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Editor’s note: Tadhg Kelly is a veteran game designer, creator of leading game design blog What Games Are and creative director of Jawfish Games. You can follow him on Twitter here.

To the joy of many, Microsoft announced another Xbox One pivot: Rather than try to maintain a fortress of solitude, the console will support indie publishing. You’ll be able to use your console as a dev kit (traditionally dev kit licenses could be very expensive) to make and publish your games. Microsoft even promises to remove some of the category barriers that segregated indie games to a backwater page in the Xbox dashboard.

These moves can be read in two ways. The first is largely as a reaction to Sony. Sony has been flirting with the indie developer community for a while, quietly building up relationships and facilitating the publishing of a number of games such as Journey and Thomas Was Alone. As part of PS4 the company has significant plans to allow small developers to self-publish on the system, although still under a dev kit model. It promises to send free kits to developers that need them.

The second read is to consider these moves in light of wider trends. Outside of giant thousand-man studios and tiny indies, most mid-sized gaming companies are nowhere within 100 kilometers of consoles these days. There’s just no place for them in a sector that values its 20m+ unit hits, and they can’t afford to compete at that level. All of those people have shifted to mobile, tablet or social instead, where they are finding success.

The move to attract indies sits semi-uncomfortably. The console industry is used to acting like a car showroom, developing specific pieces of beautiful game content and then engaging in a large sales push toward success. Fans of consoles (including many developers) are also used to this model, and tend to think of this activity as “real games,” as well as the most economically significant activity in the industry. Much as Hollywood still thinks that box office means something, console game executives tend to be more impressed by stories involving unit sales rather than residuals.

That showroom mentality is what led Microsoft down the path of making Xbox One into a mega-hub, which nobody understood, or Sony make a very similar thrust with PlayStation 3. The pivots away from those big plays may at first glance seem like attempts to atone or to broaden out their relationships with game makers, but I tend to think otherwise. What they’re actually about is developing a few show-bikes to go alongside the show-cars.

Indies vs Independents

There are several meanings of the term “indie.” For some it simply means financially independent, able to make games and revenue and be self-sustaining. For others the term is political, expressive of points of view and meaning. This second version is far more popular in the games press because it has more of an emotional component. Indies stand for something and become heroes fighting an unspecified “man.”

It may surprise you, but in the console-ist view the political kind of indie game is more desirable because it ticks the art-game box. Art games are rarely expected to make their money back, and certainly not to become big franchises. Yet there’s a lot of value in having them. If you can have a few notables like Jonathan Blow talking up your platform, a few Phil Fishes and a few “thatgamecompanys” making signature games, then this is a great story. It aligns you with the kind of story seen in Indie Game: The Movie and at GDC. Most important is that it gets the press on side, which is hugely important in the mutually assured destruction of console platforms. Appearing to be indie is worth acres of PR.

At the same time, supporting a few such indies allows platforms to retain their essential power. While PC gaming has always reserved much more power to the developer and treated hardware makers as little more than component makers, console gaming has always worked the other way. The console is the main brand and the platform story. The games all appear on the console with the holder’s say-so. The publishing model places the console brand front and center, and the games are in support, and the market tribally responds along those lines.

Taken in that vein, the modern console industry’s understanding of allowing indies to enter into its playpen is pointed but they are not embracing an ecosystem any time soon. From the standpoint of where they’ve been, modest steps to change their model may seem like great leaps for Sony, Microsoft and Nintendo. Like TV executives who are still tentative about streaming, there’s a sense of not going too fast for fear of losing everything.

This is why Microsoft’s newfound message of developer liberation is still pretty garbled. The exact plans for how Xbox One will go indie-friendly come across as a bit hazy. They smack of a recent decision at the executive level which will need some thoughtful re-engineering time to figure out on the practical level, so don’t expect it for launch. Also how it reconciles with some other showroom features (like the heavy push on mainstream TV) is anyone’s guess.

Not to let Sony off the hook, its plans for indie liberation are similarly convoluted. Sony still wants some forms of concept approval, which – even though the company promises a speedy turnaround – still sounds every bit as ludicrous as Roku wanting concept approval for movies it streams. It should make any developer pause and think seriously about what it implies.

Yet the bigger issue is that both plans are not enough. They do not represent change real enough that indies in the first sense of the word (financially viable) would find attractive. It’s also woefully out of step with just how far games have come. Developers are far more empowered today than they have been since the days of microcomputers in the 80s and are not keen to sacrifice that freedom.

