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"Modern Warfare 3" Will Mark the End of the Video Game Console Era


"Modern Warfare 3" will be one of the last hurrahs for the console-dominated gaming era as the world shifts toward new-school, alternative platforms.

Activision's (ATVI) Call of Duty: Modern Warfare 3 will be the biggest entertainment launch of all time upon its November 8 release.

How do I know this?

Because the last two Call of Duty games earned the very same distinction, so a three-peat is pretty likely.

However, Modern Warfare 3 will be one of the last hurrahs for the console-dominated gaming era as the world shifts toward new-school, alternative platforms.

The current generation of gaming platforms consists of consoles and handhelds from the likes of Nintendo, Microsoft (MSFT), and Sony (SNE).

Unfortunately, all three are being pushed aside by foes we couldn't have imagined just five years ago -- and this means big things for investors.

Let's start with mobile gaming before we discuss consoles.

According to a recent research report from Parks Associates, almost two-thirds of smartphone users play games on at least a monthly basis.

And how are smartphone sales doing? Gartner says they were up 74% to 108 million units in the second quarter.

The Nintendo DS, the best-selling handheld-gaming platform of all time, sold 146 million units in its whole lifetime.

Its successor, this year's 3DS, won't fare nearly as well. In fact, it was so poorly received at retail that it received a significant price cut in July, just four months after release. From first to worst in one generation? That's just plain scary.

The appeal of smartphone (and tablet) games is pretty easy to grasp. They're dirt-cheap or free, you can usually try before you buy, and they don't require you to buy and carry another gadget around with you.

So that takes care of the handheld world.

Now let's look at consoles.

A study commissioned by social-gaming company Kabam indicated that there is some overlap between the console and social-gaming populations.

The key finding, courtesy of VentureBeat:

About 82 percent of the hardcore social gamers also play console games. These hardcore social gamers also play for a longer period of time than casual social gamers. As the games get better on Facebook, social games (such as Kabam's Glory of Rome...) are disrupting play on the traditional consoles.

One figure shows how social gaming growth is resulting in less time and money spent on other game platforms. About 27 percent of social game players who played games on other platforms say that they are spending less time on those platforms. They are also spending about 50 percent less money on console games. Kabam's own customers report a 55 percent decline in their game play on other platforms.

Normally, I'd roll my eyes at this sort of study because as a social-game producer, Kabam is obviously looking for an outcome that supports its business model.

However, let's examine some numbers.

The soon-to-be-public social-gaming company Zynga just filed its second-quarter numbers with the SEC.

And what's going on there? Revenue was up 115% to $279 million in the second quarter of this year.
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