Are we headed for the video game crash of 2013?

In 1983 the success of arcade games led a bunch of forward-thinking entrepreneurs to say, “Wow, wouldn’t it be great if I could bring these games to the living room?” What resulted was a cluster of consoles from Atari, Magnavox, and Intellivision, amongst others, that so disastrously fragmented the market that we saw a 97% fall in game revenues. This week, CES 2013 is here with a lot of big players in the games industry unleashing new gaming hardware. It seems eerily similar to thirty years ago.

Could 2013's gaming hardware explosion lead to trouble?

The Ouya and GameStick, two Kickstarter-funded, sub-$100, Android-based consoles have garnered a lot of attention. The devices are cute, compact, and barely more powerful than your iPhone 5. Their goal is to take casual mobile games and bring them to the big screen to enjoy with your friends couch-side. The question is whether superficial, casual games that we tend to play for 10-minute stretches on the subway will be engaging enough in an environment normally reserved for more serious gaming. Especially with a point of entry north of $79, when your existing, equally-capable smartphone can already stream games to TVs.

Those devices are not the only new hardware attempting to take games that we play in one place and bring them elsewhere. With the $350 Wii U, Nintendo made a conscious decision to forgo next-gen graphics for a controller/tablet combination that let’s you walk away from the console and keep playing. Nvidia’s Shield Project hopes that hardcore PC gamers will want to forsake their 2 grand custom gaming rig and stream Battlefield 3 on a 5-inch-screen-cum-controller Frankenstein handheld. And Steam’s Big Picture plans to route it’s downloadable PC games to large-screen TVs.

It makes for a lot of places to play a lot of games, and people love flexibility. But gamers are also accustomed to particular environments in which they play each type of game. Consoles in the living room, casual mobile on the phone, and high-performance titles on PC. The danger is that developers will clamor to build for all these new devices, creating an atmosphere like that of the early ‘80s aimed more at pushing out a title to every device than making solid games.

However, the next generation of consoles may emerge from this still victorious and solidify the market as Nintendo did with the 1985 release of the NES, bringing high-quality, exclusive games. While Microsoft and Sony remain mum on the upcoming iterations of the Xbox and PlayStation, we expect to see these systems significantly close the performance gap with PCs while coming in at less than half the price of gaming rigs. With mobile games making inroads in the living room, we may end up seeing the consoles continue to reign supreme.

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