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Topic: Is the Game Industry Heading for another collapse?

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kyleforrester87

@Sinton There were a few factors (including this) to be fair, I won't list everything from the Wiki but it does state one of the reasons:

Flooded console market

At the time of the North American crash, there were many consoles on the market, including the Atari 2600, Atari 5200, ColecoVision, Odyssey 2 and the Fairchild II. In addition to this, Mattel and Coleco created devices that allowed them to play 2600 games on their consoles, and others created Atari 2600/Intellivision clones such as the Coleco Gemini, the Sears Tele-Games systems (private-labeled versions of the Atari 2600 and Intellivision), and Tandyvision (an Intellivision clone for Radio Shack).

Each of these consoles had its own library of games produced by the console maker, and many had large libraries of games produced by third-party developers. In 1982, analysts noticed trends of saturation, mentioning that the amount of new software coming in will only allow a few big hits, that retailers had too much floor space for systems, along with price drops for home computers could result in an industry shakeup.[7]

Either way, the current situation situation is quite different so I agree theirs no way to really draw any meaningful comparisons here.

Edited on by kyleforrester87

kyleforrester87

PSN: WigSplitter1987

Tasuki

Short answer No.

Video games are a more viable form of entertainment and make more money now then even some Hollywood Films. People are more accepting of video games and the industries is huge now.

Yeah you have some indie game companies pumping out shovelware but does the indie film companies hurt the film industry?

Anyone thinks that the game industry is going to crash like the 80's is either a fool, an idiot or is just trolling. I would sooner except the motion picture industry to crash before the gaming.

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kyleforrester87

@Tasuki Bit harsh at the end there bud lol. Not many people saw the last financial recession coming either, at the time. These things wouldn't happen in the first place if they were easy to predict.

Edited on by kyleforrester87

kyleforrester87

PSN: WigSplitter1987

KratosMD

@kyleforrester87 There aren't even any accurate ways to predict financial crises to begin with. You can use patterns such as the Boom-Bust pattern to see if the current economic situation matches with this one but those are not always accurate because there are just so many factors that are involved.

That said, with the current situation we have right now, it doesn't seem likely that a crisis will occur but that could change at any moment.

KratosMD

Tasuki

@kyleforrester87 Not harsh, truthful. Video games are too mainstream now for them to collapse alot more industries would collapse as well and honestly at that point civilization as we know it would collapse so at that point does it matter. Saying that the gaming industry will collapse soon is like saying the movie, music, sports industry will collapse, it just won't happen.

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kyleforrester87

@Tasuki Hmm dunno, the music industy has been hit hard by the advent of streaming. Gaming studios too, once profitable, have regularly gone under in recent years because of shifting markets. Of course these are just downturns, it would be a stretch to call them a collapse! Maybe these industries are now too big to fail. Still it's an interesting question and one that's been asked a lot online.

kyleforrester87

PSN: WigSplitter1987

Tasuki

@kyleforrester87 While I will admit there will be down times especially with illegal methods of obtaining said form of media, I don't think it's going anywhere. It will be down but just like the movie industry another blockbuster will come along, just look at how much GTA V did. While yes there plateaus especially when ideas get stale i.e. Assassin Creed games, CoD, etc. Someone will come along and reinvigorate it, heck just look what eSports (even though I hate that term) has done to the gaming industry.

I will agree with ya downturn yes collapse no. It will continue to be around in some form or another.

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BAMozzy

@Rudy_Manchego If every major AAA release is now being made with the intention of getting gamers to pay continually for content regardless of quality or whether they paid for the full base game then I personally think we might be heading for a dip if not a crash in the industry.

