AMD builds a game console monopoly

Posted by Rob Enderle

AMD has quietly gained control of the game consoles currently shipping (with the exception of the PS3), and the company recently confirmed it will be providing the core technology for Sony's upcoming PS4.

Given that Microsoft gets along well with AMD as the provider for the current Xbox 360, it seems likely Redmond will continue with this relationship for the 720 (Xbox Next) which should be announced shortly. 

This means that virtually all of the existing game console providers, for the first time, will be on the similar core technology. Essentially, this mirrors what has happened with smartphones and tablets but, instead of being ARM or Intel, the core will be AMD’s implementation of x86.  

This could go a long way to both saving the console game industry, while also putting AMD into an enviable lead position in game oriented graphics for other devices like PCs. Let me explain.

The Decline in Console Gaming

There are three likely reasons why the console gaming market is in really bad shape today.   The first reason is that the game system makers didn’t refresh their platforms often enough.   This is because they either lose money on these platforms or are close to breakeven so they manage them like a cash cow, milking them for all they are worth. 

As you can clearly see with the new BioShock Infinite title, yes, the game is epic but if you compare it to what you’ll see on a properly equipped PC, well, the visual experience is significantly degraded. By keeping the systems in place so long, the consoles have become outdated and the firms are now faced with trying to compete with tablets and smartphones to get the gamers back.  

The second is the tendency to design very low risk games, infinite sequels, basically, until folks just get tired of the same old marginal crap. You can see this in the latest SIMs game.  It has no energy, playing it is kind of like unpaid work, where once there was a lot of wonder and imagination, now it seems old, dated and uninteresting.  

The reason for this? It is so expensive to bring out a new title that developers want to rehash the ones that are currently selling because they seem to represent a far lower risk. The reason this is so expensive is that every console required a completely unique port - often requiring you basically rewrite the game to make it work across an ever smaller group of game buyers.Some platforms like the Sony Cell technology used in the PS3 were particularly harsh and expensive to develop on. So all of this together destroyed profits and with them went the companies that made the games. 

Third is the emergence of smartphones and tablets as game platforms. They basically took the existing portable game platforms out at the knees, but also drove the majority of game developers from the consoles to one of these new attractive platforms. While the operating systems were often different, the hardware was ARM-based, creating easier ports to different platforms like iOS and Android which are less costly and more lucrative to develop on.  

AMD’s Move Helps All Three Problems

The x86 platform was designed for easier, cheaper upgrades and by sharing this platform across the eco system the cost of updating it should drop - allowing all the remaining game console providers to update their systems more cheaply, making it likely they’ll update them more often as well. They will also benefit more from the advances on the PC side, pushing, in a more cost effective way, a higher degree of synergy between individual consoles from different vendors and PCs. This should help the providers avoid the obsolescence problem they are currently experiencing. 

Second, like on ARM, having a similar architecture between consoles and PCs should allow game developers to more easily port between the systems and help them avoid having to rewrite games for different consoles. This lowers their cost and helps them assure profit, making it less risky to try new games and avoid over sequencing what once was a popular title to unpopularity. 

Finally, by putting everything on a similar platform, consoles become more similar to the ARM based products (at least in terms of consistency) they are competing against. This means you get closer to parity in terms of the costs for moving between game systems - while focusing on the improved visual and artificial reality capabilities in consoles and PCs over smartphones and tablets. With the parallel emergence of game app stores on these systems, suddenly they’ll be far more competitive (in terms of both process and cost), with tablets and smartphones, all of which should enhance their attractiveness to buyers. 

Wrapping Up:  AMD’s Not So Secret Advantage

However, the not so secret advantage in doing this is that graphically, AMD will basically own the high performance gaming market because developers will feel more comfortable writing to AMD’s unique graphics capabilities once they exist across all the game systems and in PCs.

Now because games are increasingly portable between PCs and consoles, this should give them a competitive advantage in the PC gaming market as well that they’ll surely exploit. You see, it isn’t always the fastest or most powerful product that wins, but it may be the one that is most efficiently utilized. Simply put, this can result in more performance for the buck and buyers, either those building consoles or PCs, are interested in  products with the best value because those are the ones consumers often chase.  

AMD quietly has moved into a position where it could dominate all but portable gaming.  And, should they eventually target that, they’ll come in with the advantage of dominating another market first. I guess AMD has decided it doesn't want to be an underdog anymore.