I have to disagree with you here on all points.

Nintendo adding media services to Wii increased its value and attempted to compete with its direct competitors. There are definitely people who would consider these features. Additionally, I don't think Nintendo sees any real costs associated with this as its more in the favor for the host companies.

First party games are a differentiator, however, they are not the only thing people are looking at anymore as the devices no longer just play games. I stand by my arguement that any console without these other services will fail big time.

Vita is not a great example of this as they are not exactly what I am detailing. They are more like a PS3 and not like the other smart mobile devices. I already have a thread on this where I argue it would be highly successful if it had been Android based and a smartphone vs the dedicated console with a few extras.

"Google I don't think so. Games don't help their core business, search advertising. Apple will only do so as far as it keeps people buying iPhones, so they have no regard for game quality or attracting big name franchises or making the games people want to buy for themselves. They just want to make it really easy for everyone else to develop and see what sticks. So far, nothing has. (No existing mobile game will have consistent revenue or franchise loyalty. No one is waiting for Angry Birds 2."

Google, as well as Apple, have already stated (Google at CES specifically) that they will focus a lot on gaming early 2013. The more they can monetize in their respective online markets the more they will make. Sure, Google's primary market is advertising... what if TV use and its endless entertainment went through a Google enabled device? Can they not advertise here? Can they not advertise with the android market in Google TV that exists right now? How would adding more value and content (gaming) some how not make them far more money?

btw, Angry Birds 2 (aka Space) sold more on day one that most any other game sequel. I think you really don't know mobile gaming. Plus, I'm not talking about Angry Birds. I'm talking about the next CoD, the next GTA, the next 3rd party AAA game, etc. They will all be on iOS and Android as well as OnLive through these devices in 2013 and beyond.

"Their loss would be to imagine that gadgets and addons like Android or music will define the gen, or that they can focus on this instead of solid first party development and third party support.

Imagine a white cube 10cm on a side that played only three games at launch: 2D Mario, Mario Kart, Call of Duty. It doesn't do anything else, it just sits there being a dumb box. How much would it sell? I'd say minimum at the pace of the DS.

Now imagine the same box that does everything at launch: full Android shell; streaming TV, music, films; the top 20 titles from iOS and Android's game store; and so on. And its launch games are the Gamecube's, or the Vita's. It'd sell like a GC or Vita."

You're missing the point. They won't stop making first party and strong 3rd party content. They will only be adding value to the console through all these other services which are becoming standards and expected by consumers. You already said you'd expect this on the next Xbox. Do you really think a PS4 or Wii U could compete without a comparable service? Wii U won't have another Wii Sports, casuals won't buy another $300 device for a casual low-end  game when their iPads already have those games for $1. Why do you think smart TVs are becoming common place? Why do you think DVD and bluray players are becoming common place to be network enabled as well?

Basically they need both. They need big games and all the other media OS content. Without games you have GC, without proper OS you have Vita.

"Your consumer type is honestly rare. I just don't think people would buy a console wholly or mainly for media reasons, or worse phone-imitation reasons."

My consumer type is the mass market. The same group that pushed the Wii to new sales records. The same group that pushes iPad to new sales records with every yearly iteration.

Stand along TV boxes have been lacking up until now. Google TV is barely a year old and the latest iteration is the first to drive real reasons to own one. iTV has only been a media player so far without all the other iOS features. What do you think will happen when everything you can do on the insanely popular iPad or Android phone is fully on the TV device PLUS all the gaming content?

Gamers will still buy the gaming consoles and mass consumers will buy both depending on price and how the games attract them. But without the smart OS, they'd only consider the non-gaming consoles or the one that is guranteed to have these features; the next Xbox.

Exactly my thoughts when I read the article. I however think this is where consoles are  going - actually they are already well on the way there. The cellphone started out only making calls and look where that's ended up, but yeah I agree that gaming is a console's bread and butter.

I will soon be on the market for a new TV and some of the smart TVs out there are pretty impressive - they use linux or maybe Android OS.

The future of TV hardware is heading in a similar direction as consoles (apart from hardcore gaming for now) and they will offer pretty much everything that the consoles will - apart from hardcore gaming.

So in the not to distant future when most of the TVs in homes are "SMART" these multimedia addons on consoles will probably become less of a selling point.

I don't mean to imply gaming is the sideshow. It will still be a major focus, just not the major focus. I think that without a smart OS with all its capablities, they will die off.

The difference is Roku, Apple TV, majority of Android OEMs... they all don't have first party games. They will get 3rd party titles and be just fine, like a PC.

However, if MS/Sony/Nintendo do not add smart OS features, then MS will easily mop the floor with them and its Win8 integration... hell even Apple or one of Google's OEMs will out do them.

Let's take Apple. Let's assume its next iTV product is equal in power to Wii U in 2013. Consider the number of people with iOS phones and tablets already, plus a very affordable bluetooth controller. Then I am right and ALL 3rd party games are also on the device in addition to all the mobile style games.

