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Puppyroach said:

I am not focusing solely on this gen, but the last gen as well. 1. Console sales have dropped of as a whole in the last 3-4 years which obviously is related to how long the last gen as but als because the landscape for gaming has changed dramatically. We have already seen this happen in Japan. 2. If the market fo traditional home consoles shrink, we might see more developers migrate to tablets/smartphone. This will affect everyone if they don't adapt.

  1. Yes, console sales peaked in 2011 and has dropped slightly every since then till 2013. But as you said that is due to how long las gen was, in addition to that though its also due to how long prices remained high last gen. As we speak, a PS3 still cost around $250, a whopping 8yrs later!! 5yrs into the life of the PS2, you could get a brand new PS2 for less than $120. I will touch your japan point in my next point.
  2. There are a myriad of reason that cause that migration. Primarily though, its because of HD development costs. And this toes directly to the japanese market today mostly in part due to the japanese publisher busines model.Console sales in japan are dropping off a cliff  because there are increasingly fewer japanese centric console games to play. Its really that simple. The real problem is that the typical japanese publisher doesn't think like the western publisher. They don't want to just make games and hope that people will buy the consoles to play them, the want people to have already bought the console to gurantee the sales of their game. The chicken and the egg. The japanese consumer, want there to be games worth playing (naturally) to warrant them buying the console. Quite a conundrum, but thats whats happenning over there.

A way to look at all this, is that there will always be a place for the dedicated console hardware market. For too many reasons than I have the strenght to get into now. But I will give you a scenario.

Tablets/smartphones by their very nature are limited to one primary input mechanism; touch. That is a very big limitation to the depth of games that can be effectively supported on the platform. Just imagine playing Tekken/COD/WD/Uncharted....etc on a tablet or even worse, a phone. But hey, you could always just pair a controller to it right? Of course you can, but now you are carrying your tablet and controller around. Ok, to mitigate this problem you decide to only play with your controller at home, which also means that you can only play like 80% of your games they way they are designed to be played at home. While doing that, why don't I hook the tablet/phone to my 60" Tv so I could chill on the couch and play the game with my controller? Hell I dont even need wires, I can just beam the feed to my TV. So you do that since you are at home already.........

See whats happenning here?