in investment capital is expected in the foreseeable future. People should be allocating their current resources to capture the opportunities still in existence today.
2. Ask yourself, "What's the ROI on my 3G wireless game?" Companies should carefully reassess their strategies on the future technologies to ensure the resource devoted is proportionate to the revenue return expected.
3. Ask yourself, "Who are my veterans and hotshots?" Balancing the development team with a mix of veterans and newcomers is essential, since it's detrimental to ignore the present technologies and focus solely on unseen, unproven future technologies.
4. You'll know what you need to know when you need to know. Hardware makers and developers rely on each other. It's not the interest of the hardware makers to keep the development community in the dark. Developers can count on hardware makers to disclose details about the next generation technologies in due time.
5. Watch the tail--it's longer than you think. Even with the advent of the next generation devices, the current consoles will still continue to serve as viable revenues.
6. Hardcore gamers rule the first half of a new cycle. Developers should remember that the first half of the lifecycle of a console is usually driven by hardcore gamers--those who sleep in front of retail outlets to get their hands on the products. It is in the industry's interest to treat them with respect and consideration.
7. Ask yourself, "When do I let that furry thing out of its cage?" New IP tends to do better if launched with a new console. Launching new IP late in the cycle often presents a greater challenge.

Q&A

Schappert responded to a variety of questions from the audience, ranging from the role of middleware to room for innovation.

The role of middleware. Middleware will continue to serve as a good alternative for those game makers who are unable to devote significant resources to R&D. Depending on the size and budget of your company, middleware may be part of your strategy to weather the transition to the next console era.

The role of independent developers. Many publishers, including EA, still employs independent developers. However, as stakes get higher, there's a greater need for the independent developers to distinguish themselves with successful titles to attract the attention of big players. Struggling or upstart developers who have not shipped a noteworthy title for some time will have a much harder time.

Areas for innovation. Traditionally better graphics has been the principal drive behind new games. Assuming graphics improvements have reached its zenith (it's an assumption Schappert does not wholeheartedly share), game makers will have to look to other innovations, such as incorporating THX audio environment, better kinematics, complex physics. The overall fidelity to reality will increase in future games.

Network consoles. While present consoles require additional add-ons and tweaks to become network devices, the next generation devices are likely to be network-ready out of the box. Players will expect online and network gaming capabilities from next generation consoles just as they now expect most PC titles to offer online features.

Trends in outsourcing. Outsourcing is inevitable, since consumers expect the best value for their money. While development costs have increase, game prices have not; therefore, developers and publishers will need to seek lower-cost labor. But it's also important for companies to be innovative in efficiency.

Final words

Responding to an audience member's question on opportunities for small- and mid-range game developers, Schappert advocated EA's approach: "Do fewer things better."