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As gaming evolves, console makers start thinking outside the box

| Saturday, Nov. 23, 2013, 12:01 a.m.

From the first Atari Space Invaders consoles to the Nintendo Wii, game consoles have been the “it” toys of their generations. That's a trend that Sony and Microsoft are hoping to repeat with their plays for the holiday season: the PlayStation 4 and the Xbox One.

But even as consumers prepare to plop down hundreds of dollars for the latest systems, industry watchers are asking: Is gaming evolving beyond the console? After all, it has been nearly a decade since these two titans of the industry released new consoles. Put another way: When the Xbox 360 and PlayStation 3 hit the market, there was no such thing as an iPhone.

In that time, the average American's expectations for technology have changed considerably. We've dropped our one-use devices — digital cameras, camcorders, music players — in favor of tiny pocket computers that do everything. And that includes playing games.

Consequently, the face of gaming is going through a major shift. Fifty-eight percent of Americans report they play games of some stripe, according to the Entertainment Software Association. That trend is heavily driven by growth in mobile games, as one could see with a quick survey of smartphone screens on any bus or subway; you'll see a lot of Candy Crush out there.

The average gamer is still the enthusiast, however. This guy is 30 and has been playing games for more than a decade, according to the ESA report. These are hard-core gamers, who grew up blowing dust off of Nintendo cartridges and munching on pizza during campus Halo tournaments. But gaming is now reaching a wider and more diversified audience, and there's a push for gamemakers to think outside of the console.

Game consoles didn't start as all-in-one entertainment machines. In fact, they were first designed to play just a few games — or even one — at a time. Atari's original home console for Pong, for example, played only Pong. Later systems from Atari came with a handful of games such as hockey, handball and table tennis, or with one blockbuster game, such as Space Invaders.

That all changed in the 1980s, when gaming saw a shift to a cartridge-based system. That set off a golden age of gaming; it was much cheaper to swap in a new cartridge with a cool new game rather than buy another system. But it also led to a glut of games and low-quality consoles that inspired upstarts to dive in.

The influx was bad for the industry in a number of ways. For one, plenty of companies that knew nothing about games jumped on the bandwagon, meaning that bad games came from food companies, toothpaste makers and movie studios. And console makers didn't make money off games from other firms, losing profits as the market flood crowded out their own titles. Overwhelmed customers started to lose their drive to play and turned to playing games on computers rather than consoles. By December 1982, Atari in particular was suffering and released one of the greatest bombs of all time: E.T., the video game.

The industry fell into what's known as the Game Crash of 1983, which saw several companies jump out of the game market and ultimately pushed industry-leading Atari into insolvency.

“In 1983, the supply of games was incredible. There was a growing demand for games but not nearly as fast as the supply,” said Keith Robinson, a game designer for Mattel's Intellivision console at the time.

It was a blow to the growing industry. But it also allowed two names to emerge as the dominant forces of gaming: Sega and Nintendo.

For many years, gaming was mainly the domain of Japanese companies. Sega and Nintendo competed fiercely for market share and the devotion of gamers who debated the merits of Sega's Sonic the Hedgehog and Nintendo's beloved plumber, Mario. Sega became known for aggressive marketing tactics, noting that its consoles had an edge and capabilities that “Nintendon't.”

But both firms were shaken when Sony joined the race in 1994 with its PlayStation. Nintendo held strong with Nintendo 64. Sega, meanwhile, released a string of inventive but unpopular consoles. It made a last-ditch effort in 1999 with the Dreamcast, as games switched over to discs, then turned to game publishing.

As the new millennium dawned, so did a new era in console history as Microsoft emerged in 2001 with a backroom project that had nearly no support at the company: the Xbox.

The Xbox and its successor, the Xbox 360, represented an enormous shift in the gaming world, bringing the Internet into the console space as no one had before. With a new and very American approach to gaming — competitive and social — Microsoft gained slow but steady growth to challenge the dominant PS2 and the less-popular Nintendo Game Cube. Then it had a major hit with Halo, solidifying its approach to gaming and the need for a connected console so that people could play Halo together. Games of the new era, after all, required far more time than the arcade-style titles of the past, and people wanted to share those experiences with friends.

“That element of connecting people together, that feeling of hanging out together has been absolutely central” to this generation of consoles said Ben Howard, vice president of content for the gaming-news site Gamespot. That's bound to be even more essential with the next wave. “The driving force in who wins — if there is going to be a winner in this console war — will be who succeeds on the social side,” he said.

Microsoft also blazed a trail by locking up an all-important partnership with Netflix in 2008, making the game console a multi-function device. That one partnership, analysts say, transformed how consumers looked at game consoles.

Suddenly instead of spending one hour playing the Xbox, they were spending two. Or three. And as Microsoft pursued more partnerships with content providers such as Hulu and ESPN, users suddenly spent more time watching videos than playing games.

In that respect, analysts said, Sony and Nintendo were slow to catch on. Even after seeing Microsoft's success, Sony has kept the PlayStation 4 a console that's more for gaming than anything else.

Nintendo, meanwhile, has stepped back in the console races after its blockbuster success with the motion-gaming Wii, which created a more family-focused console. With hits such as Wii Fit and Wii Sports, Nintendo continues to innovate, but has largely lost the hard-core gaming market.

Another shift: in the distribution of games, which now show up on hard drives rather than in plastic cases. Some analysts say that, while this year's consoles will be wildly successful, they might be the last to carry disc trays and could be the last “game consoles” as we know them.

New models for gaming are showing up all the time. Valve, a game developer with its own digital distribution platform, is making what are essentially gaming computers for the TV. Other developers, such as the consumer robotics firm Anki, are looking at how to incorporate robots and smartphones to make games. Its first effort, Drive, aims to combine the old-school glee of having a physical toy with the evolving nature of video games by letting players add virtual attributes to mold real-life model cars. The whole thing is controlled by smartphone.

“There's a natural attachment people form with physical things,” said Anki chief executive Boris Sofman, who calls Drive the first “real-world video game.”

“It goes further when you weave in elements from video games — then it's not just any character,” Sofman said. “It's your character.”

Smartphone gaming has also given a rebirth to earlier generations of video games, which have simple graphics and short levels that work well for the small screen. Robinson has devoted his time to re-releasing Intellivision games on these new platforms and is now president of Intellivision Productions.

“Games like the titles we did back then are fast, addictive and fun,” Robinson said. We're “back to that day again that a lone person” can develop or adapt a hit game for mobile devices.

Howard, of Gamespot, said he's not quite ready to say the game console is going away. Even so, digital distribution opens a lot of possibilities for games of all sizes to be beamed straight into the living room.

“Where games and makers and platforms and all that are going to evolve is through proliferation of different types of experiences — smaller $10, $15 experiences,” he said. “It's not just about blockbuster games, it's about smaller experiences for a more diverse range of players.”

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