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Xbox One and PS4: New Consoles Are Nice, but New Gamers Would Be Even Better

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Microsoft and Sony need to grow the population of gamers, and their new consoles are not equipped to do so.

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Underpinning the negative stock trend has been weak industry revenues. Following a booming 2007 and 2008, annual industry revenues declined from 2009-2012, according to NPD. This was primarily a result of casual gamers migrating from the Nintendo Wii and DS to smartphones and tablets, or out of games altogether. Another major factor was the collapse of the rhythm/music genre, which was led by the now-defunct Guitar Hero.

And year-to-date, NPD's industry sales data has not been encouraging, which is not a suprise, given the multi-year slowdown as well as the coming rollout of new consoles. Most recently, for April, total sales fell 25%, with software sales down 17% and hardware sales down 42%.

Now it does appear that hardcore gamers have stuck around. The big blockbusters like Call of Duty and Halo, while showing some chinks in their armor, have been pretty reliable sellers.

So the question becomes, are the Xbox One and Sony PS4 equipped to create a healthy new population of console gamers?

We've already seen three major pieces of gaming hardware fall flat relative to their prior iterations: the Nintendo Wii U console (see: Weak Wii U Sales Are Dragging Nintendo Down), and the Nintendo 3DS (see: Nintendo Joins the Long List of Apple Victims) and Sony PS Vita handhelds.

The Nintendo products failed because of the shift of casual gamers to smartphones and tablets, and the PS Vita definitely suffered from a high price and underwhelming game lineup.

So they're not directly comparable to the hardcore-themed Xbox One and PS4 -- but these are signs that the casual audience will have zero interest in the Xbox One and PS4, both of which will lean on the expensive side.

Yes, I get that Microsoft wants to own the living room by integrating consumer-friendly features, but no one who is not already a hardcore gamer is going to pony up $300 to 400 or more for an Xbox One at launch to watch movies on Netflix (NASDAQ:NFLX) or watch NFL clips or make Skype calls.

At the same time, Sony and Microsoft may be facing a new generation of gamers who are less likely to care about consoles. I was playing an Atari 2600 in the early 1980s, when I was five years old, so I was indoctrinated to consoles very early.

Today, kids younger than that are playing with iPads.

Check out young Ibrahim here:



Both Sony and Microsoft are throwing around specs regarding teraflops and polygons and lens flares and megahertz and blah blah blah, but where does the next generation of hardcore gamers come from when kids are getting used to smartphone and tablet games that are basically good enough?

And if the hardcore gaming audience was growing, why have industry revenues been stagnating for so long? Surely they would have eventually picked up the slack for the casual group, right?

So what does this industry really need? New gaming consoles? Or new gamers?

I suspect that both the Xbox One and PS4 will sell well out of the gate, but each's longer-term outlook remains much tougher to gauge.

If you've got a different view, please use the comments section below to make your voice heard!

Twitter: @Minyanville

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