I don’t think Naugty Dog has anything to worry about. Next gen will be less about a graphical leap than ever before. Sure, the hardware will be much better, but the initial graphical leap in game tech and art will be imperceptible next to current PC games like Battlefield 3.

So what’s the selling point? Certainly Sony can’t put out a $900 PS4 and expect anybody to buy it on the back of “MOAR GRAPHICS.”

Next Gen will be defined by the declining retail market more than anything else. MS/Apple/Sony understand that they are making a platform for digital content delivery, not just big AAA games, but also small XBLA games, free to play games, social games, but potentially more importantly: TV and Movies. A new way of interacting with your tv and games, that’s the selling point.

Apple is doing this which means MS and Sony need to strike preemptively or be disrupted. Believe it or not, there are lots of people that would happily never own another “game box” if their TV played Wii Sports and Just Dance. The PS2/Wii era market penetration is the realm of iTV.

I work on AAA games so please don’t remind me that AAA blockbusters aren’t going away. I know, I know. I like those games too. Yes, we will always have them and they will get more uber in the future. It’s great.

But that’s not the highest end of the market. The highest end is $100/month TV & Movie subscriptions that people currently pay to the likes of Comcast and Verizon. The highest end of the games market is not even Mondern Warfare 3′s Billion Dollars, it’s WoW’s Several Billion Dollars.

The next gen is about making and owning the living room software & services platform. Look at how well Apple and Google have done on the backs of iOS and Android. Everybody wants to do that in the living room. The competition is not between Xbox 720 and PS4, the competition is between:

- iTV
- Xbox Live
- PSN
- Google TV
- Steam (which is remarkably well positioned to be relevant in the living room)

Platforms. That is what matters and is what will define the next gen. The level of uncertainty around the future of those platforms is far more terrifying to me than “how much RAM will the box have?”

There have been three bits of news from GDC so far that paint a better picture of how Smart TV will disrupt the AAA game industry in the living room. Once again, Valve is ahead of everybody else in their thinking:

1. Iwata’s Keynote was about a crisis for Game Developers. My Translation: Nintendo is the one in crisis. Everybody on Facebook and iOS is doing just fine. Yet, Nintendo can’t follow up the blue ocean strategy of the Wii with another Wii – it’s a red ocean now with Kinect, Move on the motion control side and lots of new competitors (Smart TV, cloud gaming, iOS) coming on the cheap disruptive side. Still, they clearly recognize the problem and that’s the first step towards finding a way to make a Nintendo machine part of the future living room.
2. Google recognizes the fact that control and therefore UX is a big problem in the living room. Well Done! Then, they point to tablet and smartphone touchscreens as the solution. Oops! As I mentioned in the bigger article, touchscreens lack tactile feedback, and so they can’t be eyes-off controllers. I don’t think people want to give up on-the-big-screen UI’s and spend all of their time looking down instead of actually watching a show while they surf for something else. Plus, the larger market of apps (as a device selling point) is only enabled by a controller that can navigate on the big screen. Despite being first to market with the most fully featured Smart TV platform, Google is leaving the door open for somebody else to build the great controller experience. This puts Microsoft in a great position. A “Kinect TV” product (cheap, focused on great TV UX and an open app market) could be huge. That is, if Microsoft can bring themselves to put up an open app store.
3. With my favorite bit of news, Valve announced “Big Screen Mode” for Steam, which makes my longshot scenario of a Steam-enabled Boxee 2 much less of a longshot. Big Screen Mode also features a controller-enabled UI. Very soon you’ll be able to hook a cheap PC up to your TV, buy Modern Warfare 2 for less than it costs on any console and play nearly the exact same experience. Steam has more disruptive potential than anybody is giving them credit for. Already, Super Meat Boy, a game designed for controllers, sold more on Steam than Xbox Live Arcade. I tweeted Boxee telling them to hook up with Steam, so we’ll see if they can recognize their leverage to crush Google, Apple and Microsoft, and dominate the living room.

If you’ve got the RSS burned try re-burning it from the link in the footer – I’ve switched to feedburner and I’d love to know how many of you out there are reading from a reader. I should have a pretty big post this week with some art and a whole lot of industry prediction, so you’ll want that feed updated. I should also have some new Warhammer art that I dug up posted shortly.

I’ve got a twitter account which will probably be rarely used, so you’ve got that alternative to the RSS. I’ll tweet out any new content that shows up here.

For posterity, here’s the previous site design. I liked the header and background, but I wanted something cleaner here, and I wanted a wide format so I can ditch the lightboxes.