This will be another controversial thread, but we need to start seeing the reality of the real world.

The Console industry has become stagnated. No, this isn't a thread about consoles are dying or won't exist anymore. This is a post of what we are constantly seeing every year, every generation. Layoffs, closures, changes and yet people still act Suprise when it happens. It does not matter where you are on the sales chain, highest or lowest, if you aren't growing and increasing the dollar value of your brand, its considered failing, and this is why we see these things happen.

These are not home brew brands that just want to make games for profit and accept whatever they make by years end, these are corporations that want to make more and more and more and more, year by year by year by year. You get what I am saying here. They aren't your friends. 

The reality is we live in a corporate world, these gaming businesses are run by shareholders, investors and suits. They demand more return for their money, yearly. Now before we all start jumping on the hate bandwagon on these suits, lets understand one thing before making fools of ourselves. Without the shareholders and investors, we simply won't have the company you like or the games you want. Companies don't function well without them.

Let's dumb it down for some. When an investor invests $1 into a company/project, they want $2 return. When they invest $1million, they want to see $2million return etc. People, want to know why Sony and Microsoft are continuing to move IPs out to other platforms, like we have seen with Xbox and PC and now with some 1st party games going to PS5, and how we are seeing Sony move more games to PC and possibly Xbox in the future. This is because of many reasons.

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. 

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.

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.

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.

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. 

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.

So out of all this, the question needs to be asked. Do you rather see your favorite companies bite the dust and close down, or rather see your favorite brand strive by making as much money as they can by going multiplatform? Exclusives are only good for the hardware sales but it's not good for the software.

If these companies dont grow and expand, we will continue to see price rises with future generations to make up the difference. 

I think I disagree with your first point, and agree with points two and three. However, I think it's important for people to have some perspective here. Lay offs, downsizing, cancellation of projects; those things are all normal, and happen in every industry. Big businesses make decisions based on numbers, and future expectations. So almost everybody always hires too many people when things are good, and then has to lose head count when things slow down. It would seem like there should be a way to avoid that, but no industry ever seems to have figured it out. But the gaming industry is not employing fewer people now than it was a few years ago. Even after all these layoffs, I'd bet it is still substantially bigger by headcount than it was several years ago.  Companies in the gaming space, like most of tech, went on a massive hiring spree a couple of years ago. They overshot, now they have to get back to a more realistic size. 

And cancellation of games happens all day, every day, and has throughout the history of the industry. It's normal, and healthy. They start with a lot of ideas, and most of them fall off as they move through development. You see which ones are shaping up nicely, and cancel the ones that are not. Again, normal and healthy.  The only other option would have somebody saying "no" to even more ideas before they even make it out of the brainstorming session.  That's not what we want. I think it's good that they give some budget to a bunch of potential games, and let some preliminary work take place on them before deciding which ones get to move into active development, and which ones don't. 

Nintendo proves that exclusives work for both. The difference is they were smarter in their handling of hardware. Many people gripe at them for not going with more power, but they saw the writing on the wall years ago and adjusted. Sony did the same with their 1st party output. It made their platform far more valuable.

As to the notion of exclusives, Xbox jumped on the PC bandwagon long ago, because what they were doing wasn't working. This is despite the revenue they bring in on the platform. Bringing once PC/Xbox only games to other consoles is another move in response to a failing strat. The parent company sees their issues (which are specific to them) and decided that was the best logical move. So long as other console owners buy the games, they should see an uptick in returns. 

PlayStation's situation is more complicated, because they have the market/mindshare in check, but have other things they need to work on, in addition to, weathering the financial storms plaguing many right now. Out of 100%, 75-80% of what they do works, but the leftovers are beginning to take form and it's hurting them a bit. So, what will they do? Their single player games will remain exclusive (on a duration, 6m-1y) for a while, but in the future (PS6 and beyond), we could see that change. Like Nintendo, console hardware sales still matter greatly to them and they know releasing everything day/date on another platform will start to eat away at that. Their GaaS games? Day/date PC/PS release. No question — especially after Helldivers 2. 

To layoffs on a broad scale — it isn't gaming specific. The IT industry, for example, has seen massive cuts, but you'd never hear as much about that as you would entertainment industries — which includes gaming. But this is business, and many things will bounce back. Layoffs, reductions, cancellations, and revisions are all normal and happen much more than people know. Right now, it's just happening at a higher rate and to more companies/industries at a given point and a lot of that, lest we forget, is also a result of the crippling global pandemic we're still being affected by. And yes, AI will also step in and play a factor in many things going forward. The gaming industry, in particular, has a way of bouncing back when the goings get tough. 

Stagnating doesn't begin to cover it when 500 million consoles were sold in the 7th generation, the 8th fell to under 300 million, and the 9th will probably only match that number just because of the Switch and the pandemic.

