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After years of losses, Sega confirmed on January 31, 2001 that it would stop making the Dreamcast and sell its games on other companies' machines. A hardware rivalry that had defined the previous decade ended.
One of the two companies whose rivalry had shaped console gaming in the early 1990s stopped making machines entirely. The exit showed how quickly hardware losses can become unsustainable, and it left the field to Sony, Nintendo and a newcomer from the software business.
Nintendo's new handheld went on sale in Japan on March 21, 2001, with a wide color screen and a 32-bit processor. It handled the kind of games that had required a home console ten years earlier.
The gap between what a handheld and a home console could display narrowed sharply. Portable play stopped being a compromise made on a bus and became a legitimate place to release substantial games, which kept Nintendo profitable through a difficult stretch for its living-room hardware.
A paid network service opened in North America on November 15, 2002, one year after Microsoft's console. It combined a persistent identity, friends lists, matchmaking and voice chat, all designed for broadband.
Online multiplayer stopped being a feature of individual games and became a property of the platform. That shift turned consoles into service businesses with subscription income, identity systems and social graphs, which reshaped how the companies behind them compete.
Nokia put the N-Gage on sale on October 7, 2003: a mobile phone shaped like a game handheld, with cartridges and online play. It sold poorly and was withdrawn within a few years.
Failure here is instructive rather than trivial. The N-Gage identified the right destination years before anyone reached it, and its collapse showed that hardware convergence fails when it compromises both functions. The lesson shaped how later companies approached games on phones.
Nintendo released the DS in North America on November 21, 2004, with a touch-sensitive lower screen, a microphone and local wireless play. It became one of the best-selling systems ever made.
Choosing an unusual interface over raw power worked, and it brought in an audience that specification races never reached. The DS demonstrated that the way a person touches a game can matter more than what the hardware can draw, an argument Nintendo would make again with its next home console.
Blizzard opened World of Warcraft on November 23, 2004. Forgiving solo progression, a familiar setting and unusually reliable service pulled a genre that had been niche into the cultural mainstream.
A genre confined to enthusiasts became a mass-market product, and subscription revenue from one game became a major business in its own right. It also gave researchers, journalists and the public a concrete example of a large, functioning virtual society.
Microsoft put the Xbox 360 on sale in North America on November 22, 2005, a full year before its competitors. High-definition output, a mature online service and a digital marketplace defined it.
Timing beat specifications. A year of exclusive presence in high-definition living rooms, combined with an online service nobody could match, turned Microsoft from a newcomer into a peer of Sony and Nintendo. It also established digital storefronts as central to console economics.
Sony's third console launched in Japan on November 11, 2006, carrying a Blu-ray drive and an unusual processor. A steep price and difficult development tools cost it years before it recovered.
Hardware that is difficult to program for loses ground regardless of its theoretical power, a lesson Sony applied directly to its next console. At the same time, using a games machine to win a consumer format war proved effective twice, showing how console installed bases influence markets well beyond games.
Motion control arrived in North American stores on November 19, 2006. Nintendo's Wii shipped with a remote that sensed movement and a pack-in sports collection, and it reached households that had never wanted a console.
The largest expansion of the console audience in the medium's history came from a machine that was deliberately underpowered. It proved that interface and price can outweigh graphics, and it briefly made playing games something grandparents and toddlers did in the same room.
Apple's first iPhone went on sale in the United States on June 29, 2007. It had no game store and few games, yet it created the device category that would carry the largest gaming audience in the world.
A product designed with no attention to games became the most widely owned gaming device ever made. Its touch screen and motion sensor gave designers a new vocabulary, and its arrival marked the point at which the industry's center of gravity began moving away from dedicated hardware.
Apple's App Store opened on July 10, 2008, giving any developer a route to a global audience with payment handled automatically. Games dominated it almost immediately, at prices the industry had never contemplated.
Within a few years mobile became the largest revenue segment in games, built on an audience that had never bought a console. The store also demonstrated that centralized digital distribution with automatic payments could create an entire market almost overnight, a template every platform has since copied.
Braid appeared on Microsoft's download service on August 6, 2008, alongside other small titles that summer. Tiny teams reached millions of console owners without a publisher, a retailer or a shelf.
Console platforms had been closed to anyone without a publishing deal since the 1980s. Download storefronts reopened them to individuals, and the commercial success of a self-funded game proved the audience was there. Independent development stopped being a fringe activity and became part of the industry's structure.
Markus Persson published the earliest public versions of Minecraft on May 17, 2009 and went on selling and updating it while it was still being built. Players spread it themselves, largely through video.
Paid early access moved from an oddity to an accepted way of funding development, and open-ended construction became a genre of its own. The game also demonstrated that video sharing had replaced advertising as the most powerful way for a game to find an audience.
Angry Birds reached Apple devices in December 2009. Rovio's simple physics puzzles, sold at a low price with an instantly recognizable cast, became the reference point for what a mobile hit looked like.
It gave the mobile market its first true global franchise and showed publishers that a phone game could support characters, merchandise and film adaptations. It also demonstrated the value of designing around brief, interrupted attention rather than treating that as a limitation to work around.
Microsoft's depth-sensing camera for the Xbox 360 read body movement and spoken commands with nothing held or worn. It sold at record speed, then struggled to find games that justified the hardware.
Real-time body tracking had escaped the laboratory and become a mass-produced consumer part, years before such sensors were ordinary. The launch also delivered a blunt lesson about hardware without software: a remarkable sensor cannot carry a platform if designers never work out what to build with it.
The successor to the DS put a stereoscopic display in a clamshell portable that needed no glasses. A thin launch line-up forced an unusually early price cut before software turned the system around.
Two conclusions came out of the system. Glasses-free stereoscopic depth was genuinely achievable yet optional to most players, who often preferred a brighter picture and longer battery life. And a failing hardware launch could still be rescued, because price and software, not specifications, decided whether a portable found its audience.
A general-purpose live video site spun its busiest section, the gaming channels, into a separate service. Broadcasting play with a chat window running beside it grew into an industry of its own.
Spectating became a mainstream activity rather than a side effect of competition. Discovery, marketing and community all reorganized around live video, and a new occupation appeared with no obvious precedent in earlier entertainment industries: the performer whose material is the act of playing something.
Two years of paid public development ended with a version numbered as complete, announced on stage at a gathering of players. Updates never actually stopped, and ports carried the game onto nearly every screen.
Open-ended construction proved to have a vastly larger audience than the industry assumed, and selling a game during development became a legitimate business rather than a curiosity. The game also demonstrated that a title with no story, no levels and no ending could outsell every scripted blockbuster.
Rockstar's crime epic took in around a billion dollars in its first three days, a figure comparable to the biggest openings in film. Games were now unambiguously a top-tier entertainment business.
Scale became the defining feature of the top of the market. A single release could out-earn a major film opening, which justified budgets and marketing campaigns that only a handful of companies could afford, and concentrated the blockbuster tier into fewer hands making fewer, larger bets.
Sony abandoned exotic processors for ordinary computer components, priced the console a hundred dollars below its rival and stated plainly that used discs and offline play would work. The generation was effectively decided early.
Consoles became, in effect, standardized computers in fixed configurations, which lowered development costs and made multi-platform releases routine. The launch also demonstrated that clarity about what buyers are permitted to do with what they purchase can outweigh technical specifications entirely.