Do you really think it wouldn't sell tens of millions? Do you really think all the 'core gamers' out there who only buy cod, gta, batman, assassin's creed, [insert tons of other AAA 3rd party titles] wouldn't just buy that vs a PS4 that is a Vita style upgrade? Meaning it has a lot more power, but still only a gaming machine with a halfway decent browers and a few media apps?

There are far more gamers who really don't care about MS/Sony first party than you think. Nintendo proves this. They have the singular best selling first party titles there are. Yet, looking at N64 and GC and you come to the quick realization that first party alone will only get you to the 20/30million range. You a have to have something else to push you further. Wii had that with its casual pull due to Wii Sports/Fit. Xbox/PS3 has that with tons of 3rd party support.

Games are a big draw for a gaming console. But what if 95% of those games are on 10 other devices that have all the same console simplicity, TV connections, and tons of other value added features you already us A LOT on your phones?

Again, without a smart OS, they will fail. Vita is failing due to this and it should have been a smartphone. MS is doing this and will be fine. I sincerely hope Sony and Nintendo are doing this as well as I expect.

If Nintendo was to use Android they would almost certainly block access to the Play store, like Amazon has with the Fire.

@superchunk

We'll just have to disagree.

I don't think media will ever be a draw for consoles, that is why my argument rests on. You believe it will be a big enough draw that a console without it won't suceed. We won't even see who is right because no one will launch a console without media stuff, but I believe they are wrong and I hold up the Wii as why, still.

I like to portray it as big launch games vs big media presence because they do have limited development teams and those same people are used for games or OS (at least at Nintendo and Sony they will be)

I also believe mobile gaming will fail shortly. I'm seeing VC money poured in just like the dotcom bubble. The companies cannot make it consistent enough to get enough revenue to fund anything except another $1 flash-like game. Angry Birds 2 or whatever may have the sales numbers but it does not have the revenue to justify AAA games being on these platforms any time soon. You will not see those iPad owners pay $40 for a game (what's needed for a PS360 level graphics experience) ever.

iPhone and iPad themselves are indeed popular because they internet, phone, music and video. But those are not consoles, they are pocket computers, and the PC has never lived or died by gaming. People make games for the PC if they wish, but PC is not defined by games and you don't buy a PC for games (gaming PC sales << 360 sales). Console simply cannot compete with tablets/PC in media or features terms, they have already lost, their only hope is to redouble on the exclusive and polished $30-$40 experience games.

Probably.

They'll have their own store with all the same apps and content. Of course making their own tithe on each sale.

Google doesn't care. As long as it has Google services and other stuff to get on web and monetize its advertisements.

I think 2013 will prove you wrong on the bolded. iOS and Android will have the exact same 3rd party games that will be downloaded for $50 or so initially, however, like Steam they will discount quickly and often.

Digital model removes A LOT of associated costs so there is less of a need to retain that higher price. Same reason Wii U and others have already confirmed digital games along side of retail copies. They'd rather you buy digital for many reasons beyond just cost savings.

PC hasn't lived or died in gaming because consoles are simplier to use and setup and are connected to TVs. PCs are still not widely connected to TVs but are in separate rooms and they are still generally more complicated to game on.

These upcoming smart OS based set-top boxes like GoogleTV and iTV are far more like consoles than PCs in this mannner. They are simply to setup and paly games on. Installs are without simple and they are on the front room TV. They also will have the advantage of being in your pocket and very familiar.

btw, your 360 vs PC gamign is a bad example as the 360 is almost a PC in every way, but its simplier and connect to the front room TV. Same as PS3. The next iterations will only make that distinction even less while still having the simplicity and TV/front room connection. They will be what MS tried to do with its Media Center OS. They will break that barrier and the game console market will simply become the home media center market.

I could see the game business dividing into three factions in the long run.

Apple - Staying more casual, but gradually starting to focus on gamers in order to maintain iOS adoption.

Microsoft - Self explainatory.

Nintendo + Sony + Google - I think these three will come together because they're under too much fire separately to last in a gun fight forever and Google needs partners to get into the living room space. Google supplies the OS (modified to Nintendo/Sony's needs) for free, Nintendo + Sony split software licensing fees from 3rd party software devs, Nintendo/Sony only offer limited access to the app store with apps they choose and they charge licensing premium on.

Interesting, but I dont' see Nintendo ever splitting licensing. But I too think Nintendo/Sony will move to utilizing Android in some fashion.

That is untenable. The videogame component of a multimedia box gobbles up a large amount of resources. If videogames are just a focus, one of umpteen different ones, then why wouldn't the majority of people interested in multimedia simply revert to the built-in functions of their TV, or purchase a much cheaper boxtop?

Much of the rest of your post even concedes this. Your iTV example requires enough juice under the hood to be a full-fledged game console. Third party AAA games can and will run off the thing. Of course gamers will buy this thing...because it has the games they want to play. Of course, the price of this iTV is going to be huge, because of the need to run these AAA games. So people who aren't really interested in gaming, but who want the multimedia features, can just stick to their smart TV/wi-fi added Blu-Ray/whatever much cheaper alternative they prefer. This wouldn't exactly be a case of "disruption" per se, but if the OS is really the big draw, with gaming being secondary-at-best, the end result will look remarkably similar.

Do you see what happened here?