Most gamers are aware that with each hardware iteration we stand to be less impressed with graphical fidelity than the generation before. It’s argued that the last real leap in visuals was the Playstation One to the Dreamcast (brief pause for the fanboys). What’s beyond contest is that biggest change occurred between the 16 bit era and the 32 bit era with 3D polygonal technology. I don’t see another leap similar to that occurring for a long time; and the big three understand that they are limited by budgets and technology when trying to fleece money from gamers every new generation.

Microsoft and Sony have done a good job understanding this and it has turned into a service arms race to see which one of them can clutter your system user interface the worst. Microsoft is winning by a landslide, with Netflix, Facebook, Twitter, and Hulu already on the console and HBO Go coming soon. Microsoft is not only trying to compete with the Playstation 3 itself, but with television watching time in general. I do enjoy the extra layers of services and I’d even toy with the idea of making my Xbox 360 the set-top box it’s pretending to be now if they can offer actual live television in the future. Beyond that, I would like to get even better integration with my media files. As it stands now, it’s clunky, though power users are loving it. Making it easier for casual gamers to access their home movies, music, and pictures is simply adding value to the console and is a relatively easy tweak to do.

The gamification of every single thing under the sun is another innovation that’s come out of this generation; one that badly needs refining. While it’s fun to earn badges from Foursquare every time I walk into Subway and get treated like dirt, I’d like for one of the big three to take the reins and show everyone else how it’s done. Yes, notify me that I received the “Press Start to Play” achievement but they need to mean more than they do now. I’d like to convert my points to buy virtual goods. My dashboard needs dressing up, as does my avatar. I shouldn’t have to spend hard earned, poorly converted space points to do that when I have a boatload of useless points accumulating for collecting every single package in Grand Theft Auto 4. Also, it would be fun to be able to wager my points against someone else in say, a hand of poker, or a Call of Duty match. Point is, yes; it’s fun to accumulate points and rewards at every corner, but letting me do something with them, anything with them, will go a long way in making me care.

The biggest innovation in this generation is the digital marketplace. This is critical for the big three to understand; we have spent hundreds of space bucks in the digital game space and we intend to carry our DLC over into the next generation. The first company to block that path will likely forfeit a lot of potential shoppers; since there is no real precedent for digital game libraries, we are blindly trusting Nintendo, Sony, and Microsoft right now. Of course they will tell you that you still own the games since you can still hook up the old console to play them, but realistically I’d say there is a very small percentage of gamers that keep their old consoles hooked up once it’s time to move on. I can’t stress how important this is for consumer trust and for the gaming economy in general.

Motion gaming also needs to go. It’s a lame duck innovation that created the facade of converting people into gamers when in reality, that is simply not the case. Anyone with arms and legs can play Wii Sports and according to sales everyone has, but they’re not buying new games; there isn’t any growth from that sector. Instead, people only bring out the Wii during family events and flail their arms until grandpa has a heart attack. Grandpa going into cardiac arrest does not make him a gamer. Sony with the Eye Toy for the Playstation 2 had the right idea. Create some casual games for casual fans and move on. Before the Wii drove every soccer Mom mad, Sony had no intention of making the center of the gaming world a motion activated one. Let’s press the reset button and pretend motion gaming did not happen; let’s get controls right before moving on to the next big bang.

In the end, the next generation will bring with it, a few surprises. After all, this is still a very young industry, one that is still trying to find it’s place in our culture. It’s important to continue to move forward as we always have; I only hope we take some time to stop and refine some of the great ideas that came out of this generation before we move on to the next one.

Motion gaming also needs to go.

I think the next big change will be in displays. We've started with the move to HD and 3D, but these are still reliant on existing display technology. A 360-degree, fully immersive and glasses-free 3D display is the dream of every gamer. Where there's a desire, there's money to be made. Where there's money to be made, some one will eventually figure out how to do it.
 
I'm thinking something like this. 

digital is probably going to be something that happens. i don't like digital right now, because you don't know what is going to happen with consoles.

They should start investing in voxel technology ;p, I mean seriously imagine the crazy shit we could have with atom engine dedicated hardware.

