PlayStation 4K/4.5/NEO

Alright, let's talk about the rumored PlayStation 4K (or 4.5 or NEO)...

When rumors started surfacing during GDC a few weeks back that Sony was potentially working on a more powerful version of the PlayStation 4 that could release as early as this year, I chose not to write about it until more details came to light. With GiantBomb and Eurogamer adding what they know in the past day, I guess it's time to weigh in on it.

Welcome to 2016, console industry. What took you so long?

My entire life, technology has been advancing at breakneck speeds: computers, televisions, cars, and obviously cell phones. Yet for the last 30 years, consoles have been content to hold back and work off the 5-6 year cycles established by Nintendo with the NES. Comparing Nintendo, Sony, and Microsoft from the NES up through the Wii/Xbox 360/PlayStation 3 generation, the average time from North American release to the release of the succeeding console has been between 5 and 6 years. And that's actually slightly skewed up due to the overly long life cycle of that generation, which averaged 7 years across the three systems.

During the last generation of consoles, the smartphone revolutionized the tech world and eventually the addition of the App Store and Google Play gave everyone with a smartphone the access to games. Last year, circulation reach 2.6 billion active smartphone users and TechCrunch predicts current growth rate and activation models will lead to 6.1 billion by 2020 (nearly 80% of the predicted 7.7 billion world population). Now compare that 2.6 billion to the roughly 260 million Wiis, Xbox 360s, and PlayStation 3s on the market. Smartphones moved ten times as many units in over nearly the same number of years.

The rapid shift in the marketplace almost certainly left console manufacturers wary of launching new systems so they extended the lifespans of the last generation roughly 2 years past their predecessors. Many industry analysts fully expected the eventually PlayStation 4 and Xbox One launches to fail, especially after the severely underwhelming performance of Nintendo's Wii U when it launched in 2012.

But alas, the PlayStation 4 and Xbox One launched with record-breaking years. And despite current estimates of the PlayStation 4 outselling the Xbox One nearly 2-to-1, Microsoft's console has still been steadily outselling its own predecessor. Now I have often attributed this to a misreading of the console consumer. My theory is this: this is the first generation of consoles where my gamer generation (who grew up with the Nintendo) is out of college and has our own disposable income to spend on our hobbies. As a result, I see the meteoric early-adopter numbers fueled by that passionate hardcore base. This is who we are, this is what we enjoy, and so video games are where we invest our hard-earned revenue.

But recently, I have begun to recognize that there may be something else at play. When Steve Jobs launched the iPhone, it changed the world. When he launched the next iteration a year later, the iPhone 3G, it changed the buying patterns of the tech consumer. People weren't holding on to their phone for years and years anymore. Suddenly, people were waiting in line to buy a slightly upgraded version of the perfectly good phone they already had in their pockets. You weren't left behind if you didn't upgrade but the marketing power of Apple made you feel like you were. Next, came the first S model in the iPhone 3GS as an additional placeholder between numbered iterations and the trend has continued to this day.

There has been a new iteration of the iPhone every year since 2007. These devices have consistently been priced over the $400 price point of a standard console, even with costs subsidized by signing a contract with a wireless provider. Just tonight, I went by a Verizon store and the only reason I didn't leave with a new Samsung Galaxy S7 phone for nearly $700 retail was because they were out of stock. Traditionally, this high cost is given a pass of sorts because of the additional functionality inherent to a smartphone but the typical console is a significantly more powerful device. So if Apple can sell the iPhone 6 and the iPhone 6s to the same consumer, why can't consoles do the same?

All of this to say, I imagine at some point during the long development cycle for the PlayStation 4 and Xbox One, both Microsoft and Sony came to the same conclusion that they could adopt a similar business model. But with Microsoft still licking its wounds from the PR nightmare of their launch announcement and first year, it's entirely possible they backed off from the idea to instead focus on running damage control. But both consoles launched and were often described as now being much more like PCs than in previous generations. And yet, people were out there complaining if a game wasn't running at 1080p and 60 fps. So now that Sony is trying to address that technical request with this new iteration, the same people are outraged again, unaware that they helped lead the industry to this point. 

Avoiding Market Segmentation

Based on these early reports, it would appear that Sony is being very careful to avoid splitting their players across the two systems. Consumers who upgrade and buy the new iteration, just like with the iPhone, will have the potential for a better processing power and more memory while consumers who opt to stick with their current system will still have access to all of the same content, it just might not look as great as the newer iteration; just like someone who invests in a high-end PC can get a better experience than a mid-range or low-end PC. As long as they avoid segmenting the market like the New 3DS compared to the original, it doesn't hurt the gamer. All games will be compatible with the original PlayStation 4 and feature a NEO mode can use the extra power and memory to enhance the frame rate and graphical fidelity.