You Are Free To Do What We Tell You

It used to be imperative to placate Sony, Nintendo or Microsoft for any game to have a chance of being published. This was expensive between concept approvals, extensive technical requirements and laborious quality assurance and certification processes. But what could you do? They were the gatekeepers, it was largely a relationships business, and that was that.

Even when they moved into digital markets they were choosy, taking an active role in content selection and publishing. Games were released on schedules to give a window for sales to build and platforms were managed like topiary. Not too many games of one genre or another, just a few key ones and a heavy sense of curation. All very bonsai.

Then Apple and Facebook upended that model with something more organic and irrevocably changed how developers thought of success. Success was no longer to be like Jonathan Blow or Ubisoft. It became being like SuperCell. The console industry has never been able to fully understand the depth of that shift.

The way that developers approach making games on Facebook, iOS and Android is radically different to how things used to be when console platforms (and PCs) was all there was. They just do it, no dev kits, relationships, publishing schedules or concept approvals required. They may need to pass some curation (particularly from Apple) but those conditions tend to be far narrower in scope than anything the console industry ever imposed. Essentially don’t crash, no porn, no defamation and you’re good to go.

That new model is the one that breeds true independent game development success. The bonsai paradigm of consoles prevents developers from expanding too much, meaning that a thatgamecompany gets to make cool games but not really grow (if they want to, of course). Whereas the iOS/Android/Facebook model gives birth to Rovios and Zyngas (in happier times perhaps). When platforms get out of the way and let software be software, software becomes wildly successful and the platform itself grows.

Obviously Rovio is an extreme case, but many other smaller studios have managed to forge their own destinies in a similar fashion. Studios like Spry Fox and NimbleBit make the games they want to make, how they want to make them, with whatever business model they desire, and it’s no big deal. So they are free to innovate and they do. Same for us at Jawfish.

Enter the Micros

Console makers do realize that they’ve painted themselves into a corner, want to change and get some press goodwill. Yet not to the extent that they detonate their existing business. Especially not when many of their fans prefer to cheer for stasis and buy into predictable franchises over innovation.

I don’t envy them, but that gap is why microconsoles are a real threat. OUYA, GamePop, GameStick, Mad Catz and whatever Google might be cooking up are relatively unencumbered by old constraints, and therefore able to empower indies in the first sense. The fact that they’re mostly using a common operating system helps, but their main advantage is the potential flexibility and the focus that being simple provides.

The first generation of microconsole hardware is less than stellar. Of course it is. The idea is brand new and still finding its way. The OUYA’s joypad, for example, isn’t good. The processors for most microconsoles are probably underpowered, and there are lots of early firmware and operating system issues. Look past these early-phase issues, however, and take in the longer view.

Microconsoles can iterate on hardware quickly, like phone makers, where Sony is stuck with a fixed spec for the next seven years with PS4. Big consoles have to be static because big publishers (like Activision) need the spec to be stable enough to master in order to make the next Call of Duty. A SuperCell, on the other hand, doesn’t. An iPad doesn’t. Indeed most every other form of electronics has figured out how to move to an annualized cycle except console makers.

Beyond hardware issues the next issue is the customer. Who are microconsoles for? Everyone. Everyone who likes to play games cheaply, for fun, with simple controllers and low (or free) prices. As we’ve seen on phone, tablet and Facebook, that translates to a hell of a lot of people. And before we get too worried about TV being somehow special in this regard, consider that that is a self-cyclical piece of thinking born of consoles being pretty bad as devices. They are only now getting into the idea that maybe they should have power/resume states like every other device you’ve owned since the turn of the millennium. Part of the reason why they have that special gamer aura is because they are a hassle. There’s no reason for micros to follow the same path.

Power Shifts

The future that I see for console gaming is one where hardware incrementally cedes power to software. Pushed by microconsoles offering a vastly cheaper option on the one hand, and developers of incredible games with the right business models on the other, the prospect of all three current console platform holders being reduced to only vertically satisfying their core fans is very real. The prospect of big publishers taking a bath is also very real.

It will take a couple of iterations to get their hardware and business models right. It may take the entrance of a big player like Google or Samsung to validate it (much as Amazon did for ebooks). There will also be that initial flurry of press coverage that will swamp all channels with talk of PS4 vs X1 (and ill-advisedly lamenting Nintendo) for the next 18 months. That will cover over the real story to an extent, allowing OUYA et al room to breathe and pivot.

