Generational overview

The history of game hardware has witnessed several major changes in both devices and industry structure. First of all, the division of new product introductions into consoles, home computers and handhelds has evolved from the consoles only approach of the first generation to the near tie between consoles and handhelds in the most recent generation (Figure 11). The first generation devices were all consoles, but in the second generation computers became more numerous. Home computers became heavily standardised multipurpose devices. Since the fourth generation home computers specifically designed for gaming have been scarce. At the same time consoles became the most common platform type. Since the sixth generation handhelds have been as numerous as

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consoles in new product introductions. This may be due to advances in handhelds allowing them to reach console levels in some performance criteria. However, the handhelds still have small screens suitable for very different purposes than consoles. Killing time at the airport is a perfect showcase of the merits of the handhelds, whereas the consoles‘ detailed graphics and special effects on the plasma screen offer a very different game experience.

Figure 11. Numbers of different kinds of devices in each generation.

Some of these devices have been successful and some have been miserable failures causing bankruptcies. Figure 12 presents the number of products and successful products in each generation in addition to the number of firms that have manufactured them. In each generation most firms introduced just one device. The number of successful devices has stabilised at around five per generation. The slump in the fifth generation was caused by the fierce battle by Nintendo 64 and Sony PlayStation. Since then handhelds have become as popular as consoles. An interesting recent development is that game development still continues for the previous generation Xbox and PlayStation 2 even though Xbox 360 has been on the market since 2005 and PlayStation 3 since 2006. In earlier generations the fadeout of game development for previous generation machines was significantly faster. In addition to games for PlayStation 2, many retailers still stock the device itself. Thus the competition is currently both within and between device generations.

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Figure 12. Number of firms, products and successful products in each generation.

As many devices have been failures many firms have been forced to exit. The firm numbers peaked in the second generation. Between the second and third generations there was a shakeout after which firm numbers stabilised to a level approximately 25% of the peak. The entry rate went through a slump right after the shakeout, but stabilised around 50% of the firm numbers in each generation. Thus there was considerable churning as in each generation half the firms exited and were replaced by new entrants. Such high entry and exit rates after the shakeout diverge from the assumptions of the industry life-cycle theory.

Figure 13. Entries, exist and firm numbers in each generation.

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With new generations new performance criteria of interest have emerged. There have been very clear performance criteria from early on, making the comparison of the products relatively easy.

The earliest metric used to differentiate the devices was the number of colours that the device could display on screen. This avenue of development was exhausted when truecolour, i.e. 16.8 million colours, became a standard feature in fifth generation machines. During the third generation CPU capacity became another important factor communicating the value of the device. However, by the sixth generation the pursuit of more raw CPU capacity had ceased as complicated coprocessor architectures had become the norm, rendering increases in CPU bits superfluous. Since the sixth generation polygon rendering capability vital for 3D graphics has become the variable of interest.

It is noteworthy that the number of colours and polygon rendering capability have both undergone exponential growth. The number of colours ceased exactly at the truecolour level and no incremental increases have appeared, or would have made a difference, in more advanced devices.

Thus there was no levelling off but a sharp halt. The polygon rendering capability is still growing exponentially and no final level is in sight. It may be that there is a perpetual introduction of new performance criteria and exponential development in them as a non-utilitarian product does not have a natural limit at which performance suffices for the task at hand. As there is no (utilitarian) job to be done the consumer will value any new avenue of development if it contributes to more immersing and enjoyable entertainment. Perhaps it will be the physiological limitations of the human eye that eventually curtail the need for advances in the quality of graphics.

In addition to these performance metrics a notable development has been the change in the storage media. Figure 14 plots the usage of different storage media as a percentage of the devices. In the first generation all devices had built-in games. In the second generation cartridges had become the most popular media with disk in the third generation. The fourth and fifth generations were dominated by CD whereas the cartridge made a surprising comeback in the sixth generation. This is due to the rise of the handhelds where cartridges continued to be a popular storage medium. In the seventh generation DVD is the medium of choice even though CD is still strong. Other media used in seventh generation devices include mini-DVD for PSP, proprietary optical disk for Wii and Blu-ray disk for PlayStation 3. There has been a distinct dominant design in each generation.

However, this changed every few years and even the most recent generation has introduced several new storage media.

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Figure 14. Percentage of devices using particular storage media in each generation.

In recent years hardware diversity has also been created by mobile phone, iTV (interactive television) and casual web browser games. Mobile gaming has the challenges of the divergent features of different phone models, non-standardised support for various operator services and various telecom regulations for using positioning information. However, Mäyrä (2008, p. 147) argues that location-based multiplayer experiences are a promising concept for mobile gaming.

Especially in the UK, iTV game business models have been explored since the early 2000s.

According to Spectrum Strategy Consultants (2002, p. 14) it remained a niche concept and it does not appear to have become hugely popular since that assessment. Casual web browser gaming on the other hand appears to have become popular. Casual gaming on home computers was popularised by MineSweeper included in all Microsoft operating systems since 1991. In web browser based casual gaming the business model relies on advertising. For example, Sissyfight 2000 (launched in 2000) and Hapland (launched in 2005) have showcased the power of web browser casual games in attracting gamers (see Newman and Simons 2007).

The conclusion on the evolution of game hardware is that it is not showing many signs of maturation as defined by the industry life-cycle theory. The number of firms declined after the second generation peak value, but the entry and exit rates remained high at around 50% per generation. There have been exponential increases in key performance metrics and so far there is no sign of stagnation in this respect. Furthermore, there are no easily identifiable dominant designs. In most generations there has been a clear dominant storage medium, but this has changed in all but one transformation between generations (CD was dominant in both fourth and fifth generation). It appears that the most influential dominant design is the business model of hardware and software sold separately. The use of separate storage media to sell games on allows narrow profit margins on

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hardware and greater profits on software, which in turn makes it psychologically easier for consumers to invest in a game device.