Predict: The Next Generation Console Tech

[aaronspink]

ISPs will raise prices if there's any kind of widespread downloading of video files.

Not the crappy torrents that most movie consumers do not download but when big services like iTunes and Amazon starts putting stresses on the broadband infrastructure.

There are caps, the ISPs just don't advertise them. But more and more people will hit them and they'll be cut off or charged more.

Considering the amount of movies already being downloaded via torrents, unbox, itunes, movielink, netflix, I doubt it.

These services are the reasons they are able to sell the higher priced high bandwidth connections. If the costs get too high, you'll see the ISPs go to co-hosting before they impose real caps in the US.

In fact, the way most peering agreements actually work, they would prefer that the consumers download to their hearts content, the only issue for most of the ISPs is their upstream bandwidth, at least in the US.

Right now every smart ISP is already increasing down trunk bandwidth and working with various content distributors to form colocation based content distribution.

Right now the real battle is between the ISPs that want to provide the content themselves so they make more profit and the net neutrality companies that want to provide the content. There is no battle in the net world of whether its going to happen, only over who is going to do it.

Or do you think that both MS and Sony are just wasting their time and money working and investing in their own content delivery systems built into the 360 and ps3?

We're basically 1 full upgrade away from being able to DL realtime 30mb/s video. Less as the codecs improve over time.

And you would be a fool if you don't think that the game and console makers don't look at companies like best buy, walmart, gamestop, etc as just unwanted drains on revenue that provide little to no benefit. Middle men were meant to be squeezed out of the market unless they provide more service and value than they take and for the most part none of them do in the game market.

Aaron Spink
speaking for myself inc.

 

[aaronspink]

I'll admit to a guilty pleasure: I'm a huge fan of South Park, Futurama, and Simpsons. I have a few full episode of Simpsons and Futurama, and have the entire South Park collection on DVD. Unfortunately, they really amount to an expensive archive I don't even watch. That's because I can't be bothered to dig through each box for the right disc for an episode I am looking for -- and that is how I tend to enjoy them. As the mood strikes, I'll want to watch a specific episode. Now that southparkstudios.net (the official site for South Park) has all episodes via. stream from their website, despite the lower quality and lack of "extras" -- I solely watch old episodes from their site. I can pretty much promise you there's no going back for me. I have swore off on buying any more DVD's... or CD's for that matter. Up until recently, I would buy a CD, and immediately rip it onto an external HDD that serves as my music library, only to file the CD into a box. That is, until I decided to subscribe to eMusic.

Which is an important point, quality is but one piece of the value pie, convenience is another piece and generally a more valuable and therefore more important piece.

Examples abound:
DAT vs CD
MP3 vs DVD-A/SACD
the next one will be
MP4/MKV vs BR

The ability to have your whole collection at your fingertips is incredibly powerful, its why MP3/itunes have won the music battle. Its why steam has been able to take over a large portion of the PC gaming market, and its why current generation consoles are integrating broadband content delivery and why next gen consoles will be DRIVEN by broadband content delivery (not to mention its more secure than discs, safer, has effectively perfect backup, etc.

Aaron spink
speaking for myself inc.

 

[thatdude90210]

Comcast just started rolling out their free upgrade to "Blast," 16M/2M, for those who were getting 8M/768k. I don't see them turning around and say, oh by the way if you download anything with that extra download capacity, we're going to have to charge you.

I rarely turn on my DVD player anymore, most of the stuff I watch are either live tv, recorded tv, streamed, or downloads.

The last 3 PC games I bought were from Steam, if I had a bigger HD instead of the tiny 20GB that came with my 360, I would rather get my console games through download too. I'm sure a majority of people don't have the same preference, but I can easily picture them going that way sooner or later.

Btw, why doesn't MS take advantage of their Live video marketplace by doing something like AppleTV. They already have the online part, just need something like a stripped down 360 that just plays media, and with a big harddrive.

