In the console world, there is endless speculation about the immediate future: X Company will dominate in Y Timeframe; Z Game is Delayed to Quarter Q. Here is my vision of the far future in console gaming: ten years away or more.
Despite the efforts of the Wii to refocus on fun and innovative interaction, even Nintendo will be forced to incorporate multimedia features in their next console to avoid falling behind. As industry networking and multimedia distribution standards improve (TV over IP; downloaded games), consoles will increasingly get their content from the internet.
Both of these trends will cause consoles to have very complex embedded operating systems to cope with all the data and the DRM that must be put in place to stop pirating of expensive downloaded console games and HD movie rental. At the same time, the number of I/O protocols is increasing so future consoles will have even more SKUs than present with varying standards like Wi-fi, Displayport, HDMI, USB, SD Cards, Memory sticks, HD optical media, other removable flash storage, Infrared, Ethernet, Bluetooth, various controllers and peripherals and many future standards too.
As games become increasingly complex to develop,third-party publishers will have to put games on even more platforms to cover costs. This is not necessarily bad, but the crossover between PC and Xbox 360 at present will expand until it is not really necessary to buy both to get the experience. In addition, gamers will begin to expect longer lives from their games to compensate for the rising cost of purchase - this necessitates bonus content and bugfixes.
There are four primary advantages of a home console over a computer: platform consistency, price, exclusive games and lack of sudden instability like PC patches are prone too. As you can see, all four of these pillars are threatened by the direction Microsoft, Sony and even Nintendo (they have made some progress toward it compared to the last generation too) are going in.
So, once another few generations have passed, console gaming will sadly fade as PC-only setups become the simpler alternative to PC-and-console setups.
Microsoft will declare victory for their grand strategy of eliminating consoles as competition to sales of Windows PCs. Sony will be forced into niche electronics not covered by the ever-broader range of the PC being connected to screens and devices around the home, and their PSP line will become more of a mobile PC than a games handheld (indeed, is this not the case already?) Third-parties will begin to transition their console franchises to the PC, perhaps with proprietary peripherals to keep the feel. They will also benefit from the sale of Console Game IP from Microsoft and Sony. As PCs and consoles merge, proprietary content delivery systems will proliferate as the online delivery of console games is accepted as the PC philosophy.
Nintendo is a little different. They only have console gaming as their business, refuse to sell their IP and have a talent from remaining profitable with small sales. I believe they will focus on handheld gaming, with no multimedia features and a focus on fun and innovation in which areas there is infinite room to expand and little competition from the PC or PSP lines. We will see the 'big' console titles on handhelds with as much detail and depth as the 'big' titles on the Wii now.
In conclusion, the death of home consoles will be slow, profitable and not bad for the consumer, but it will be inevitable. My opinion is that as consoles fade, PC game "platforms" will be created from the successors or continuations of Windows NT, Mac OS X and Linux.
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