AAA Games versus Smart TV



Final Grades

Nobody completes the recipe right now. Anybody can win. The fight will go on for years, with controllers and UX evolving, and I expect everyone will narrow in on the magic recipe from their differentiated positions.

It’s possible that there could be two categories, one cheap box that does apps, and one expensive box that does AAA games. But, there is no way that we will see a repeat of this generation’s PS3/360/Wii triad – there is not enough money out there to sustain one “AAAA” game box, let alone three boxes, and the app box will take most of the money off the table anyway.

We have entered a cold war of game consoles. Nobody wants to shoot first in the next generation. The game console business is shrinking. If Microsoft and Sony both launch next-gen $600 game consoles, they are likely to spend each other into oblivion.

Gamers will always want AAA blockbusters, but it’s a shaky proposition to design a new box just for them right now and sell it at a loss again. The current consoles will continue their cold war while the Smart TV battles heat up very quickly.

Yet, the dour outlook for games is only for the short term. In the long term, the winning Smart TV platform will enable a new renaissance of games in the living room.

P.S. – There is my grand vision of the future. But, before I sign off, allow me throw in a longshot: Valve, my love, get on the phone to Boxee. Build a Sandy Bridge box with their OS on top that includes a Steam channel alongside their apps. Design a great controller, something like the 360 controller (enabling AAA ports), but with pointing capability and fewer buttons. Call it the Boxee2. Get a hardware partner to build it, just like the original. Do this, and you might just give the big boys a run for their money.

9 Responses

  1. Nice article.

    I think three things:

    1. There’s no incentive for the content people to make this happen. I used to work for BSkyB on the interactive TV games as a producer, and for decades the various interactive teams inside Sky have been agitating for up to date technology, but companies like Sky won’t bite. Their reasoning, which is hard to argue with, is that they need to get cheap boxes into people’s homes that can carry digital signals, and once they’re in they have no incentive to go around replacing millions of boxes with technology that allows viewers to do things other than watch TV.

    All the cable and satellite companies have the same problem, and they’ve spent a long time figuring out how to deliver VOD etc onto their existing technology as a result, and that’s not going to change. So that means that any extra Google or Apple box has to be in addition to the cable box, and not free. That’s a bit of a problem.

    2. They may always end up falling between two stools. It’s hard to say what problem these devices actually solve. With VOD, DVR and hundreds of channels the average consumer arguably has far more video content than they actually need, so yet another source seems a bit frivolous. With game consoles that use dedicated (therefore better) controllers, the play experiences are very likely to be better and so the enhanced App Box’s versions might seem quite lightweight by comparison.

    I think nobody has solved that question yet. Without a compelling problem to solve (and I’m not sure box reduction is that compelling) it has to be sold as an nice-to-have, which instantly reduces the market ubiquity.

    3. Perhaps the solution is to go upwards. It doesn’t apply so much to Google, but what strikes me as odd is that Apple doesn’t have a gaming machine. They have all the components in place, from a development platform, to a commercial platform, an approvals department to a great reputation for designing awesome hardware. So isn’t the answer (for Apple at least) to do a PS1-era Sony and create a game console?

    Overwhelmingy, I think yes. What they could do is create a console that is wholly iTunes based, uses the App Store etc, but sells big games as opposed to just Angry Birds. Of course it could do Angry Birds as well, but – notionally at least – they could take a huge wedge out of the business model of the disc-based platforms that exist today. That to me is the missing link in the chain, because it gets the Apple tv into the homes through replacement rather than as an additive box.

    All in all though, I think there will not be one mega-convergent box. The economics just don’t stack up and there’s too many power players on the content side who really don’t want that to happen. There’s nothing stopping a whole lot of disruption happening on the console side though.

    February 2, 2011 at 3:35 pm

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  3. Lucas


    Thanks so much for the reply. Looking at this from the perspective of the TV world is the best way, and it’s the arena that I have the least experience in, so your comments mean a lot. The big media conglomerates will undoubtedly act as a massive drag on this transition. As you point out, they may prevent it from happening at all. After reading your reply and doing some more research, I can readily see how big of an obstacle it is that they represent.

    However, with so many companies like Hulu and Netflix working on services that can offer these companies more revenue, not less, I think that angle can be solved. There are many incentives for MS, Sony, Apple and Google to bring a iOS-like experience to the living room (as described in the article). That pressure, and the competition between these companies has the potential to sidestep whatever challenges Sky, Time Warner, Comcast, and their ilk represent.


