At the very heart of the £110bn gaming market, the console wars have raged for decades.
From the febrile Nineties face-off of Sega v Nintendo – with Sonic and Super Mario the unlikely generals of an often down-and-dirty scrap – to the more recent three-way battle between Sony, Microsoft and Nintendo, the battle for supremacy under the television has driven video games to become the most valuable entertainment industry in the world.
There have been casualties along the way, but alongside the ubiquity of blockbuster PC gaming, consoles have been the industry’s great survivor. Many predicted their downfall before this "generation" of hardware began in 2013, Sony’s PlayStation 4 and Microsoft’s Xbox One set to suffer in the face of the burgeoning mobile games market.
How quaint that seems now. While mobile gaming is a vast industry, making up 51pc of the global gaming market, console gaming has continued to flourish. Sony has sold more than 91 million PS4s so far, surpassing the 84 million lifetime sales of its predecessor.
And while Microsoft has lagged behind with an estimated 39 million Xbox One sales, the software giant’s gaming head Phil Spencer recently said that Microsoft had its “highest revenue year last year, with more than $10bn (£7.7bn) in revenue in the gaming category.”
Nintendo, meanwhile, has found itself resurgent with the Switch console released in 2017 selling an estimated 20 million units globally and is the fastest-ever selling games console in the US.
It seems the dedicated gaming console still has plenty of lives left, then, its ability to provide the biggest blockbusters – Red Dead Redemption 2, Assassin’s Creed and Call of Duty to name a few – is undimmed.
But the latest threat to the console’s staying power is coming, with widespread "cloud gaming" soon to take a foothold in the industry. At its intended peak, cloud gaming (or ‘gaming on demand’) will see the biggest blockbuster games directly streamed from the internet to any device: PCs, smart TVs, tablets and even mobile phones.
Much like what Netflix and its ilk has done for TV and film streaming, cloud gaming is looking to provide "triple-A" gaming experiences to any device, anywhere without the need to hook up an expensive box to the TV.
While we are assured to have at least one more round of dedicated consoles, with both Microsoft and Sony confirming successors to the Xbox One and PS4 (likely to appear in 2020), the industry at large is readying itself for the possible disruption that mainstream cloud gaming will bring.
“We will see another generation, but there is a good chance that step-by-step we will see less and less hardware,” CEO of Assassin’s Creed publisher Ubisoft Yves Guillemot told Variety.
“With time, I think streaming will become more accessible to many players and make it not necessary to have big hardware at home. There will be one more console generation and then after that, we will be streaming, all of us.”
History is already marked by the failure of streaming devices such as the maligned OnLive. But this time the industry is more prepared and the technology more advanced. Some nascent or experimental services more suited to the challenge already exist.
Nvidia’s "GeForce Now" is in beta, allowing players to stream games to PCs or Nvidia’s range of Shield tablets. Sony has a largely unheralded service already running called PlayStation Now, streaming a selection of PS2, PS3 and PS4 games to the PS4 itself or a PC.
Such existing services are yet to have the full-blooded commitment that cloud gaming will need to become a mainstream pursuit, with a limited selection of games and compatible platforms.
But in October, Microsoft revealed its own Project xCloud, a games on demand service that will leverage its existing cloud computing network Azure to stream triple-A games to any device. Microsoft said that xCloud is a "multi-year journey" for the company, but will begin trialling the service in 2019.
With the announcement, Microsoft demonstrated Xbox One games Forza Horizon 4 running on a mobile phone connected to an Xbox controller and Halo 5 played on a tablet using touchscreen. Despite Sony’s tentative toe in the water with PlayStation Now, Microsoft’s firm commitment to Project xCloud is being looked at by some as a tipping point for games on demand.
And in quick succession, Google released its own cloud gaming service today with Stadia.
In Japan meanwhile, you can also stream Odyssey and Capcom’s Resident Evil 7 to the Nintendo Switch, a relatively underpowered console that is natively incompatible with these technologically demanding games.
With big players in the console wars – and seemingly new combatants too – already taking the battle to the cloud, it could spark a fundamental shift in how games are played.