 

[Mobius1aic]

A stripped down 360 that just plays media with a big harddrive? That my friend would be a computer lol. A 360 w/o game capabilities is besides the point of the brand name, however I understand what you're going for and a $200 box that handles all your media needs with a large harddrive is a very attractive idea, but I'd market it as a media player really. But talking about that reminded me of the disaster that was the PSX system, the one that was a combined PS2, DVD reader/writer and DVR. Too bad for uneffective marketing through Sony Corp and not SCEI, it's an interesting machine and I think it could've been a wonderful device to have. Also I wonder if the PS2 functionality in the machine could use the HDD for game saves or even Final Fantasy 11?

 

[B1663r]

Wow, this is a pixel counting forum, and some people here have been talking about comparative quality of video services. I would love to see this foum analyze Amazon vs XBox vs Apple video download services. I know in my experience which one I prefer. But the video quality they offer is obviously different.

Also, put me in the camp that doesn't think that $15 for buy movie downloads isn't going to take off. While at the same time, I think video download rentals will begin to seriously displace DVD rentals in the next year or two.

 

[wco81]

Yeah lets see console makers try to cut Wal Mart and the rest out of the gaming business.

You can't download hardware. And there's no money in hardware so stores have to make money on software.

In future generations, there will be higher-capacity HDDs but capacity won't grow that fast. Meanwhile content data will grow.

You can look around. Comcast tries to charge premium for faster download connections but there are stories about people being cut off for actually downloading too much. They won't tell you what too much is though.

 

[Barbarian]

Yeah lets see console makers try to cut Wal Mart and the rest out of the gaming business.

Considering Wal Mart specifically can take up to 50% cut from the price you pay, they are probably number 1 middleman to be removed. How awesome would be to be able to buy GTA4 for 30-40 bucks online?
As long as the publishers are smart enough to lower the price of course. Unfortunately, judging by Steam, it doesn't seem publishers are willing to pass down some of the saved costs, which might change if downloads become more popular and there's more competition.
Additionally, downloads allow publishers to clamp down on the "annoying" used-games sales, from which they don't get a cut, and there's been numerous plans in the past to change that, but all of them unsuccessful.

 

[AlphaWolf]

Considering Wal Mart specifically can take up to 50% cut from the price you pay, they are probably number 1 middleman to be removed. How awesome would be to be able to buy GTA4 for 30-40 bucks online?
As long as the publishers are smart enough to lower the price of course. Unfortunately, judging by Steam, it doesn't seem publishers are willing to pass down some of the saved costs, which might change if downloads become more popular and there's more competition.
Additionally, downloads allow publishers to clamp down on the "annoying" used-games sales, from which they don't get a cut, and there's been numerous plans in the past to change that, but all of them unsuccessful.

Where would you buy your console? If wal-mart didn't have software to sell, they'd probably tell Sony, Nintendo and Microsoft to take their hardware and shove it. And steam is just a different middleman.

 

[ninzel]

I think ISP's and cable provides are already facing bandwidth problems just rolling out HD channels. Last I read a lot of compression was being used by certain services to keep speed up,and bigger bandwidth demands are really just beginning.
Now imagine 5-10 years out when downloading services AND HD channels become truely mainstream. There will be challenges and extra costs to the consumer I have no doubt.

 

[aaronspink]

Yeah lets see console makers try to cut Wal Mart and the rest out of the gaming business.

Considering they are being cut out of the music biz and the book biz along with a whole host of other retailers, I think its not an unexpected outcome.

You can't download hardware. And there's no money in hardware so stores have to make money on software.

you can however drop ship hardware.

In future generations, there will be higher-capacity HDDs but capacity won't grow that fast. Meanwhile content data will grow.

Within 3-4 years you are looking at 1 TB drives costing the same in volume as the current disks being used in the consoles.

We'll be generous and say games use 50 GB at that time, which mean 20 games loaded on the console at the same time MINIMUM! I'm pretty sure MS, Sony, and Nintendo would be more than happy with an attach rate of 10-20 games.

You can look around. Comcast tries to charge premium for faster download connections but there are stories about people being cut off for actually downloading too much. They won't tell you what too much is though.

