Reality, Console Industry has become Stagnated.

[Pemalite]

Azzanation said:

1) The console Industry isn't big enough for all companies to strive and is stagnated. It's not growing. Meaning, only thing these companies can do is match what they did last generation and with budgets increasing within the AAA industry, makes it even harder. This is why we are seeing more attempts of multiplatform games, Digital media, MTs, Online etc. They can only steal from each others customer userbase, they can't bring in new people to gaming within the console walls. 

This is blatantly false.

The console market is growing by roughly a few percentage points every year.
https://www.statista.com/outlook/cmo/consumer-electronics/gaming-equipment/game-consoles/worldwide

This ignores the meteoric rise of PC gaming and Mobile gaming.

Gaming is growing.

Azzanation said:

2) Shareholders aren't making enough coin back, no one invests only to break even. When you break even, it's a loss, because money wasted for little to no return, could have been spent in other industries to increase value. Time is money and investments are long term projects. This hurts shareholders when there is no growth within the brands they have stocks in.

In the case of Microsoft, Nintendo and Sony, you don't *really* invest in a specific gaming brand.
You invest in the company.

And Microsoft being the most valuable company on Earth reinforces that investors are extremely happy and expect a return on their investment.
https://companiesmarketcap.com/

Nintendo is also doing stupidly well, the Switch is printing more money than even the Wii did.
https://www.macrotrends.net/stocks/charts/NTDOY/nintendo/gross-profit

Azzanation said:

3) Games take too long to make and costs are too big. Companies that release 1 game every 5 years, have to cross their fingers and toes, hoping its successful because if it undersells, it hurts ALOT and they have to wait another 5 years to release a game that could still fail. This is why we are seeing more and more games more Multiplatform and more AA games. They are easier to make, cost less, and the most popular games out their right now are games like Palworld. 

I can go on and on with examples, but we need to start understanding how the industry operates. It's never about selling more than the competition, it's about selling more than your previous records. Industries are run by graphs, not your feelings. If the graphs are pointing up, then necessary actions are taking to get the arrow to pointing upward. This is why we constantly see layoffs and closures.

Here are some examples if you disagree with what I have written.

Keep in mind that smaller scope games continue to be made relatively quickly.

And whilst AAA games get larger, more expensive and potentially sell more copies with longer development times, other developers are stepping in and filling in the gaps.
Go back 20 years and you wouldn't have games like GTA5, Minecraft etc' set to sell 100~ million copies, that more than makes up for costlier development costs.

Again, not every game needs that kind of investment to be a success. See: Palworld with it's $7 million dollar budget.
https://www.inc-aus.com/kit-eaton/palworlds-popularity-a-huge-win-for-small-game-makers.html

Azzanation said:

Example 1: Sony's PS5 was the fastest selling console at launch, it's on track to match the PS4 sales wise. Yet why are they cutting jobs, closing studios, and bringing games to PC? Because it's about improving their dollar, not matching what they achieved last gen. The only way Sony can grow is to expand outside the console walls. Hence the PC ports. They wouldn't do it if they are way ahead of targets. Unlike Nintendo, they have thrashed their last console, the WiiU. However, the Switch 2 has a giant target on its back now because it needs to do better than the Switch One, otherwise we will see Nintendo take similar action to Sony and MS.

The reason for the job cuts is because jobs got artificially inflated during COVID, everyone was stuck at home, everyone was consuming digital content en-masse.

We saw engagement with digital platforms more than double during COVID as more people started to work from home.
https://www.sciencedirect.com/science/article/pii/S2773067024000037

Now we are seeing a market correction as markets return to normalcy.

Switch 2.0 doesn't need to exceed the Switch 1.0 to be successful.

They just need to be profitable, historically when Nintendo has done poorly (I.E. DS+wii to 3DS+WiiU) it was not met with significant layoffs, Nintendo as a company has always been relatively stable and ran relatively lean.

Iwata even took a paycut to prevent layoffs.
https://www.cnbc.com/2024/02/13/nintendo-ceo-once-halved-salary-to-prevent-layoffs-why-thats-uncommon.html

Azzanation said:

Example 2:  Why is MS bringing games to PS5? Let's use Rare as an example. They haven't released a new game since Sea of Thieves back in 2018, Rares only income comes from SoTs. MS is most likely bringing SoTs to PS5, is to boost player counts again and to help Rare make money to again please the shareholders. Otherwise, MS will be forced to cut jobs and maybe worse, close the studio. 

Some games require a strong player base to make them an enjoyable experience online... And the best way to do that is to be on as many platforms as possible.

This benefits Xbox gamers with it's smaller playerbase.

Azzanation said:

Example 3: Xbox and PS are now 3rd party PC companies. They are all bringing their games to PC, if not now, it will eventually happen. They see the growth and success from games they cross over and with the success of games like Sea of Thieves and Helldivars 2, especially Sony won't be missing these opportunities much longer, much like what MS started doing in the XB1 era. It's a matter of time.

They have always technically been "PC companies".

PC stands for "Personal Computer".

Consoles for all intents are computers... And tend to be "personal" or "family" in nature rather than commercial or industrial devices, just like a desktop windows PC.
I.E. Sony advertised the PS1 as a Computer Entertainment device.

The difference with consoles verses IBM-based computers is that they are far more closed-off, walled gardens.

And because PC tends to invest a significant amount more in processing technology and ended up being generationally ahead of everything else on the market from other companies like IBM, PowerPC, ARM, MiPS etc'. It was a no-brainer for consoles to go down that path eventually and leverage scales of economy and adopt PC technology.