The regular PlayStation 4 can still easily continue on for the typical life cycle of 5 years and change (which we're about half way through) and late in the life cycle games like whatever Naughty Dog releases post-Uncharted 4 will inevitably look better and better but with the PlayStation 4K they'll be able to get the equivalent of The Last of Us and The Last of Us Remastered running on these two iterations of the same system, instead of crossing generations. And while we wait for the games that will still be coming to the console in the next two or three years, the die-hard supporters or tech-crazy early adopters can invest in a second PlayStation 4 that they would not have been purchased otherwise, which is of course great for Sony's bottom line just as the people who buy every iteration of the iPhone are great for Apple's.

Developer Math

The odd-men out in this equation are the developers. Being required to develop PlayStation 4 and a PlayStation NEO versions of the game will undoubtedly cost time and money that the developers and publishers wouldn't have been subjected to under the old model. Even if optimizing a game from the PlayStation 4 to the PlayStation NEO build is drastically simpler than building out a PlayStation version and an Xbox version, it's still one more expense in the project budget. However, any Triple-A publisher and developer that builds there games for console and PC is already equipped to do this as the PC versions are likely already optimized to run the gamut of performance levels from minimum specifications to the best graphics they can design.

And on the other end of the spectrum, we have the Indie developers. But I would argue that most of these developers can get away with a NEO version of the game that is on par with the PlayStation 4 version. While these games are great at filling up a library, they're not typically the showcase for the system's power. And in the off-chance that they are going to try to do something with the extra power of the NEO, I imagine Sony will gladly help them out, in the same way they help a lot of current Indie developers port their games from PC.

Stuck in the middle: the ever-shrinking middle-tier developer. These companies will likely rely on their staff to put in extra hours in order to provide the requisite NEO version. They won't have other studios like the Triple-A space that they can kick these "ports" to in between projects and they probably won't be so small as to warrant Sony stepping in to fully support the NEO version. But I imagine if it means the difference between being a multi-platform title or being an Xbox exclusive, Sony might be willing to lend the extra support, if for no other reason than to avoid the stigma that might come from driving developers away.

Implementation

Perhaps the biggest question of them all is how will Sony implement this new strategy? They obviously haven't responded publicly to these rumors and perhaps were planning on announcing the new system at E3 (which is also when we'll get the presumed NX announcement, meaning 2016 is going to end up being a big year for gaming news). But doing so now would mean approximately two more months of think pieces like this one working speculating based on incomplete and possibly incorrect information. So I imagine there are emergency meetings at Sony working on identify both how to move up their time table as well as how to best address a lot of the concerns they're hearing from industry analysts.

Consumers buying a PlayStation 4 now, or those who purchased in the past couple months might be upset that they're model is being replaced by a shiny new one so soon after their purchase but that is always the risk when buying new technology. I could have bought that phone tonight only for Samsung to release specs on the newest iteration tomorrow. I have less sympathy for consumers like myself who bought the system closer to launch because our $400 investment and early financial support has already benefitted us as consumers by providing Sony with the dominant mindshare in the marketplace. Developers and publishers are eager to get their games on our system because it has the greater install bases so we get more games, exclusive content from partnership deals (crappy as they are), and a larger network of players. The assumption that the early adopters are now being screwed over by Sony stems from an entitlement that a system should last a certain amount of time and since the overly long last generation is what is most immediate on people's minds, that 7-year cycle is what people expected out of this one, which flies in the face of every other comparable industry. Iterative models of nearly all tech industries launch every year or two in the current marketplace. Consumers don't have to buy every model (though some will) but industries are eager to incentivize new consumers by providing them with newer, flashier options rather than trying to sell them their older products that became outdated after a few months on the market.

I will be especially curious to see if they introduce some kind of discounted upgrade path for consumers. Perhaps Sony partners with GameStop and agrees to allow consumers to bring in their existing PlayStation 4 and upgrade to a PlayStation 4K system for $200 instead of paying the rumored $400 full price for a new unit. If so, that's $600 dollars total that a day one adopter has spent instead of $800 and that $600 is still less than the phone I looked at tonight. The $200 that these early adopters are paying over somebody who waits to just pick up the new iteration can then be written off as the price of having the exclusive access to the system for the last two and a half years (or however long they've owned their system). Meanwhile, Sony and/or GameStop now have a (presumably) working PlayStation 4 that they can either refurbish and sell to a consumer that doesn't care about the difference between PlayStation 4 and PlayStation 4K or that can be upgraded and sold as a PlayStation 4K unit. And again, they've also gotten someone to purchase a second console they probably would not have otherwise, bolstering their buying power among publishers and developers.

In any event, I'm excited to see how and when Sony responds. And when they do, I'll be sure to write about it here (unless some other outlet wants to pay me to do it for them).