"The model is transitioning away from these big boxed games where you're pouring hundreds of millions of dollars into a title, to these sorts of games that don't count on the distributor," Kern announced, "They don't need the distributor to succeed, so a lot more money goes into the game rather than to marketing and you get to grow organically with your players."
He went on to reason, "There's no barrier to entry for players you can start to compete on fun instead of marketing, which is really the area that we as developers should be in. We should be competing on the strength of our ideas and the fun of our gameplay, not the IP, or the license behind the title, or the size of the marketing push."
Kern then claimed that the current system was "broken", saying, "Look at the symptoms. Look at the fact that there's no middle ground anymore. You're either an indie game or you're a massive AAA, IP-backed sequel with derivative gameplay that's rehashed over and over again as it's the only safe bet you can make when you're spending hundreds of millions of dollars."
He went on to insist that "there's no middle ground" in the videogame industry, with only indie titles and blockbuster titles, and that after every game launch, there would be a "wave of lay-offs" shortly after.
"People say 'Oh, that's normal, Hollywood does it all the time.' Well, it's not normal. It's a symptom of your business being broken," Kern dismissed, "In Hollywood they work on contract - it's very different. They expect only to work from A to B. In games, these big publishers are hiring swathes of people expecting to have jobs long-term but then lay them off at the end of a project because it doesn't quite deliver. This is unsustainable."
This is why, Kern stated, that "Consoles, I believe, are dead."
"You keep making these bigger and bigger bets and what that forces you to do is play it safer and safer," he said, "And if you play it safer and safer with your gameplay, people will get tired of the crap you're serving. When that happens, they get bored and they will leave. And you haven't fostered any of the middle ground innovation and new ideas that you need to tap into next."
The future lies with mobile and PC, Kern insisted.
"Isn't it ridiculous that you can buy these fantastic games on iPad, but then you get a publisher like Square Enix charging an astronomical price for an old game port? They just don't get it. They don't get that we have to lower the barrier for entry," he noted. He did not acknowledge the $500-$800 USD entry price towards buying an iPad, however.
He went on to claim that large publishers weren't needed anymore, stating, "I think they're at severe risk right now of being trumped by Apple, by Google, by Facebook. Look at indie games. Look at Riot Games and League of Legends. They have more users than World of Warcraft does. That's crazy. And they don't have a publisher.
"Who needs publishers any more? I certainly don't. I couldn't care less about them at this stage."