And the backlash against comcast? MASSIVE! They recently totally changed their policies for fear of legislation over the issue. In addition, I'm not aware of cases where comcast cut people off for downloading but generally uploading. And yeah, they may discontinue you if you are using max bandwidth 24/7 but that doesn't have anything to do with the discussion at hand.

We're looking at 3-4 years out when 50-100 Mb/s connections will be available from almost all providers in reasonable first world countries. And for areas where there are slower connections, there will always be disc based distribution of content that you can load onto the HD just like Valve currently uses.

Aaron Spink
speaking for myself inc.

 

[aaronspink]

I think ISP's and cable provides are already facing bandwidth problems just rolling out HD channels. Last I read a lot of compression was being used by certain services to keep speed up,and bigger bandwidth demands are really just beginning.
Now imagine 5-10 years out when downloading services AND HD channels become truely mainstream. There will be challenges and extra costs to the consumer I have no doubt.

Actually, you'll see a transition by almost all of the TV providers from broadcast distribution to narrowcast distribution (no provider has the bandwidth now or in the future to do full bitrate HD broadcast of all channels and certainly not using MPEG2). Its what most of the new systems are being designed around because its much more bandwidth efficient at the curb (plus for all the channel surfers out there, it actually changes channels faster too!).

Aaron Spink
speaking for myself.

 

[wco81]

I'm going to venture a guess that the next-gen consoles won't have 1 TB HDDs.

Nor will they rely mainly on digital distribution for games.

It'll still be shrink-wrap for games and packaged media for movies.

 

[AlphaWolf]

There's no question DD will be a bigger part of next generation consoles, but it's not anywhere near ready to take over from retail. Who will supply the bandwidth for 5 million people downloading a 20gb title on day one?

As for drop shipping hardware, there's still a high number of people that simply won't accept that. I personally limit online purchases to certain products, because if there is something wrong with CE, I want to walk back into the store and exchange it in a few minutes and that happens far more than I would like. Repacking something and sending it back is a major annoyance that I don't mind paying a B&M to handle.

 

[aaronspink]

There's no question DD will be a bigger part of next generation consoles, but it's not anywhere near ready to take over from retail. Who will supply the bandwidth for 5 million people downloading a 20gb title on day one?

The same way its done now, as soon as the game hits gold, it goes up for preloads. Distributed content distribution has been a solved problem for 10 years now. In fact there are companies who primary biz is distributed content delivery and they are used by most of the people delivering content on the net today (aka akamai). I would be surprised if MS/Sony weren't already using them in some capacity or another.

As for drop shipping hardware, there's still a high number of people that simply won't accept that. I personally limit online purchases to certain products, because if there is something wrong with CE, I want to walk back into the store and exchange it in a few minutes and that happens far more than I would like. Repacking something and sending it back is a major annoyance that I don't mind paying a B&M to handle.

I'm quite sure that retail outlets would still sell the consoles, accessories, and content. Its just there will be other avenues to get the content as well. Lets be honest, it isn't like retail is the cheapest way to get games currently anyway.

Aaron spink
speaking for myself inc.

 

[aaronspink]

I'm going to venture a guess that the next-gen consoles won't have 1 TB HDDs.

Nor will they rely mainly on digital distribution for games.

It'll still be shrink-wrap for games and packaged media for movies.

within 3-4 years 1 TB drives will be effectively single platters. It might not be 1 TB but it will be close.

And they are already pushing DD for games as they generally make more money that way.

And a large portion of the software market is already moving away from shrink-wrap towards DD and this trend will only increase. For the developers and publishers they end up making significantly more money this way.

Aaron spink
speaking for myself inc.

 

[AlphaWolf]

The same way its done now, as soon as the game hits gold, it goes up for preloads. Distributed content distribution has been a solved problem for 10 years now. In fact there are companies who primary biz is distributed content delivery and they are used by most of the people delivering content on the net today (aka akamai). I would be surprised if MS/Sony weren't already using them in some capacity or another.

didn't really answer the question

I'm quite sure that retail outlets would still sell the consoles, accessories, and content. Its just there will be other avenues to get the content as well. Lets be honest, it isn't like retail is the cheapest way to get games currently anyway.