These practices are in place because we as Consumers allow them to be. However if you look at things like the 'Online Pass', that is no longer a part of gaming practices because we as consumers reacted to it negatively. Games like Titanfall and Battlefront also were 'unsuccessful' for EA and so changed their tactic and gave us a Single Player campaign and 'free' DLC. EA know that they can't sell DLC or Micro-transactions if there are NO (or at least very limited) users left to sell to and a small unhappy 'user' base that can't play the DLC they bought in the season pass and it probably cost more to make and implement than they got back in revenue. They need to ensure the game has enough content to bring users in and enough content/depth to keep them engaged over its life-span to actually have a market for 'additional' content. Its not in their interest to skimp on the initial content as the game won't sell in sufficient numbers to have a market to sell extra to. EA knew they couldn't get away with releasing TF2 or BF2 in the same way and now these have much more content and a free DLC schedule.

First Party games actually still need to sell to be successful. Maybe not so many and can take 'bigger' risks because they are 'subsidised' by their Parent Company. Sony for example gets revenue from Console sales, Subscriptions like PS+, some profit from 3rd Party sales on PSN and Physical sales too. EA will have to pay Sony a percentage for releasing their game on their platform, putting their Copyrighted logo's on the boxes etc so will have to sell 'more' copies to offset these. If GG or Sucker Punch don't release a game for 4-5yrs, Sony are releasing games from Naughty Dog, Santa Monica or Polyphony, selling Millions of Consoles, Subscriptions etc, getting money in from sales over PSN and money from 3rd Party sales on their platform so the 'risks' are less but can still 'fail' or be 'costly'. The Order 1886 for example caused Sony to split from Ready at Dawn. Guerrilla Cambridge closed - maybe because of multiple factors - rather than just 1 game but Driveclub and Rigs were costly games and for one reason or another struggled in their market - Driveclub because it was a 30fps racer with 'issues' at launch up against impressive 60fps racers and Rigs because VR hasn't got the install base to sell to.

If we as Consumers stopped buying micro-transaction, stopped buying all the 'online' Ubisoft games etc, then these would 'disappear' or at least evolve, change etc. Whilst it is a 'successful' practice, it will continue...

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Rudy_Manchego

@Tasuki A collapse is fully possible in any industry and its causes are not always apparent. If by collapse you mean will video games end and no one produce or play them at all? Of course not. Could the market drastically shift in a different way then it is currently? Of course, it has happened several times in the past. I also don't think speculating about such a downturn is being a fool or idiot - it is what analysts do for a living, and what are we if not armchair gaming analysts? We have seen several major shakeups to the industry in the last thirty years.

As said, I don't think the sky is falling but clearly the indistry is going to change dramatically in the next five-ten years.

@BAMozzy Sure thing and I 100% agree about consumers buying it. I think what it shows is that EA and other publishers need/want to make more money to be profitable then that from selling games alone. That they are trying so many different tactics to get it implies they haven't found the right balance. If each new revenue stream stalls they'll need to substitute it somewhere. Personally I think this market is going to become bloated - the gaming community isn't necessarily growing and there is only so much gamers can afford. If more and more games require additional purchases then a lot of titles are going to struggle more and more. Except for Fifa and Madden, people will buy those no matter what.

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kyleforrester87

@Rudy_Manchego @Tasuki Yeah I mean it's not as if NO video games were made following the collapse in the 80s, it just was just a sudden sharp down turn and then a prolonged period of lower activity before picking back up again.

Edited on by kyleforrester87

kyleforrester87

PSN: WigSplitter1987

Tasuki

@kyleforrester87 Right let's remember it was in NA that the game industry crashed, in Japan gaming was still big although I am not sure about Europe. But during that time you had Nintendo, Sega and others going strong in Japan, which in the end made them even think about bringing gaming back to NA.

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BAMozzy

@Rudy_Manchego Part of the reason that Publishers 'feel' they have to make 'more' money is to keep the money coming in whilst others are still in development and to keep profits climbing with the rising costs especially with minimum effort and additional investment. These are responsible to share holders who want to see an increase in profits year on year but with 'rising' costs - salaries, studio running costs etc - expenditure is increasing more than the Profits. By that I mean that if year on year their net expenditure is increasing by 5% but their 'growth' is only 2%, their 'net' profit may not show much growth. In the stock market, Hearing a company only made a £400m in that quarter, down from $415m from the same time last year is seen as a downward trend so there is two things you can do, cut back on expenditure so net Profit is higher (not always possible) or find ways to increase pure Profit. Rather than put that money into projects to get 'profits' from products as that also increases expenditure, they add ways of extracting more money/profit from the games they have and we as consumers (not everyone but enough) buy into it so its perpetuated.