There are a lot of culprits here: market consolidation around a number of evergreen titles (Fortnite, GTA, some Nintendo franchises, other GAAS, etc.), the younger generations going for shorter and more immediate endorphin releases like TikTok, competition from smartphones, and so on.

It's possible this is a problem with no market solution just like there was no market solution for pure handhelds and arcades. On the other hand, maybe generative AI will rein in the ballooning developing costs for whoever is still buying dedicated consoles a decade from now.

Yeah... no. Absolutely not.

Nintendo didn't lay off developers during the 3DS and Wii U era despite investors asking for cost-cutting measures. Nintendo's response was that development staff is an asset, because games drive hardware sales. Therefore laying off developers would only be a short term benefit, but then have very bad consequences in the mid to long term. And this is the correct thinking.

There were other things that investors repeatedly asked for during the dire Wii U days, but Nintendo did not cave in. That's because Nintendo is not reliant on investors' money to get their funding for their next big project.

We do not need to speculate if Nintendo would take similar actions to Sony and MS, because we already have the history of Nintendo not even considering such moves because such moves would be detrimental to their core business. When we know that Nintendo did not consider these moves when they were posting losses, then it's safe to say that Nintendo won't consider them either when they are in the situation of Sony now where profit margins have declined by around 5 percent points.

The point is that you can't make a post about all companies being the same when that is clearly not the case due to Nintendo being an outlier in so many different aspects of this business. You are making the all too common mistake that you think the industry works this way because that's how it has to work. But Nintendo not only clearly shows that it does not have to be this way, but also that you can actually be more profitable by doing it differently, and that there's no mutual exclusivity between high profitability and high customer satisfaction.

You begin your post by talking about the reality of the real world and end with the question if anyone would rather see their favorite company bite the dust or make as much money as possible by going multiplatform. This conclusion is extremely detached from reality when you've thrown Nintendo in the mix, and even if you explicitly excluded Nintendo from the topic, your conclusion would still only somewhat work.

I still find it a bit puzzling that Sony, despite their current sales and black numbers, would rather do things the Microsoft way than taking a few cues from Nintendo. I'm not talking about the last few months, but the last several years since Jim Ryan took the reins of the PS division. Because clearly, Microsoft is not the company you should strive to be like in gaming. PlayStation is still making profits every quarter, so their recent business decisions strike me as an overreaction that could bite them in the butt in the long run. As a console manufacturer they have to look at first party software as more than just the games making money, but also as a driver of hardware sales which in turn increase collected royalty fees from third parties and PS+ subscriptions; this isn't as simple of an equation as putting games on the PC and making more profit overall by default, because some money is undoubtedly going to be missed out on on the PS console side.

Honestly, with AI things moving as they do, like recent Sora and Genie, all I can see is classic gaming industry crashing in the next few years.

Nintendo is mostly the one keeping consoles alive. For better or for worse, they have scores of exclusives (most of the best ones are Nintendo's own games) and feel very different from PC gaming.
Xbox is very, very similar to PC. And even PlayStation is blurring the line.
Consoles used to be developed in secret and were very different from PCs and mobile devices in architecture.
Sony relying on expensive, cinematic games is quite stagnant to an extent and not sustainable.

To add what has been said about Nintendo, the thing is that Japan has laws that make it harder for you to fire employees to save on cost. You have to look at every other method first and have no plausible alternative. That's among the reasons for Iwata's famous pay cuts.

If you want to point out Sony's Japanese, well Naughty Dog, Insomniac, and the like are not Japanese studios. So they aren't under the same protections.

Their game sales also seem to be doing well. Because frankly if Nintendo was having interest issues, I would not expect Pikmin 4 to be selling multi-millions because it is a Pikmin game. When Skyward Sword came out in late Wii, it sold that sort of numbers. So its more logical to say the Switch is still doing well to let Pikmin sell at the levels of low-interest Zelda periods than say, imply Pikmin is as popular as Zelda.

Nintendo is probably safest from the industry trends, though it is true they aren't guaranteed to be unaffected. They're also the entry point, as people tend to get, say, a Game Boy or a Switch as their first console, so people going into gaming seems to be moving along well. The problem is that it seems that a lot of gamers are going to PC next as an 'upgrade', not Playstation or X-Box.

I don’t keep up in Financials, but personally gaming has never been better. So much amazing software and amazing prices.

Can't wait to see the corpo financial speech used to justify scrapping the livelyhood of thousands of people being the justification of an industry that experienced a growth in revenue much too strong in the 2010's to remain sustainable as it is.

We're currently in the fallout of these decisions that were taken previously, of course shortsighted due too multiple factors be it unforeseen or not.

Then you look at Nintendo buisness side who despite the pro-labor laws implemented in their country, has always demonstrated gall to face up against scummy investors chasing short term gain maximization because they already understand the strength of their buisness to take up themselves in the position they currently are whilst being more sustainable than their peers.

Even better, when they mess up like the last generation, they barely acquiesce to their demands.