Video game industry analyst, Michael Pachter, recently spoke at a Q&A session at PAX that was filmed for his show “Pach Attack”, which appears on GameTrailers (watch the full PAX panel HERE).  The very first question that he was asked was whether or not he thinks it would be possible for another company to bring a brand new console to the market.  Pachter responded by saying that he doesn’t think that there will be a new console cycle at all, and that everything will be moving to streaming server-based solutions like OnLive.

I do agree with Pachter in his belief that a new company won’t be making a new console (at least not any time soon).  I can’t, however, get on board with the idea of streaming video games, or that we are on our last set of consoles.  As Pachter says in the video, Microsoft probably lost $1 billion on the Xbox, so the number of companies that are able and willing to lose that kind of money on video games is extremely limited, if not non-existent.  He goes on to say, “I think where technology is right now, I’m not sure we’re gonna have another console cycle, we could but…  why can’t you have that be server based and have OnLive deliver it?”

I personally can’t see streaming services becoming the primary content delivery system anytime in the next 5-10 years, if not longer.  The gaming market is generally split between casual and hardcore, but I think most people fall somewhere in the middle and could be considered more of the “mainstream” audience. A streaming game service is instantly useless for either extreme end of the spectrum.

There is absolutely no reason to stream games like Angry Birds or Farmville; these types of games run perfectly on low-end PCs and a wide variety of phones.  Streaming these types of games would actually require high-end hardware and would over-complicate something quite simple.  The hardcore gamer won’t be settling for streaming gaming, as they are constantly pushing the edge of gaming from the technology and visual perspective.  Right now, streaming games simply don’t even come close to high-end PC or even the abilities of an Xbox 360 or PS3.

Because of this, I can only assume that these server-based solutions could possibly only appeal to people that fall somewhere in the middle.  But, I still have to ask the question – what problem does this new system solve?  What benefits do these new services really offer?  With rapidly increased performance in the handheld market, we have already seen demos of the Unreal Engine 3 and id Tech 5 running on an iPhone.  Cheaper and more powerful integrated graphics solutions in netbooks and laptops are able to run games like Call of Duty around the same visual quality as OnLive.  Consoles allow developers to highly optimize their games to  a specific set of hardware to give the players an optimal experience on their big screen HDTV with surround sound.  I just don’t see any need for a server-based streaming platform.

I also need to touch on Pachter’s thoughts on the consoles themselves.  I could talk about Moore’s Law and the different technology, both hardware and software, that we might see in the next 5 years but I won’t.  It comes down to the fact that most people always want something new and better, myself included.  When a new system comes out and people see that Call of Duty, Madden, Halo, or some brand new game all look 10 times better, they will want it and they will buy it.

TL;DR: At the end of the day, the fact is that the video game market is expanding.  Facebook and iPhone games aren’t taking away from “traditional” video games, but are adding to them.  There probably is a market out there that wants the ability to play a wide variety of games on their mid-range PC, Mac, or mobile device.  I just don’t see a completely server-based system taking over and replacing home consoles any time soon.