Depends how you do the math, for people that share titles (trade with friends) or trade in/buy used, a retail copy is still better value than DD. Retail currently eats margins on hardware, they won't do that if they are going to lose the software. I don't really think its an issue because pure DD is probably at least 20 years away.

 

[V3]

We're looking at 3-4 years out when 50-100 Mb/s connections will be available from almost all providers in reasonable first world countries.

3-4 years for widespread availability, you need to another 3-4 years for adoption. As long as ISPs don't charge you over $1 for a GB, I think we'll be all right.

Really what we are doing is just changing the middlemen from your Walmarts to your Telcos and ISPs. Telcos and ISPs are going to be even more powerful. Lets hope they don't screw with us.

In the mean time the cheapest and convenient way to get contents for home is still to shop online and deliver by mail. With download contents, the quality is just not there yet. MP3s and MP4s are nice for portable players, but for home usage they are just too low quality.

 

[aaronspink]

Depends how you do the math, for people that share titles (trade with friends) or trade in/buy used, a retail copy is still better value than DD. Retail currently eats margins on hardware, they won't do that if they are going to lose the software. I don't really think its an issue because pure DD is probably at least 20 years away.

Oh, I don't think they'll ever go to a DD only option, but I don't really think we'll have *playable* discs with the next generation. Instead I believe the discs will just be an alternative delivery method for the actual DD content system, as I said similar to how Valve does retail games currently.

The disc will just contain the game file that would normally be downloaded over the net, probably encrypted with the same encryption key as the pre-load DD net version. Just like with current valve games, you would copy to HD and authorize (though authorization may be included on a security track on the disc like it is in current console discs for convenience). I do believe it will require an online connection for the initial authorization check with the check resulting in a machine specific hash key to enable the user to play the game.

This provide the highest level of security possible in widely distributed content and if you don't think the console companies are interested in this, then you obviously haven't been following the drive cracks available for 360, the future cracks that WILL be available for PS3, etc. By using an online authorization DB they pretty much can squash external means, such as disk duplication/copies, as a method of piracy. Compared to SOME ideas I've heard proposed this is a SIMPLE system.

So in the end there is really no difference between the downloaded version and the disk version, just two different mediums to supply the bandwidth to install the content.

As far as the retail outlets are concerned, Valve and other steam games seem to get just as much shelf space as non-Valve/Steam games so I don't think thats much of an issue. I never said the games would be PRICED different for DD vs retail, just that the publisher/console maker would make more money on the game for net download.

As far as it being 20+ years out, you already have Sony selling the same game as both DD and retail... And in effect its just the logical progression of DLC.

Aaron Spink
speaking for myself inc.

 

[AlphaWolf]

Oh, I don't think they'll ever go to a DD only option, but I don't really think we'll have *playable* discs with the next generation. Instead I believe the discs will just be an alternative delivery method for the actual DD content system, as I said similar to how Valve does retail games currently.

The disc will just contain the game file that would normally be downloaded over the net, probably encrypted with the same encryption key as the pre-load DD net version. Just like with current valve games, you would copy to HD and authorize (though authorization may be included on a security track on the disc like it is in current console discs for convenience). I do believe it will require an online connection for the initial authorization check with the check resulting in a machine specific hash key to enable the user to play the game.

This provide the highest level of security possible in widely distributed content and if you don't think the console companies are interested in this, then you obviously haven't been following the drive cracks available for 360, the future cracks that WILL be available for PS3, etc. By using an online authorization DB they pretty much can squash external means, such as disk duplication/copies, as a method of piracy. Compared to SOME ideas I've heard proposed this is a SIMPLE system.

It'll be secure for a bit, then it will be cracked and just a wasted effort like every other DRM before it. They can patch, and then the pirates patch and so on.

So in the end there is really no difference between the downloaded version and the disk version, just two different mediums to supply the bandwidth to install the content.

While it has advantages of being a bit more secure initially, it has disadvantages for the consumer that could cost them in terms of sales. Part of the reason people switch to consoles is ease of use, when you start taking that away (with required installs, and online checks), you're going to start losing your base. Loss of resale value would also be an issue they would have to address, while I rarely trade in games, there's a number of games I may not have bought if this were not an option.