But in the medium term? The new SuperCells will not be coming from these revamped “indie” console offerings. They’ll come from a very different kind of device entirely.

(If you’d like to hear more, come see me talk about microconsoles some more at Casual Connect this week in San Francisco.)

In AllThingsD‘s Q&A with Jack Tretton this week, the Sony Computer Entertainment of America CEO explained at length why he thinks the new PlayStation 4 can weather the storm of changing media habits and increased competition in the living room.

For the superfans, though, that’s all moot. The gaming world may be a very different place from what it was in 2006, but one thing hasn’t changed: Sony (and, no doubt, Microsoft next week) can still expect the faithful to treat midnight console launches as celebrations. Here’s what happened at Sony and GameStop’s PS4 launch party in San Francisco on Thursday night.:

  • Octodad (or, rather, someone dressed as the indie game star) poses for a picture.

  • The PS4 faithful line up outside of GameStop.

  • One of the PS4’s launch titles is Knack, an action-platformer game published by Sony Computer Entertainment Japan.

  • Another gamer plays 2K Sports’ basketball game NBA 2K14, a cross-platform title also available to buy at launch.

  • It wouldn’t be a party without balloons.

  • A bit crowded.

  • PlayStation 4 boxes awaiting owners inside GameStop.

  • The winner of a PS4 raffle shakes hands with PlayStation SVP of Sales Tim Bender.

  • GameStop President Tony Bartel and Bender pose for photos behind the counter.

  • Some people take their gaming consoles seriously. The first person to buy a PS4 on the west coast holds it aloft.

  • And some people take them even more seriously than that. It’s no V-J Day in Times Square, but…

(Photos by Vjeran Pavic)

In case you missed it last night, Sony announced — but didn’t exactly unveil — its latest videogame console, the PlayStation 4.

Sony's Jack Tretton

But while the gaming hardware was notably absent, consumers did get a glimpse of some key upcoming game titles, as well as Sony’s plans to offer cloud gaming, more integration with PS Vita, and even some concept games that use Sony’s motion-sensor device, the Move.

AllThingsD sat down with Jack Tretton, the president and CEO of Sony Computer Entertainment of America, to discuss the future of the gaming console — as well as why Sony didn’t show theirs last night — and Sony’s strategy of “doubling down” on its hardcore gaming audience.

I think it was Sony’s Andrew House who said right off the bat that the living room is no longer the focal point of gaming. Can you further explain this idea and how it relates to the future of the console?

My interpretation is that the living room used to be the only place that gaming lived. Now it’s the primary place, but it’s not the exclusive place. So I still think that sitting on the couch in front of the TV with a powerful console like PlayStation is the nerve center of the experience, but it doesn’t end there — it extends out into the world, 24 hours a day, seven days a week, on smartphones and tablets and dedicated devices like Vita. It’s a little bit scary if you’re a core gamer, because you feel like if you go to sleep, you might miss something.

A good portion of tonight’s event was on game titles, not as much on cloud streaming, mobile or entertainment. Is Sony PlayStation doubling down on its position with hard-core gamers?

Well, I think the console has evolved beyond strictly gaming devices. People expect multimedia capabilities, and that’s certainly a given. But what we’re all about, in our DNA, is the gaming and the gamers. You buy [PlayStation] because you’re a gamer and you enjoy playing games, and you use it for other purposes, but we’re first and foremost about that core gamer that eats, sleeps and drinks the gaming.

I think there are more gamers today than there have been ever before, and the core is really strong, and loyal.

But at the same time, at least in the U.S. market, Microsoft has had the best-selling console for many months in a row now, and they’ve taken a media-heavy approach. What’s your thought on their strategy?

We look at the market in worldwide terms, and every market is extremely important to us. The facts are, we debuted the PlayStation 3 at $599, which was an extremely steep price barrier for a lot of consumers. And we debuted a year after Microsoft, but on a worldwide basis, we’ve sold the same, if not more, devices. I think we’re at 77 million sold right now — it’s basically splitting hairs. Despite all that, our message has been extremely well-received around the world.

