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Video game firms’ evolving hardware cycles are a player-driven shift

Microsoft is hoping the recently released Gears of War 4, seen above, will help drive sales of the latest iteration of its video game console, the Xbox One S, which came out in the summer.

The Associated Press

When Rod Fergusson was offered the chance to lead the development of a new Gears of War game, he jumped at the opportunity.

It was 2014, and Microsoft Corp., where Mr. Fergusson started his video game career 13 years earlier, had just purchased the rights to the lucrative franchise.

The Canadian software developer was a logical choice for the job. He had shepherded production on three previous Gears titles while working at Epic Games in North Carolina, including 2006's Gears of War – the first in the series and a blockbuster success that helped to establish Microsoft's legitimacy in the video game business.

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"At that time, HD televisions were the new technology," Mr. Fergusson says. Gears was created with high-resolution visuals that amazed consumers and reviewers. The game boosted sales of HD TVs as well as Xbox 360s, the only console it could be played on.

Microsoft is hoping Mr. Fergusson's latest effort – Gears of War 4 hit store shelves last week – will have a similar effect and help to drive sales of the Xbox One S console, which it released in the summer.

"One of the things we like to do with Gears is have that visual showcase and help push some of the leading-edge technologies," Mr. Fergusson said in an interview last month at The Coalition, the Vancouver studio he runs.

Gears of War 4 is a big part of Microsoft's push to gain ground in the latest phase of a global console battle. Video game hardware is big business. In April, Sony Corp. – the market leader and Microsoft's biggest competitor – reported sales of its PlayStation 4 (PS4) had reached 40 million units worldwide since its release about 30 months before. While Microsoft does not report specific sales figures, analysts at the time estimated sales of the Xbox One console to be about 20 million.

In the past, new hardware was released about every eight years, but that cycle is changing. Both Microsoft and Sony unveiled new models of their respective consoles after less than three years. To take on the Xbox One S, Sony released a smaller version of the PS4 on Sept. 15. Both companies have yet another model in the works, too. The more advanced PS4 Pro is scheduled to hit shelves in November, while Project Scorpio – the code name for a high-powered Xbox One – is planned for 2017.

This is a notable shift. According to analyst Michael Goodman, the primary reason for the change in the hardware cycle is the original PS4 and Xbox One could not support the new 4K and high dynamic range (HDR) displays. And unlike past TV technological transitions, this one has happened "in the blink of an eye."

"So much about video games are about the visuals," said Mr. Goodman, director of digital media for Strategy Analytics, noting that most TVs being sold today are 4K and within a year, he expects all TVs to also be equipped with HDR.

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Right now, the new "slim" PS4 and the Xbox One S support HDR, but they can't deliver video games in 4K. The next editions of the consoles will bring true 4K gaming; Gears of War 4 was developed so that it will deliver when Scorpio arrives.

Director of Xbox Canada Craig Tullett said Gears of War is a well-established and popular franchise that is "inherently social and connected." He expects groups of friends who regularly play together will all upgrade their hardware en masse.

Attitudes about device upgrades have also changed. Smartphone manufacturers have established that consumers are willing to shell out hundreds of dollars every year or two on new handsets and tablets. One reason that people are willing to do that is because the apps they've already purchased, and they love to use, don't suddenly become obsolete if they buy a new device.

"In the past, when a generation [of hardware] finished, you had to say goodbye to your games," Mr. Fergusson said. The industry needed to evolve. "Getting locked into an eight-year cycle and then having to throw it all away and start over again is just archaic."

Being able to get players into Gears of War 4 on three different systems – the Xbox One, the Xbox One S and any Windows 10 computer – is also broadening the audience potential. "That's what choice is about," Mr. Fergusson said.


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Percentage of Canadian adults who own a game console


Percentage of Canadians who are a gamer (defined as anyone who has played a video game on any system in the past month)


Amount contributed by the video game industry to Canada's GDP

Source: Entertainment Software Association of Canada

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