The summary of ‘Why Consoles Are Going Extinct’

00:00:00

In this segment, the video discusses the importance of gaming consoles since their inception. It highlights how consoles like the Nintendo Entertainment System in the ’80s, the Super Nintendo in the ’90s, and the PlayStation 2 in the 2000s revolutionized home entertainment and advanced gaming technology. Despite their historical significance, consoles have seen a decline over the past decade, losing market share to PCs and mobile phones. The segment also touches upon the “console wars” that drove innovation through fierce competition between different manufacturers. Additionally, there is a brief mention of the sponsor, NordVPN, emphasizing its security benefits, especially for frequent travelers using public Wi-Fi. Finally, the video references the early days of the console wars between Atari and Intellivision and how this competition initially boosted the console market before the video game industry crash in 1983, partly due to market saturation and a shift towards personal computers.

00:03:00

In this segment of the video, the discussion begins with the decline of the console market after Atari’s initial success, noting a significant drop in home video game revenues from $3.2 billion in 1983 to $100 million in 1985. The narrative then shifts to Nintendo’s entry with the NES in 1985, which revitalized the industry by focusing on quality games and changing public perception. The NES’s success set the stage for the second console war between Sega and Nintendo, with Sega launching the Genesis and creating Sonic to compete with Nintendo’s Mario. This rivalry continued until Sony entered the market with the PlayStation, which was technologically superior and featured memorable characters, leading to Sega’s decline.

The segment further highlights the dominance of Japanese companies in the console market during the ’80s and ’90s, until Microsoft entered with the Xbox, a powerful but initially less popular console compared to the PS2. Microsoft’s persistence in the market, despite the Xbox’s modest initial sales, paved the way for significant developments in the subsequent generation of consoles.

00:06:00

In this part of the video, the speaker discusses their experiences with the Xbox 360, PlayStation 3, and Wii, highlighting unique features of each console that made them stand out. The Xbox 360 had a fantastic game lineup and community, the PS3 offered advanced technology with a built-in Blu-ray player at a competitive price, and the Wii was fun despite its gimmicky games. This generation was significant as it marked the peak and fierce competition among consoles.

The speaker then transitions to the next generation of consoles, discussing the excitement around the PS4 and the disappointing reception of the Xbox One. Sony’s PS4 was well-received for its games and community features, whereas Microsoft’s announcement for the Xbox One focused too much on multimedia features, causing confusion and dissatisfaction among gamers. Additionally, Nintendo’s console at the time, which attempted to blend console and handheld gaming, also failed to impress, leading to financial struggles for the company.

The shift in the console market resulted in a clear victory for PlayStation, driven by its superior exclusive games, while Xbox and Nintendo struggled to maintain their identities and appeal.

00:09:00

In this segment of the video, the discussion centers on the long-lasting consequences of the PlayStation 4 winning over the Wii U, leading to the Wii U becoming Nintendo’s last traditional console. It elaborates on why the Nintendo Switch isn’t considered a typical home console but rather a hybrid device primarily geared towards handheld use with the additional option to connect to a TV. This strategic shift allowed Nintendo to consolidate resources previously divided between console and handheld markets, thus exiting the traditional console war in 2017. The narrative then shifts to the impact on Xbox, emphasizing how the Xbox One’s failure in the digital gaming era hurt Microsoft significantly. This loss prompted Microsoft to rethink its strategy, leading to the hypothesis that Microsoft might aim to move beyond traditional consoles entirely, adopting a new business model more aligned with current digital trends.

00:12:00

In this part of the video, the speaker explains the economics behind the console and razor markets, noting that like razors, consoles are sold at a loss with the expectation of recouping costs through high-margin sales of complementary products—in this case, games. However, if a company loses the console war, the financial losses can be devastating, leading to companies exiting the market. Microsoft, historically a loser in the console war, took a different approach by acquiring game studios like Mojang (Minecraft), ZeniMax (Bethesda), and Activision Blizzard, spending over $80 billion. These acquisitions were not aimed at making Xbox exclusive games but at creating a vast library for a gaming subscription service, Game Pass. This strategy is aligned with Microsoft’s plan to shift focus from consoles to becoming the “Netflix of gaming,” making Game Pass accessible on various devices including PCs, which significantly broadens their market reach. Recent leaks show that future Xbox hardware will prioritize digital and cloud-based gaming solutions, reflecting this shift in focus.

00:15:00

In this segment, the video discusses the future of gaming as a hybrid model combining both client and cloud power. Microsoft is still making consoles because current technology isn’t ready to go fully cloud-based, as seen with the failure of Google Stadia. Consoles are needed for high-fidelity games, especially online ones. The speaker has been able to stream games on mobile devices, like using an iPhone to play high-end games with advanced features, and mentions Microsoft’s partnership with Samsung for streaming games directly onto TVs. This new direction allows gamers to access games without needing a console or PC.

The video then shifts to the console wars, specifically between Microsoft’s Xbox and Sony’s PlayStation. Microsoft wants to shift focus from console competition to subscription services. Crossplay, the ability to play games across different platforms, was briefly enabled in 2017 with Fortnite, showing that it’s possible but Sony resisted due to its market dominance and desire to keep exclusivity within PlayStation Network. Xbox’s Phil Spencer supported crossplay, creating pressure on Sony to reconsider their stance, especially when Fortnite was released on the Nintendo Switch, further complicating the competitive landscape.

00:18:00

In this part of the video, the discussion centers on the transition to cross-platform gaming initiated by Fortnite, which eventually forced Sony to allow cross-play. This move effectively diminished the incentive for the console wars, as gamers could play together irrespective of the console. The segment also covers Microsoft’s acknowledgment in 2023 that they lost the console wars, highlighting a shift in focus to cloud gaming. The video compares this industry change to historical business failures like Kodak and Blockbuster, emphasizing Sony’s resistance to moving away from traditional consoles. The overall message suggests that the future of gaming lies in cloud technology, with new competition emerging, which benefits consumers through increased variety and innovation.

00:21:00

In this segment of the video, the speaker discusses the shift in the gaming market from traditional consoles to more accessible platforms such as PCs, phones, TVs, and cloud gaming. Despite rapid global gaming growth, consoles are losing relevance, especially in markets like China, Korea, and India where PCs and other devices dominate. The future of gaming is predicted to center around hybrid technology and subscription services rather than dedicated home consoles. The speaker is both nostalgic about the past era of consoles and excited about the innovation and changes in the gaming industry. They also mention their Discord community aimed at supporting aspiring indie game developers through challenges and events.