If there comes a time when these methods don't work anymore because we as gamers refuse to buy into that practice, these companies will be forced to find other ways and if that means having to invest in 'new' games, making 'arcade/budget' type games for example, then they will do that.

The Market isn't 'bloated' at all but gamers are getting fed up with these practices. Games are still 'profitable' but publisher 'greed' has affected the state of the industry and to a degree the diversity too. Those Single player games would still make a profit but unless they can through in some MP with DLC, micro-transaction content the profit margins are not 'substantial' enough for a Publisher. Sony for example are 'happy' to release Single Player games - without DLC because they are 'happy' if it makes them any profit - even if its just a few million - its still Profit. It seems that Publishers don't want to make games that may only make 10's of million in Profit but 100's of millions in profit - I mean they are dealing in 'billions' so 10million is not going to make that much of a difference. I know to us, that's 'significant' but its like the difference an extra £100 a year to your Salary would make to someone earning £20K annually. Like I said these companies want to make £400m+ a quarter so a game that's taken 2-3yrs, with £40m investment to only make £10m in profit is not good 'enough', they would rather spend 2-3yrs spending £150-200m with big name A list actors and a MP with DLC and micro-transactions and get £500+m in day 1 sales and then sell DLC and Micro transactions to keep the profits rising on each game. I bet games like Infinite Warfare was a LOT more profitable than Modern Warfare 2 despite selling a lot less....

The second we as gamers refuse to buy these extras, they will disappear almost as quickly as they became the norm. Just look at how much Micro-transaction profit was made by Activision!! EA and others will see this and follow suit but like you say, it can't go on so rather than gaming collapsing, I see 'new' practices coming in to try and keep profits high. If that means making more games and grabbing whatever profits are going, they will do that but whilst they can do very little, there is no incentive to change.

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BAMozzy

@Tasuki I never felt the collapse in the UK myself. I started gaming in the 70's with Pong and an Atari as well as handheld/table top single games - like Game and Watch series, Astro Wars, Pac-Man etc. By the early 80's, my gaming moved more to home computers with the BBC Model B (my father had this but I was still able to game on it), my Vic 20, and there was Sinclair ZX80/81 too and whilst I wasn't 'earning' money, I could save my pocket money or any money I got from Birthdays etc and buy some cheap games or type out code from a book/magazine to play a new game. I believe the 'crash' was 1983 but by then I was gaming on a ZX Spectrum and then an Amstrad CPC464 (an alternative to the Commodore 64) soon after which I bought myself from my paper-round money and had more 'new' games a week than I could afford to buy. My local games shop was always stocked with games - new games from Codemasters, Ocean, EA, Amsoft, US Gold, Activision etc etc and that was from 1984-ish

I cannot remember a time when 'gaming' wasn't popular. If I wasn't playing on my own Computer, I was around a friends house playing on theirs. I had friends with computers so I could play on a C64, Dragon 32 etc and some had young 'brothers' with the consoles. In 1983, it wasn't 'cool' for people my age to play on 'kids' toys which consoles were seen as. The 'home computer' was seen as the better gaming device for people my age as it was also more versatile, more 'adult' - although we still only used them for gaming. It wasn't until the N64 and Playstation that 'consoles' would be seen as not just for 'kids' consoles - although the N64 less so than the Playstation but it still had 'teen/adult' games. I was 23 when the PS1 launched and quite a few still thought it 'odd' that I had a console to game on at my age...

Anyway, point is, the 'crash' really didn't affect us (or at least me) in the UK

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Tasuki

@BAMozzy Yeah that's what I have always heard that consoles in Europe took a back seat to P.C.s which explains why the NES or Famicom can't remember which one it was called didn't do to well in Europe which also would cause the video game crash not to be too big in Europe, I just wasn't sure.