But Microsoft told the Telegraph that it doesn’t see streaming as a replacement for consoles. “I believe there will always be an important role for the console in people’s gameplay,” chief marketing officer for Xbox, Mike Nichols said.
“We believe so much in consoles that we’ve launched two in two years and acknowledged that we’re working on another one. I think about streaming as complimentary as it might reach people that consoles can’t or that the consoles aren’t appropriate for; if you don’t have the large TV or you don’t have much space. Or if you want something that’s mobile with you, if you are leaving the house and you want to carry on playing.”
The current advantage for native gaming on consoles and high-powered PCs is that broadband and mobile network speeds are currently not up to the task of streaming triple-A games to the same standard.
Feedback on Google’s Assassin’s Creed Odyssey trials has been good, but for players wanting games at 4K resolution and the highest level of performance will still need a premium console and ultra high-definition TV.
Perhaps more importantly there is also the issue of latency. When you are streaming a film or TV series on Netflix or Amazon Prime, small drops in your internet connection can lead to a pause or momentary lowering of the video resolution to compensate.
For passive viewing this is a minor irritation, but for fast-paced interactive video games it could be crippling, with characters on-screen reacting too late to button presses. In a world in which serious video game players are adjusting the settings on their TV and monitors to compensate for the milliseconds of latency that come with even native gaming, cloud gaming will need internet speeds to catch up.
This is an issue that is challenging enough with home broadband, but with a "peak 5G" mobile network – needed to provide cloud gaming at a high level on the go – not predicted to be in force until 2029 it could be a decade before cloud gaming is truly troubling the console.
There is a reason that the cloud versions of Odyssey and Resident Evil 7 for Switch were trialled in Japan, with the country hosting the world’s fastest internet at nearly triple the global average.
But with firms such as Microsoft and Google already setting up the building blocks, we are likely to see an acceleration in the already apparent change in how games are provided and monetised.
Microsoft, somewhat wounded by the Xbox One’s market inferiority to the PS4 in this generation, has made huge strides in its subscription based model. For a monthly fee, its Xbox Game Pass service currently offers a solid catalogue of games available to download.
Most significantly, Microsoft has started making its blockbuster exclusives – such as Forza Horizon 4 and the upcoming Crackdown 3 – available on Game Pass at release.
It is hardly a stretch to see Game Pass as its intended model for Project xCloud. And with Microsoft’s recent splurge on acquiring new development studios, it is preparing itself to bolster its line-up of first-party offerings; an area the Xbox One era has notoriously struggled with.
“It makes sense for Game Pass to be part of that,” says Nichols. “We have nothing to share right now like: it is Game Pass that’s streamed or individual titles that are rented. It’s too early for that, we’re just tipping our hat to working on this. We think that when all is said and done we’ll do a really good job of it. But I think the technology through which our experiences get to people, be it streaming or native is a little bit different to the business model of buying something or subscribing.”
Of course, the implicit suggestion of streaming to multiple devices is that games will start to become more platform agnostic. This is something that perhaps suits a software giant such as Microsoft, but perhaps less so for PlayStation and Nintendo, whose stellar line-up of exclusives they may prefer to reserve for their own platforms. But if that were the case, the winds of change are already blowing and may be hard to resist.
Even disregarding the looming advent of cloud gaming, games such as battle royale phenomenon Fortnite have already starting breaking down some of the barriers between platforms. Fortnite allows players to carry their progress and purchases across platforms, be it PlayStation, PC or mobile phone, and to play with other players on different devices.
Even Sony, a staunch hold-out against the idea of "cross-platform play" eventually bowed to the power of Fortnite and the demands of a new breed of player; brought up on Netflix, free-to-play games and the ability to move between platforms at will.
These are the considerations that gaming companies will need to take into account when it comes to cloud gaming and the future of the industry as a whole. It may be a good decade away, but does this mean peace in our time and an end to the console wars?
The disruption that this new technology will bring is likely to be fierce, but dedicated gaming devices have continuously managed to adapt to new challenges. Time will tell if they can weather this particular storm.