Plus, if you look at multimedia services, we’re the No. 1 streaming device when it comes to Netflix, not Xbox. They’re trying to — I don’t really know what they’re trying to do. I’d rather not comment on their strategy. But we’re trying to say we’re all about the gamers and, by the way, there’s multimedia out there. I think the people who tuned in to see this live streaming event, from all around the world, were watching to see the gaming.

Will the new console cost $599 to start?

I certainly hope not. I think we’re very proud of what we delivered with the PlayStation 3 in terms of technology, and that we were able to enhance the features while still reducing the price to $249. But I think our goal with this is to debut at a more consumer-friendly price. But we haven’t made any final decisions about what the price will be at launch.

Why didn’t we see the new console today?

I guess when I think about the console, you open it up, you look at it, you certainly look at it when you insert a disc, but for most people, it’s behind a cabinet or on a shelf somewhere and you spend all your time looking at the screen. And we wanted to show people the screen. There will be multiple opportunities to share the look of the console between now and the launch. We just didn’t choose this first event as the time to show it.

But is it ready?

I mean, we’re certainly capable of showing playable game content, but we don’t have a mass-production box that we can bring out and pull out. That’s still in development in terms of final specs and design.

It wasn’t a big surprise today that there were some cloud-gaming announcements, given Sony’s acquisition of Gaikai. But cloud gaming, especially when it comes to graphics-heavy stuff, can suffer some technical difficulties. How does Sony plan to manage that?

I think that all credit goes to Gaikai, and all credit goes to Sony for recognizing the strength of Gaikai and acquiring them. We’ve cerainly had cloud storage, but Gaikai seemed to be well ahead of anybody else that we saw, and were doing things we didn’t think were possible. So I think the acquisition allows us to do things that are more in line with consumer expectations; allow them to play the games they expect.

And PS4 can play those games. I’ve certainly seen it done that every game we’ve ever published, up through PS3, is playable with no latency. I don’t know if we’re saying we’re at that stage yet, but we think we can get there in the near term.

Microsoft’s Xbox 360 has been the bestselling videogame console in the U.S. every month for more than two years.

xbox_380

There’s no doubt about it’s strength in the U.S., but internationally, it’s not so clear how the seven-year old game console is faring, especially in comparison to Sony’s PlayStation.

Microsoft sold 281,000 Xbox 360 units in January, up 4.1 percent from 270,000 a year ago, according to the NPD Group, which tracks sales of video-game software, hardware and accessories in the U.S. that occur at retail.

Earlier this week at D: Dive Into Media, Yusuf Mehdi, who leads Microsoft’s interactive entertainment business, also provided an update based on internal data.

He said the overall Xbox installed base is now at 76 million, up from 70 million at the end of September of last year. Also, 24 million Kinects have been sold, up from 20 million last year, and there are 46 million Xbox Live accounts, up from 40 million.

Sales continue to be brisk because the company has been successful at moving beyond a hard-core gaming audience to serve members of the family who like other forms of entertainment, such as streaming video or music.

But the rivalry between the different console makers is particularly intense right now as the industry waits for the next-generation devices to launch.

The Nintendo Wii U was the first to launch this holiday season, but has had a relatively lackluster performance. Next week, Sony is planning to unveil its new home videogame console at an event in New York. But Microsoft has remained mum on its plans for any potential Xbox 720. Earlier this week, Mehdi refused to budge on the subject. “I’ll politely decline any comment,” he said.

So, the question is, will Sony’s PlayStation 4 be well received?

If global trends are any indication, it’s possible. Based on numbers culled from the three company’s earnings reports, Geekwire was able to determine that the PlayStation 3 was the best-selling home console worldwide during the holidays.

Sales of the PS2 and PS3 totaled 6.8 million units for the December quarter to beat the number of Nintendo Wii and Wii U units sold (5.3 million), and the number of units reported by Microsoft for the Xbox 360 (5.9 million).

For the full year, the two PlayStation devices together sold 15.6 million units worldwide, compared with 8 million for Nintendo and about 11 million for the Xbox 360.

In other words, Sony continues to have a very strong worldwide presence for the PlayStation, compared to the Xbox which seems to dominate in the U.S.

Overall, however, the hardware sector remains fairly weak. Most executives in the videogame industry believe a new wave of hardware is needed to spur consumer interest again, while others believe that gamers are less attached to the living room than they were before and prefer gaming wherever they are from their phone or tablet.

NPD reported that sales of hardware in January were down 17 percent year over year when taking into account that the month had five weeks instead of four.