Even here in NA in the late 80's early 90's PCS and consoles were looked at differently. Video Game consoles such as NES, or Genesis and even ones later on were looked on as toys or systems used for gaming and fun. PCS on the other hand were looked on as machines used for business or educational purposes. I mean yeah I remember playing games on a PC in school like Oregon Trail, Carmen San Diego, and Odell Lake to name a few which were fun but also were way more educational then say Super Mario Bros or Sonic. I don't even remember playing a non educational game on a PC untill years later when I was in high school and my friend showed me Doom.

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BAMozzy

@Tasuki Never heard of the Famicom but we had the Nes and Sega too...

The first time I played Donkey Kong - the original Donkey Kong - was on a BBC Model B computer - along with games like Defender, frogger, Asteroids etc and some fruit machine, chess, draughts and text based games.

Games like Choplifter, Manic Miner, Jet Set Willy, Sabre Wulf, Jet Pac, Knight Lore, Dizzy etc as well as well as all the Arcade games like 1942, Operation Wolf, Space Harrier, Out Run etc all came to our computers - maybe a few years after they appeared in the Arcade. At the time, the only place to get more 'adult' games was on computers, the games like Vixen, Game Over 2, Barbarian, Elite, Sam Fox (page 3 model) Strip Poker, the Leisure suit Larry games, speedball and games based on 'adult' films like Cobra, Robocop etc. It was seen as more violent, more controversial, more 'grown-up'. Barbarian for example was banned in Germany because it featured decapitation and like Vixen and Game Over 2, had box art featuring scantily clad women on the cover. For a lot of my age group, these were far more appealing than the games on consoles at that time although we did have Gameboys to play Mario, Tetris etc whilst waiting for the school bus and filling time between lessons. By the time Sonic was born, I was nearly 20 and like I said, it wasn't really the done thing for 'adults' to play on kids toys. A few friends had younger brothers/sisters with Sega/Nintendo consoles so we did get to play - often in a drunken state....

Like I said though, from my perspective the 80's just went from strength to strength. I only heard about the NA crash years later, by which time it had recovered. When I moved about 5-6yrs ago, I cleared out the attic of all my Vic20 and Amstrad CPC games - that equated to 4+ boxes (boxes about the size of a Microwave) full of games - most were standard 'cassette' boxes although I did have 1 box with bigger cases. This was just my '80's' gaming history...

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Rudy_Manchego

@BAMozzy "If there comes a time when these methods don't work anymore because we as gamers refuse to buy into that practice, these companies will be forced to find other ways and if that means having to invest in 'new' games, making 'arcade/budget' type games for example, then they will do that."

Exactly, that is called a downturn in the market and it depends on how quickly publishers could react to any such reduction in their profits. A business can fail while making a lot of revenue.

The undeniable fact is that to maintain profit margins, publishers need revenue streams other than just selling base games to cover costs. Any shock to those revenue streams could lead to a sudden collapse in their profitability which could always see major publishers close up shop.

What are your thoughts on the ageing gaming population - the average age now being mid-30's for most games as opposed to being teens and young adults as it was in the 90's? Do you think this might have an impact? Interested to know your thoughts.

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Tasuki

@BAMozzy Right. I know now that there were many games on PC's back in the 80's, stuff like Wolfenstein. I think it was just the NA marketing of PCs like I said as more business and educational machines. Then again that very well could have been because of the crash as companies were afraid to use the words video games for that type of entertainment which I am sure you know is why the NES was called that.

As a kid though when I would ask for a PC I was always told by my parents that a PC is not for kids. Even my best friend in grade school whose parents had an Amiga and a few other PCS that I didn't know the names of forbidden us to play those machines but let us play the NES, SNES, Genesis or countless other consoles, except for the Neo Geo that they owned.

Sadly I only got into PC gaming in the early 2000's and even then it's only limited to simulation and MMOs.