digital wont happen any time soon for consoles at least be a requirement, sure there will be the option but ,

i dont think it will take over , because not everyone has access to high speed internet , and even then if they decide to cut the internet off period , -they would be sol because , well obviously they have no internet

and game developers would lose sales ,

and the fact they still charge 59.99 and you dont get the manual or case or anything like t hat , im sorry i will never pay that much for a digital release 15-20 bucks at most , -and thats because we lose the collection value and everything else asciated with collecting or selling old games ,

and i think its time we realise its about new ways to control now, , its appearent , nintendo has been the front runner for 7- 8 yrs with the nintendo ds , and 5 yrs with the nintendo wii , and they made change, that change was motion , some hate it some love it but we all gotta respect it ,

they been doing this since nes era , the only system they released that really did not evolve much was the nintendo gamecube , every other system added more buttons and features to the controller,

and wii u is most certainly not an exception , as it brings everything the nintendo 64/nes snes wii gc and the nintendo ds had brought foroward then adds the ability to stream the whole game unto the controller yet again evolving how we play ,

and in that one zelda thing demo where the girl hel d the controller sideways , and controlled those saw like things, that was awsome , i look forward to see some one utilize it for a fps, - and make a game like condemned were we can pick up any thing such as chairs and such , and to throw them we hold the remote sideways and fling it ,

but ya thats as far i think we will go next gen , it wont be much of a jump , cause you gotta remember the costs , sony and ms already charging still 250 plus for 360 /ps3 , and thier as old as my nintendo dslite actually xbox 360 is a year older ,

so seeing as the prices are the way they are now they cant afford to throw all the resources into power , wed probably see more enemies on screen and such like that and ya steroscopic 3d , but other then that ,nintendo wii u power is the highest i think we will see until 2015-2016 , even sony them selfs said ps3 was enough power ,that they wouldnt invest in much more power next gen ,

so that only leaves microsoft,

im guessing sony will not release ps4 for any more then 300-400 going by how shaky it was this gen for 600 dollar ps3s ,

and we know nintendo is cheap - they always price their consoles 100 more then their current handheld -- their current handheld at launch 250 right now is 170 so its going to be either 270 or 300-349.99 , that being the highest

if one of the 3 make the mistake of selling their consoles at 500-600 , then ill be laughing because well they should have known

so with all that said , i m betting the next gen will be about control

The next console needs to have some 4d tech or im not buying.

I like your post but have to disagree on the Motion controls. Right now it is in it's infancy stage and just needs to be reworked. Gaming Developers just don't see it as a money making prospect farther then a compilation of mini-games to get a quick buck out of due to it's optional nature. Once the Big three run a console with this kind of technology at the fore-front, then we will see a drastic change in how Motion Technology works. Microsoft and Sony (yes I am leaving out Nintendo) need to sit down and rework Move and Kinect for their new console and if they can make it a dedicated line for their general consumer, we will see the rise of that technology.

Just give it time, and it will happen. Motion technology was only introduced in the past 4-5 years, and it was introduced by a company that gave little care to advancing the technology to anything beyond a casual family gaming session's hardware. We need to see serious backing, and once that happens, all will change.

Nice blog post, I just have a few points. Firstly, while live TV on consoles in the next gen would be awesome, I think consoles will only begin to be viable as a set-top box replacement if they get all the major channels on there, and that'd be a very tall order. Secondly, gamification doesn't really have much to do with achievements and just because both achievement points and online currency are referred to as "points", I don't think it's at all reasonable to expect achievement points to be convertible into currency, at least not at a level where achievement points weren't worth a miniscule amount of money. If you're looking for more money back in return for your games perhaps that is something that could be dealt with through more extensive reward programs, however if you're looking for tangible rewards for being good at games then I think that's best carried out on a game-by-game basis. Perhaps those highest on the leaderboards in a fighting game for example, could receive free Microsoft Points, or real-world swag. I doubt that actually having achievement points themselves as currency would be economically viable for the console manufacturers. I also don't think that losing points through spending or wagering is much in the spirit of achievements, they're supposed to be an ever-increasing persistent record of your progress in games, like EXP in an RPG.

The thing I agree with you most on is that we should be able to carry our data over to the next generation of consoles, I really hope that can happen. As for motion control games, we need to stop with the idea that someone who plays motion control games isn't a gamer, it's elitist and pointless. Secondly though, does data really show that casual gamers don't buy new games? This might be the case but I'd like to see that data. I really don't think Sony are trying to make motion controls the future centrepiece of gaming. As it is Microsoft and Sony are just treating motion gaming and traditional gaming as two separate markets, and seem very wary about the idea of one bleeding into the other. Motion gaming makes a ton of money, seems to keep casual gamers happy and isn't directly impacting us. I don't really see why it should be taken away.

Basically the next generation will certainly bring some graphical advancement, but most of the hardware improvements are going to be on a performance basis. I think the real key will be starting with bigger hardrives and better integration with the internet and applications. The only problem is that the Xbox and PlayStation start looking like computers that can't do as much and that certainly doesn’t make me want to spend money on one vs. a good gaming PC.

@StriderNo9: I think the media leader varies by region. In the UK we don't get Netflix, Hulu or HBO Go. PlayStation offers BBC, ITV and C4 (all free TV on demand services), LOVEFiLM (similar to Netflix) and MUBI. Xbox offers Sky (which requires a Sky subscription).