One of the more interesting debates in consumer tech is whether the console game market is heading for the junk heap. Gaming on smartphones and tablets is taking off and game developers are starting to shift their budgets away from $200-plus consoles like the Sony
Xbox and Nintendo’s Wii to these mobile gadgets.
Sales of consoles in the U.S.
dropped 21% in 2012
to just over $4 billion and Microsoft surprised some analysts when it reported a 29% revenue drop at its Xbox unit. Meanwhile, games sales fell from $11 billion in 2011 to about $9 billion in last year, data from research firm
Some big game developers are having trouble making the transition.
THQ filed for bankruptcy
and Electronic Arts
, the No. 2 U.S. video game maker, recently
fired its CEO John Riccitiello
as the company has struggled to adjust to new platforms.
JP Mangalindan at Fortune
thinks Electronic Arts not only needs a new CEO, but also should spend more to develop innovative games.
Investors have grown disenchanted with Electronic Arts, Activision Blizzard
and Take-Two Interactive
. Check out this five-year chart of their stock price performance.
EA data by YCharts
As they try to shift to mobile platforms, these large game studios with high fixed costs now face competition from a legion of smaller players. As Bloomberg noted in a recent
, “mobile games are most created by teams of 10 or less, and can be funded out-of-pocket for as little as $100.”
Disruption is the name of the game when it comes to the $67 billion video game industry.
has an excellent
highlighting the other trends—digital downloads, crowdfunding and so on—reshaping the industry in a hurry.
If you are interested in smart tech investing ideas, check out Covestor manager Barry Randall’s
Crabtree Technology model
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Mortal Kombat time for the video console game industry
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