As far as the retail outlets are concerned, Valve and other steam games seem to get just as much shelf space as non-Valve/Steam games so I don't think thats much of an issue. I never said the games would be PRICED different for DD vs retail, just that the publisher/console maker would make more money on the game for net download.

You can't undercut the retail by too much, or you do lose that shelf space. If there's no margin for retail they won't carry it. Retail accounts for a lot of free advertising, but they are only going to devote shelf space based on returns. If direct downloads start decreasing Walmart's sales you will start to see a decline in shelf space. There's a synergy with retail that developers/publishers need whether they realize it or not.

As far as it being 20+ years out, you already have Sony selling the same game as both DD and retail... And in effect its just the logical progression of DLC.

Sure, Sony has a couple (relatively small) games they've sold online and Microsoft has a catalog of old games they sell on xbl. That doesn't mean that all of their customers will use it or want to use it. I know a lot of people that would rather just buy a boxed retail copy that they can trade in or lend to a friend, if that goes away it doesn't necessarily follow that they will accept the DD version, they just might pass on it.

It's not all as simply as the publishers/console manufactures putting their games in a new format, there's a number of issues they have to address in terms of selling it to the masses. And god forbid if you release a console with a DD format that starts out like steam did...

 

[aaronspink]

It'll be secure for a bit, then it will be cracked and just a wasted effort like every other DRM before it. They can patch, and then the pirates patch and so on.

Actually its quite a bit more secure than that. Done correctly with encrypted storage, encrypted memory and signed hashes it basically limited breaches to the point that the cost of piracy becomes extremely prohibitive. And it closes the number one mass piracy loophole with is the disc itself.

While it has advantages of being a bit more secure initially, it has disadvantages for the consumer that could cost them in terms of sales. Part of the reason people switch to consoles is ease of use, when you start taking that away (with required installs, and online checks), you're going to start losing your base. Loss of resale value would also be an issue they would have to address, while I rarely trade in games, there's a number of games I may not have bought if this were not an option.

Those are all going to be realities of consoles going forward. MS/Sony/Nintendo don't really care for and don't want resale and if they can move to a model that doesn't allow it, they will. As far as required installs and online checks? You don't think those are coming? You don't think the game developers want to run off a HD with reasonable random access and high bandwidth vs optical?

And for the people doing the digital downloads/installs, its up and running the very second it goes live. And with the speeds of the optical drives doing linear reads in 3-4 years with BR you are looking at install times of under 8 minutes.

You can't undercut the retail by too much, or you do lose that shelf space. If there's no margin for retail they won't carry it. Retail accounts for a lot of free advertising, but they are only going to devote shelf space based on returns. If direct downloads start decreasing Walmart's sales you will start to see a decline in shelf space. There's a synergy with retail that developers/publishers need whether they realize it or not.

Even if they don't undercut retail they still come out way ahead because of the additional revenue they made via DD. In the end it comes down to this: what is walmart going to do? They can either get what they can get or nothing. Walmart will choose to get what they can get. Its not like retailers have stopped selling CDs even though the market is rapidly shifting to online sales. The walmarts of the world stocked and sold CDs of music that was *given* away online!

Sure, Sony has a couple (relatively small) games they've sold online and Microsoft has a catalog of old games they sell on xbl. That doesn't mean that all of their customers will use it or want to use it. I know a lot of people that would rather just buy a boxed retail copy that they can trade in or lend to a friend, if that goes away it doesn't necessarily follow that they will accept the DD version, they just might pass on it.

You think they'll just stop playing games? All those people are just going to pass on GTA V or Halo 4, etc?

It's not all as simply as the publishers/console manufactures putting their games in a new format, there's a number of issues they have to address in terms of selling it to the masses. And god forbid if you release a console with a DD format that starts out like steam did...

Steam is doing just fine now. Of course there were bumps initially, no one else had ever tried to do what steam did. Now its old hat, its been done, and its continuously gaining in popularity.

Aaron spink
speaking for myself inc.