It’s game over for video game consoles Credit: Todd Bates

We are now in the twilight days of what video game enthusiasts call the seventh generation of game consoles. It began in November of 2005 with the release of the X-Box 360, and will end when Nintendo ushers in Generation Eight by releasing its Wii update — dubbed Wii U, and featuring a controller that looks like an ugly, button-filled smartphone on steroids — currently slated to drop during the 2012 holiday shopping blitz. Wii U will be followed by next-gen iterations of Sony’s Playstation and Microsoft’s X-box sometime later; probably 2013 or 2014, but no one knows for sure.

Editor's note: David Russell gives the console player's side of the story here.

This is how it’s been since the late 1970s. Every seven years or so, the big game companies hype and release their latest and greatest hardware (usually already a year behind the state of the art by launch day) and the players line up to get locked into a dedicated ecosystem of games delivered via physical media (until now, a cartridge or optical disc). If you bought from Nintendo, you got to play exclusive titles featuring Mario and Donkey Kong. Microsoft players got Halo’s Master Chief all to themselves. But in today’s interconnected world, this antiquated distribution system and hardware tri-opoly is toast.

Already there are products like Valve Corporation’s Steam, which enables the downloading of thousands of games (including new, state-of-the-art stuff from major publishers) to a computer or mobile device. Even better is OnLive, which allows users to play games on a computer or mobile phone with no dedicated hardware required. OnLive works by rendering the games in remote servers (saving the player the need for expensive and powerful gaming hardware) and sending it out in real time via the Internet. It doesn’t sound like it should work (why is there no lag?), but it does. And it’s amazing.

And don’t forget about Apple’s iOS and Google’s Android platform. Nintendo sure hasn’t. Reports had head honchos at The Big N calling Apple “the enemy of the future,” after the Cupertino giant grabbed 19 percent of all mobile gaming revenue in 2009. Gamers tend to dismiss mobile phones as underpowered and with substandard control schemes, but in focusing on today they miss seeing what’s about to happen. Looking ahead, the smartphone industry is currently upgrading its hardware every year (2012 models will sport powerful quad-core processors) vs. every 10 years or so for the gaming giants. In the go-go decade already underway, companies that fall behind will be dead and gone before you can say, “game over.”

That leaves Nintendo, Microsoft and Sony as dinosaurs facing extinction. Nintendo at least owns highly valuable intellectual property that can be leveraged to keep the company afloat. (In other words: Super Mario Bros. and The Legend of Zelda will be coming to an iPhone near you, no matter what Nintendo says about never licensing their characters for non-Nintendo hardware.) Microsoft has its Windows cash cow, which continues to produce milk (though not as much as it used to). Sony, however, is in real trouble. Just 10 years ago the Japanese conglomerate owned the markets for televisions, video games and mobile music players. Today, tough competition from Samsung, Nintendo and Apple has Sony looking shaky and defensive. Maybe the new, handheld Playstation Vita is a huge hit and saves the company, but I doubt it.

So add the video game industry to the growing stack of businesses that have seen the Internet upend a longstanding business model with catastrophic results for the established entities. It’s happened in music and journalism already, and it’s currently affecting the movie and TV industries, which are starting to see revenues crumble in the face of online competition and distribution.

Gamers shouldn’t worry, though. All this competition will only result in better games that are readily available to more players in more ways than ever before. So the future is golden — except for the people at Sony. They’re fucked.

You arrive at the Dalí Museum. Do you: