"People aren't as motivated by cutting-edge graphics as they once were," says Paul Neurath, creative director at Zynga, makers of "FarmVille," "Mafia Wars" and other social games on Facebook.
"Gamers that care intensely about graphics will continue to do so, but I think there are fewer now than there were in the past," he says. "Big leaps in graphics no longer exist. Unless there's some futuristic holographic display or direct brain implement we don't know about, it's hard to get a lot better."
Cole, the gaming analyst, agrees.
"Cutting-edge graphics in the past amounted to nothing more than killer CGI videos that added nothing to gameplay," he said. "That's a problem for an industry that up until recently prided itself on "buy this console because the games look a lot better than the ones you currently own.'"
In that sense, next-generation is no longer "next." We've arrived. Looking back, NES was certainly a step above Atari and imprecise joysticks. SNES and Genesis offered a huge leap in affordable home graphics. PlayStation and N64 immersed players into 3-D worlds replete with camera control. PlayStation 2 and Xbox overcame polygons in favor of rounded and non-jaggy looks. All of these were improvements upon previous generations of gaming systems.
But this current generation of consoles? With the exception of the early Wii years, they've largely offered better-looking versions of games we've already played. There have been a lot of great games to be sure, but fewer must-haves --- the kind that truly take the medium into uncharted territory.
Rise of cheap, social gaming
Cheap, bite-size games such as "Angry Birds" and "Plants vs. Zombies" have thrived in recent years, ensnaring new players with novel gameplay.
"Virtually all of my clients are in social and mobile sectors, which have totally exploded in the last few years and continue unabated today," says Crook, who previously worked as a console designer.
As such, the demand for games has grown. "It's not so much that gamer interests have changed since the last generation, but that a whole group of new players have started playing games," says Zynga's Neurath. "These people would never have played last-generation console games. They're more into it for the social aspect."
Console makers so far have been ill-equipped to meet this demand, given their lucrative, 30-year-old model of selling games for $50-$60.
This partly explains why Nintendo, after five years of phenomenal Wii growth, is slumping. Industry experts say they're not in a position to meet the demands of most new social gamers.
We'll soon find out whether the Wii U can revive Nintendo's fortunes. The console's big new feature is a 6.2-inch touchscreen GamePad controller that interacts in creative new ways with the gamers' TV. Wii U players can play together, with one person using a TV screen and the other using the GamePad. A single player also can access additional content on the GamePad that enhances the game on the big screen.
Nintendo declined to comment for this story.
In a struggling economy, consoles also have fallen victim to the cut-rate pricing of games -- something consumers are exceedingly demanding but consoles have yet to offer.
In what has become a successful business model, many developers give away their games for free, then charge players later for status upgrades or gameplay perks.
"Say what you want about freemium, 'nickel and diming' of players, but I'd sooner pay nothing up front and $5 to $10 later than plunk down $60 on a game and hope I like it," says Crook.
Ubisoft's Hutchinson refers to it as a rising "fear" among console gamers. With so many deals to be had elsewhere, a lot of console gamers are making fewer full-price purchases than before.
"The free-to-play model has certainly impacted the industry," agrees Zynga's Neurath.
On top of that, 99¢ iPhone and iPad games are also taking a toll on the perceived value of dedicated gaming systems. Even PC games go on sale for as little as $5-$20 on occasion, a trend that has breathed new life into PC gaming and changed how some of the most ardent gamers value games.
"The business model for a five-year life cycle isn't working for Sony and Microsoft," says Cole. "They spend billions to R&D and market these new systems, they sell them at a loss for the first few years and then they don't really have the software business to make up the cost. They are better getting out of the business entirely rather than go after a five-year life cycle."
How console makers can fight back
In wake of all these changes, what's a console maker to do? What might reinvigorate interest in living-room and dedicated handheld gaming?
A first step would be fresher consoles themselves. The Xbox 360 is 7 years old, while the Wii and the PlayStation 3 are both 6.
Newer motion-controlled gaming systems such as Microsoft's Kinect and Sony's Move, which let players control in-game avatars by moving their arms and legs, have helped sustain interest. But experts say more upgrades are needed.