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BAMozzy

@Rudy_Manchego Chances are that if these practices 'suddenly' stopped, the companies like EA, Activision etc would still survive, still react quickly enough but instead of getting £400m in profits (around £133m a month), they may find their quarterly profits 'halved'. The most likely hit will come more from the 'micro-transaction' profits as these are cosmetics and don't really have an impact on game-play in the first instance. If we hit a 'financial' crisis, the first things to go would be those things that don't matter so much. People would still by the game and still make a profit for the company but all those 'free' profit (money for doing virtually nothing) would be affected.

Rarely do you get a sudden, global reaction so whilst the majority in NA for example boycott micro-transactions or refuse to buy a game, chances are that some in NA would still buy as well as Europe and the rest of the world. It would be a more 'gradual' downturn and generally I doubt it would affect 'every' game and ALL companies. For example if there was a reaction to micro-transactions in CoD, maybe SW:BF2 would be affected too but both of these would still sell enough copies to be profitable, Activision/Bungie may well find a way around the 'eververse' trading so that by CoD 2018, there was something different in place. I know that chances are the likes of EA and Activision wouldn't be able to turn games around quickly and get them on the market but they may opt to bring out some remasters that are relatively cheap and quick to get out and likely to make 'small' profit but profit none the less.

As for 'ageing' gaming population, I don't see myself giving up anytime soon. My kids game too and as this site proves, there are generations still jumping on board. The average age can be calculated in various ways of course. Is that the average based on 'numbers' of gamers in their 30's or is the fact we have gamers now in their 40's, 50's and beyond pushing the average age up. 20yrs ago, the average was 'younger' because people in their 40's+ was very rare. You have mean, mode and median averages and 30's could just be the 'mid-point'. All those teen - twenties are offset by the 40+ gamers so average is 30 something but doesn't mean that the younger generation are not 'gaming' as much anymore - just that more and more 'older' gamers exist than they did 20yrs ago.

Consoles these days are not 'kids' toys in the same way they were. They are now a major part of most peoples Audio Visual set-up - alongside the STB and Surround Sound system - effectively replacing the VHS/DVD player too. Kids may have their own in the bedroom in a lot of families but some have just the one that belongs to their parents and maybe have their own Profile and games to play. Its not something you would buy a '5-6yr old' - not like the 80's consoles.

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themcnoisy

@Sinton yup this guy has it.

Go and buy the atari collection, it will last you 2 hours tops. People were paying £20 a cartridge. Insanity. The games were mostly terrible. Even the best games Adventure, Space Invaders and Tank get boring half an hour in. I'm not surprised people ditched buying games.

Its a bit different now, one game can last you a month, if not more.

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Dichotomy

While I don't think the iterations of consoles are going to have much effect on any sort of crash that could happen (even if I do not particularly like the direction these current updates imply for the future of console gaming), I do think there are a lot of problems with the gaming industry as a whole that could lead to problems in the future.

The main problem is a matter of business, yes companies need to make money to survive, but the industry has reached a point where squeezing every last penny out of a game is prioritised over customer satisfaction. Things like pre-order bonuses, pre-order season passes (with bonuses for doing so), microtransactions in full priced games, day one DLC and day one patches are all culprits in damaging the experience for players just to make more money to impress shareholders who have zero interest in the hobby.

While most are just accepting of anything thrown at them in order to play the latest sequel, I do feel there are tangibly more people who are making a stand against this kind of marketing than when I first started on about it a decade or more ago. It feels like a tipping point may be reached soon when it is realised more people are not buying games based on these business decisions than they are making by using them - I certainly spend far less on gaming than I did even five years ago and may well just finish my console gaming journey when my PS4 becomes obsolete as I am that disillusioned with the direction my hobby has taken.

So, to answer the question, I think a crash could happen if the current trend of milking gamers continues. On systems though, I doubt it as there are still, technically, only three console systems and given two of them are effectively PCs in a box now there isn't much of an additional cost to develop between systems.

Dichotomy

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