    February 7, 2011 at 2:37 pm

  4. Pete Morrish

    Another website, another disagreement with Tadhg.

    (We’re mates, by they way, and have worked together in the past; whilst he was producing at BSkyB, I was producing at one of their developers. Part of my current day job involves working in the next-gen connected TV space.)

    Just a couple of thoughts from me.

    1) I don’t think that the connected-TV games market will start with trying to appeal to gamers that are already out there (i.e. your Xbox gamers, PS3 gamers, etc). So I *do* disagree with the idea of Apple bringing out a dedicated games console. From my point of view, games consoles already exist to meet the needs of dedicated gamers; they ain’t going anywhere just yet. Such a device – with App Store – would be a great step, and would shake up the established industry players, but it wouldn’t be disruptive from the consumer’s point of view.

    2) I think the unmet consumer need will distil out of the mass of non-gamers who want quick, convenient distractions. People that are scared of traditional game controllers (the iPhone has shown that good content fits new non-scary controllers, so a traditional-style controller is by no means a pre-requisite for connected-TV gaming to properly take off), and that can’t be bothered turning on another box, waiting for it to boot up, then navigating menus until they finally get to the content they want.

    Instead, here’s a thing (and I’m thinking on the fly here; I’ve not heard anyone posit anything similar to this before): games as channels.

    The ideal setup for the traditional use case of the TV-watching experience, and for the traditional UX of the those slumped in front of the telly, is to have games ‘always on’. I’m thinking that (e.g.) Angry Birds is on channel 626. Flick to channel 626, and *there’s* Angry Birds, exactly where you left it. No loading time, no extra set-up, no nothing. It’s just another TV channel from the user’s point of view.

    From a tech viewpoint, it’s similar to the iOS implementation of multitasking, I guess. It would be the ultimate in convenience, and would leverage pre-existing mental models of both TV channels and the TV-content consumption experience (meaning that there’s no learning going on; the entire experience is self-evident from start to finish).

    As far as I know, none of the current or over-the-horizon boxes work in this kind of way. It’d make for a nigh-on perfect user experience, though, and could well be the blue touch paper that the space needs.

    February 10, 2011 at 9:48 am

  5. Lucas


    Great comment. The Wii calls their games “channels,” but you don’t flip between them, you still have a loading screen. It’s essentially the same as the iOS home screen of apps.

    I think a lot of modern TV users are used to a guide screen – one that lets them watch while they browse for something else to check out. That’s also similar to a home screen of apps, but with multitasking (as you point out). There’s definitely a great benefit in multitasking – flip to Angry Birds while your show is in commercials, or watch/play split screen.

    However, managing all of that is just another layer of complexity that requires finesse and a sublime input method.

    There is no doubt that any one of the four major companies I profile could make huge UX improvements over the status quo.

    February 10, 2011 at 11:19 am

  6. Dani

    So what’s your view on this and Nintendo after the announcement of the Wii U?

    September 1, 2011 at 8:00 am

  7. Lucas

    If I were to rewrite this now, I’d put Nintendo just under Microsoft, but above Sony.

    The capability to play a game on the small screen while the big screen is occupied is a really slick innovation. Nintendo continues to dabble in using it’s innovative controllers for more than just games. Netflix on the Wii is a huge hit. The Wii U controller will let you surf the web. It could potentially combine the browse-and-sling navigation of an iPad with the tactile surfing of a remote (using the game buttons).

    Yet, I don’t think there’s any indication that Nintendo will want to tackle the UX problem of managing TV and Movies with its controllers. Nintendo has typically strayed from providing live services, and I don’t think they have the experience or back-end services/infrastructure capability to pull it off right now. As long as they are relegating their offerings to the 3rd party Netflix/Amazon VOD realm, they will never have direct control over UX and will be limiting the potential of those offerings.

    Let us also remember the 3DS and Virtua Boy and that not all of Nintendo’s innovative controllers have legs. The Wii U is more of a hardcore machine than the Wii – it sort of splits the difference between a Wii and a PS3. Who knows if there is actually a market there?

    September 1, 2011 at 9:08 am

  8. Lucas

    Another interesting development is Google buying Motorola. They are now a hardware company and can potentially begin to offer a great UX that integrates software with a controller.

    September 1, 2011 at 9:12 am

  9. Dani

    Thanks for your insights! Good stuff!

    September 1, 2011 at 9:53 am

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