Is the tech inside games consoles becoming redundant? The Wii, PlayStation3 and Xbox 360 are now around six years old, and despite having sold 223 million collectively (the Wii accounts for the lion's share at around 97 million) sales of both consoles and discs are down across the board.
Paradoxically, the video games industry is booming, and not even overly concerned with July's 23% drop in physical discs; its focus has shifted elsewhere.
Simple 'freemium' games like Words With Friends, Angry Birds and Monopoly are all the rage across smartphones and tablets, while Massively Mulitplayer Online (MMO) games like Celtic Heroes are starting to create closer relationships between players and developers than ever before.
"MMO developers have been very good at generating new games to keep people hooked, as well as a community feel that people enjoy," says Jaclyn Wilkins, gaming expert at Charles Russell LLP. "It's something that games played through consoles need to harness as well."
Tablets & the iPad 3
Mobile gaming is getting bigger, and the real challenge to consoles comes from tablets. Games that take advantage of the iPad's retina display – such as FIFA 12, Infinity Blade and Real Racing 2 HD – are rampant. However, there is a catch that puts mobile devices at a distinct disadvantage compared to the games consoles. "The devices we've got now won't cope with high quality graphics for hardcore gamers," says Wilkins. "They're just not as responsive."
How long that will last is debatable since the majority of hardware development is bound to be around tablets and phones – rather than games consoles – simply because it's a much bigger sector of the market right now.
"Tablets are definitely a growth area," says Wilkins. "The launch of the iPad 3 will be a leap from the previous version, and eventually tablets will be as powerful as consoles."
Apple TV already indulges on 'catch and throw' video and music from the iPhone and iPad, and that's the likely future of gaming, too, though it may require some new gadgets.
"Playing casual games on a touchscreen phone is fine, but when it comes to playing the more addictive and immersive titles, seamless gameplay is impossible," says Bo Nyman, CEO of Swedish firm Fructel.
With a familiar console controller design, his company's Gametel (£43.32) device pairs with Android phones via Bluetooth. Game play is easier, and the long-term idea is obviously to port the game from phone to TV. The choice of games is limited and it's not yet likely to pull dedicated gamers away from a PS3 or Xbox 360, but the logical conclusion of this idea is obvious; to circumvent the games console.
Even TVs are getting in on the act. Samsung unveiled its 75-inch 75ES9000 earlier this year, and it's headline feature? Angry Birds, embedded and easily controlled using Kinect-style gestures thanks to its pop-up camera. OK, so it's no Halo, but could it be the start of something exciting that pulls the rug from under dedicated games consoles?
"I don't see a huge leap forward in gaming since the Kinect from Microsoft, so it's not a surprise that games console sales are stagnating," says Reuben Verghese, Vice President for Asia at smart TV platform developer Accedo, explaining that at the moment there's no reason for people to rush out and buy an expensive new console.
The console as media hub
In a bid to stay relevant, the major conosles have all embraced catch-up TV apps, on demand films – such as Lovefilm and Netflix – and even subscription TV services (like Sky Player on the Xbox 360). For many, their games console is the most connected piece of AV equipment they have, though as penetration of app-loaded 'smart' TVs increase, games consoles' abilities in this area may become less compelling.
That goes double during a recession, though Verghese does see a future for games consoles. "It's not just about gaming as we see consoles battling to become the entertainment hub of the living room," he says.
"Game consoles today offer access to streaming live TV channels and on-demand access to huge libraries of content. With increased processing power and higher speed internet connectivity combined, in a couple of years we could see some interesting new user experiences that blend gaming style interactivity with internet delivered video and social networking."
That future games consoles – the Nintendo U, Xbox 720 and PS4 – will have more processing power than they do now, as well as faster download speeds, is (almost) assured, though the same goes for smartphones and tablets, too, when the likes of 4G networks become a reality in the UK.
Of course, dedicated games consoles are always going to have a niche appeal. Those after high-def graphics and 5.1 surround sound will never want to play Halo on a phone.
"I wouldn't rule them [games consoles] out. The market will always be there because it does cater to a particular type of gamer, but the gaming market has grown so much that it now seems like a small area," says Wilkins. "It's more of a content issue to keep people hooked on games rather than consoles."
Although there are several huge brands in video games – such as Minecraft, FIFA 12 and Halo – the kind of queuing round the block fanfare for a shiny silver disc we've seen for the best-selling title, Call of Duty, somehow doesn't seem likely to be topped.
However, could the gaming high-ground slip away from consoles? Some think that a high-end gaming PC is now a go-to-device for serious gamers looking for the optimal gaming experience.
"The PC's ability to be customised in line with the needs of each and every individual gamer makes it the device of choice for true gamers," says Sandro Villinger, Technical Product Consultant at PC optimisation company TuneUp, "and one which is far better suited than, say, smartphones, tablets or even dedicated games consoles which are typically sold with a one size fits all approach."
e has a vested interest, but Villinger simply reasons that while PC users can take a few simple, cost-effective steps to profoundly increase performance, there's no such solution to an underperforming games console.
Meanwhile the Kepler GPU unveiled by Nvidia powers the gaming cloud and makes it possible to game on any H.264 device – with no games console in sight.
Whatever the future holds for gaming, the era of the silver disc is almost certainly dead; cloud gaming just makes more sense, with frequent updates and improvements possible.
Sony recently bought-up cloud gaming service Gaikai, while the U console looks set to use a Nintendo Network for online and cloud gaming. Microsoft's SmartGlass will port games to Windows 8 tablets, and Sony's PlayStation Mobile will take titles to its own tablets, phones and the PS Vita, as well as to third party Asus and Wikipad devices.
"There's a lot of innovation still to come," says Wilkins, who insists that both cloud gaming and cross-platform compatibility are big areas of development that the next wave of games consoles will have to embrace.
"If you're reading a book on a Kindle you can pick it up on an iPhone or iPad and read from the same page, and that's what will happen to games," says Wilkins. "The idea is there, but they're waiting for the right technology. A lot of developers are raring to go and are waiting for the cloud technology to catch-up."
Ever-growing and always changing, the games market is huge and fragmented. "The computer games industry looks so different to five years ago," says Wilkins.
"It's going through a transition and there are just so many options." Device-neutral, video-led augmented reality games – with a sheen of social media – are a possible end-game, but to get there we need more processing power in tablets, TVs and phones, and a dose of patience as the technology catches-up with what developers know it almost possible. If you do buy another games console, it will likely be your last.