The future is bleak for the home console predicts Square Enix CEO Yoichi Wada, who believes that the time is fast approaching “when hardware isn’t even needed anymore” and games switch to “server-based offerings, game streaming and digital distribution.”

In an interview with MCV , Square Enix’s chief says that it has already adjusted its strategy accordingly to cope with the change by focusing on social and browser-based games. When the beta phase of Final Fantasy XIV begins on PS3 in 2010, Wada says that he’ll also be watching very closely as to how it performs.

Wada believes that platform holders, Microsoft and Sony, already have the wheels in motion to cope with the change and since 2005 have been implementing a shift to more server-based games. He believes that third parties will need to follow suit if they’re to survive some tough economic times.

The death of the home console has long been predicted, but largely dismissed. In 2008, the Telegraph published an interesting interview with Tom Hoggins, CEO of games company WildTangent, who makes some valid points on the debate and believes that it will be online communities that will drive the industry.

"Sony and Microsoft took the bet that prettier graphics would be the huge differentiating feature for their consoles. They were wrong. Everybody expects things to look good, so making it look 10 per cent better doesn't have a big impact on its value. Since that's changed, we now live in an era where community defines the value of a game, not production values. So the community dynamics of an MMO are more valuable to a user than how good the graphics look," he said.

Surely the future’s not going to be MMO’s and, god forbid, social networks such as PlayStation Home? Wonder what Nintendo has to say on the matter?