Thats why I said: “Why not license the gaming hardware for a cheap monthly fee as well? We already pay that way for our cable TV boxes etc right?”

I didn't say MMO's and LIVE are a service that is hardware based. But it's a step towards it. :)

It just doesn't make sense otherwise :)

Yes, it would be a fleecing of the consumer, if it were to happen. And I agree that someone, somewhere, will try it. I just don't think, and I very much hope, it won't get off the ground simply from the nature of competition between the big three. Why would they participate in a system that gloms them together with their direct competitors? If you don't have the 360 and PS3 and Wii games in your service, what do you have? You have GameTap. Sure, you might be able to con someone into paying a monthly fee to lease hardware – but if you can't get the console jockeys to do it from a lack of participation by the publishers, you've seriously crippled your potential audience.

And I know that Xbox LIVE and MMOs like WoW seem to point to the subscription model. But the key difference is in what they are selling – LIVE and MMOs are a service that is hardware based. They are, to a point, platform agnostic (LIVE is both PC and Xbox, I know its not independent of a specific platform, but it doesn't fully rely on one specific piece of hardware). WoW is a service, nothing more. It runs on multiple platforms and has a (relatively) low cost of entry from the hardware side. Selling only PC gamers (we've eliminated the consoles above) a service that takes away their PCs…I just don't see it.

@Khanzza:

I completely agree that MS or Sony, or even Nintendo, would love to lock in their customers and drain them for gobs of cash. That's what they do now! The current model for gaming locks players into a console choice, and the biggest fights are over exclusivity and market penetration and units sold. Amen.

However, Mr. Enderle's service, as you state, is flawed. Not one of the big three are going to opt into a system that makes them cooperate with each other. You're right – consumer buy-in would be tough for a hardware-based service. But even more – why would MS or Sony bother trying to sell a universal service to their customers? They've already convinced us to buy into the current model of exclusivity. Why do a 180 now?

For me, it would mean quitting gaming, but then the industry is already doing its hardest to make it so.

There is another solution though. The industry could stop trying to screw the customers by making crappy games and hyping shovelware. Not that I will expect to see any major publishers thinking about such a “strange” strategy.

Well, well.. you can always blame piracy, most crappy developers do.

Totally understand your point, and I agree that without support from the big three, it is likely not to happen.

But…if the model starts to work in other areas like PC software, movies, music etc I would at least expect the gaming industry to follow suit. Some of the casual games out there are already like that. And to be honest, there are millions of gamers paying a subscription fee to Microsoft's Xbox Live already…only they pay monthly and get very little content for free. Microsoft is already dabbing a little in this “virtual cloud”/subscription model right? MMO's like WOW already are as well.

Why not license the gaming hardware for a cheap monthly fee as well? We already pay that way for our cable TV boxes etc right?

I think it totally sucks, and it's a fleecing of the consumer. Would love to see things not going in this direction. I just think it's too late.

True, most do NOT make money off hardware. Nintendo does, even with their console at the lowest price point of the big three. Nonetheless, MS and Sony are just as invested in selling their hardware – because of the exclusive services they offer their users. They don't make money off the hardware, but they make money by having large numbers of users who have access to their “entertainment portals”. Why license away exclusive access to users? And for those gamers who own multiple consoles, they've already proven that they will shell out big bucks for access to multiple service providers (MS, Sony, Nintendo) by the fact that they bought multiple consoles. They wouldn't be interested in Mr. Enderle's “servioe”.

As for Gamefly and GameTap – sure, they're subscription models. They've already got some of my money! There's a key difference, and I think that's what I was trying to point out – they license software only. Not the hardware, and that's my point – hardcore gamers who will pay for subscription services are either PC gamers who WANT to own their hardware, or console owners who have proven they are willing to make a choice between platforms.

Sure, someone somewhere is going to try to market this approach and sell it. But without the support of the big three, they won't get very far. How can you market a “universal” gaming service that is independent of hardware, when Nintendo won't license you any of their first-party titles? Or Microsoft won't give you the rights to any of their Xbox 360 exclusives? What do you have to sell your subscribers at that point?

@Rob: sorry, your URLs are only partial. I'd love the check them out!

http://www.latimes.com/entertainment/news/la-et-sc...

This will be the first big test of a centralized gaming model. By placing the gaming engine in the cloud they expect to be able to address the latency problem with MMOs. Intel has been pushing this concept for about a year now.

Also:

http://www.microsoft.com/presspass/press/2008/jul0...

This is Microsoft moving, more slowly, in the same direction.

Most game companies DO not make money on the console hardware, they make it off the game royalties. Even game accessories such as game controllers etc have little if no margin on them.

What Rob is describing above could actually happen and that's the point. Everything is going to a subscription model (if you are a Gamefly, or Gametap user, you already know this). MS Office is available in subscription-based format, movies are (ala video on demand/Netflix etc) and so is music (iTunes, Napster etc), so it only makes sense that games will.

I think it's B.S. as well – for the record. But I still think companies will push for this.