GameStop CEO Thinks The Console Cycle Will Get ShorterBy: Zach Walton - October 8, 2013
For years, the console cycle was predictable. Nintendo, Sony and whoever else would release a console, wait five years and then release a new one. This past generation, however, has completely destroyed that concept with a console cycle that has lasted eight years. Some may feel that long console cycles will now be the norm, but GameStop’s CEO doesn’t see it that way.
CNET recently had a chance to chat with GameStop CEO Paul Raines about the upcoming console shift to the PS4 and Xbox One. He predicted that we’ll see the successors to the PS4 and Xbox One sooner rather than later. In fact, he says that new consoles must come out a “greater frequency” if they want to remain relevant in the home.
It’s an interesting concept, but an expensive one. Consoles cost a lot of money to make, and releasing one every two to three years instead of the established five to seven would make little financial sense. Manufacturers like Apple, Samsung and others can iterate on their devices yearly thanks to their ability to sell the devices at a huge mark up above the actual cost. Game consoles on the other hand are almost always sold at a loss at launch, and make up for it with software sales. If game consoles went for biannual iterations, the software sales just wouldn’t be there to prop up the hardware losses.
All of this just makes the recent revelation of Steam machines far more desirable to those looking for a AAA gaming experience in the living room. With a Steam machine, you pay a high upfront cost for top-of-the-line hardware, and then you can continually upgrade said hardware over the years as new components are released.
This PC-centric approach to console gaming may actually be what the future holds for Microsoft and Sony. It’s been suggested by some industry figures and analysts that this upcoming generation will be the last – at least in a traditional sense. The cost of producing customized game hardware has now gotten to a point where it only makes sense for Sony, Microsoft and others to build and sell PCs that consumers can then upgrade as they see fit.
We can save that discussion for the future though. For now, the PS4 and Xbox One will be launching next month to at least a million preorders for the former. Raines says that’s going to translate to supply shortages. That’s only healthy for the industry, and GameStop in particular, as the retailer makes about $1 billion a year in console sales. With this latest generation, it’s expecting to see a sizable bump in revenue thanks to the pent up demand for new consoles.[Image: Wikimedia Commons]