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Another Video Game Industry Crash?

Last posted Aug 31, 2013 at 03:11PM EDT. Added Aug 30, 2013 at 11:13PM EDT
13 posts from 10 users

This topic has been bugging me for quite a bit, but after EA announced that they would be laying off another 300 of it’s employees, I think this may be a good thing to discuss.


For those of you who don’t remember or are not old enough to remember, back in 1983 the American Video Game Industry outright crashed, total industry value dropping 97% over the course of two years. Nintendo of course revitalized the industry 5 years later when the original NES became a hit on the market.


A few things that caused the crash included:

~An over abundance of Consoles on the market. At least 12-14 of them depending on clones.
~Atari had nearly reached Market Satruation, and new consoles had been slated for release the next year.
~High Profile Failures, and rehashed sequels.
~And an American Dollar Value Drop.


In recent years we have seen several similar scenarios, such as:

~An over-abundance of consoles on the market. Last generation we had 5 (Wii, Ds, PS3, PSP, Xbox 360) + 2 if you count Steam/Pc as a console-like service and if you consider Android/Iphone games it’s own group. In the coming years we will have; Wii U, 3DS, PS4, Vita, Xbox 1, Ouya, Pc/Steam, Iphone/Android, and the rumored upcoming “Steam Box”, leaving us at 9, 10 depending on how long Sony supports the PS3 for. The market is getting very crowded. A counter argument to this is the fact multi-plats have become far more common, but how does that balance out with Hardware Sales in general? The hardware manufactures won’t make money if there is too many choices to make.

~We have reached Market Saturation and are moving into another Console Generation. Which on the TV Hardware side has either had poor sales (Wii U) or poor press (Xbox 1), and with the Vita seemingly getting ready to take the trip across the river of Acheron. The 3DS seems to be the main exception to this, as they have sold 30 million copies and haven’t even released a Pokémon Game yet.

~High Profile Failures and Rehashed Sequels. With so many big companies playing it safe, slowly having all of their IP’s degenerate into sequel rot, people are outright getting tired of this strategy and have stopped buying sequels. Even Satoru Iwata admitted that was to be something that Nintendo have to change to avert a total disaster on their end.

This is also highlighted by the fact that too much money is getting poured into games to ever possibly make a profit. EA has recently said they wanted to milk an extra $80 in DLC off the consumer, and are no longer putting up any not-online games on the market to once again help promote their online market.

~I know there are better experts on the site, but this seems to be the only point that hasn’t repeated itself. But if it does, the soup of Disaster will have been made again.


So what do you think? Will this happen or will the industry avert this course in time? If we do face another video game crash within the next year or two, what do you think will happen? Which companies do you think will live though it? And which companies are going to get hit the hardest?

Last edited Aug 30, 2013 at 11:41PM EDT
Aug 30, 2013 at 11:13PM EDT
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I’m gonna say this now.
Nintendo is gonna survive the crash with no problems.
Nintendo’s body is ready for it.

Aug 30, 2013 at 11:21PM EDT
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I think the games industry is facing the same problem the movie industry is facing; too many blockbusters so to speak are being released and they all cost way too much to make. Hopefully we don’t get to the point where games will have to make a billion to break like with movies. In terms of developers, I think some Japanese developers would be hurt really bad such as Capcom and Square Enix, as I find they sometimes expect too much in terms of sales and a lot of their attempts to appeal to the west have not worked out so well.

Aug 30, 2013 at 11:53PM EDT
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If the industry does crash, here’s how I imagine it will all go down:

First, the “PC gaming master race” will become a reality and we’re going to be hearing it from them for years to come. The consoles will probably die and everyone will have to adjust to the new paradigm.

What used to be “XBOX” will become a piece of software that lets you manage all of your houses entertainment from your PC, and might have something to do with games, might just be on its own, depending on if Xbox’s game devs survive the crash and are still developing games, in which case focus will shift to PC and tablet games. Microsoft’s core hardware and software products will probably start to have greater effort put into making them gaming capable/friendly. Kinect will probably still exist in some form.

Nintendo’s knack for creating a myriad of interesting (or sometimes just weird) gaming hardware peripherals will make their transition less painful than one might expect, as they may just switch right to developing games and peripherals for PC gaming. If they open their peripherals so as to be programmable for whatever you’d like to use it for, it would add a host of possibilities for indie and 3rd party game development and hobbyists, which would in turn give more everyday consumers a reason to purchase their hardware. It would probably come second though, to the development of their portable consoles. Despite how much bigger mobile and tablet gaming has gotten recently, I just don’t see it becoming big enough that it would come close to deposing portable consoles outright, at least if my personal experiences are anything to go by. The demand for a portable device whose sole important function is gaming (save the precious phone/tablet computer battery!) is just too high.

Sony’s game division would be hit hard, as there would no longer be enough demand for their Playstation consoles to merit continued development. They would have to shift their entire focus onto game development; and portable consoles, assuming they find enough success with VITA or perhaps its successor, to merit continued development of those as well. To remain competitive with Nintendo in the peripherals battle, they may create one or more successors to the Playstation Move, and likewise make them open for use in whatever you’d like in addition to some of their first party games. If they stop development of portable consoles, then they’ll likely develop games for mobile and tablet devices, setting up a fiercer competition for Nintendo’s portable consoles.

Third party developers will have an easy time of things, as many of them will have already been developing ports of their games for PC anyway. No consoles though would mean that every game developed would have to take into account the fact that machine specs will vary from consumer to consumer, and so must accommodate accordingly. All kinds of newly designed PC controller peripherals will be coming out in droves, until the dust from the crash settles and natural selection eliminates a vast swath of them.

EA SHALL NOT SURVIVE! thunderclap……unless their sports games allow them to hang on by the skin of their teeth. Their demise is also just sort of wishful thinking on my part…

Aug 31, 2013 at 02:57AM EDT
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If there’s a crash:

>Sony Corporation, already saddled with debt (they sold their North American headquarter building to free up saome cash) and a lethargic stock price could spin off their entertainment divisions (Sony Pictures and Sony Computer).

>Microsoft, stumbling around in the dark while Apple, Google, and open source software (I’m looking at you, Open/Libre Office) all beat it to death and it hemorrhages money on failed products like Windows 8 and Surface, cuts/sells Xbox to try and reorganize.

>Nintendo is forced to actually invest in new IPs when Pokemon, Mario, and Zelda fail to deliver. They also admit defeat and jump into the mobile market in a quick cash grab to stay afloat.

>Most handheld consoles are discontinued as smartphones and tablets pull a Nanking on them.

>Electronic Arts implodes and starts lopping off septic limbs (game studios and IPs) in an effort to avoid Chap 7.

>Activision-Blizzard demerges with Blizzard’s reliance on WoW being it’s undoing as subscriptions dry up. Activision goes under as it’s lack of IPs and overuse of licensed games kills it when licensers realize video games are no longer viable for a quick buck.

>Gabe Newell goes to Golden Corral and binges with other Valve employees as Steam continues to print money like it’s the Fed. Much like Gaben at the all you can eat buffet, Valve gobbles up the IPs that its competitors are selling and strengthens its hold. It’s insistence on the Steam Box, however, proves a money pit.

>Bethsada Softworks is relatively unaffected due to primary using PCs, which are unscathed in the crash due to their multitasking abilities.

>Tablet/Smartphone gaming continues to carve out its niche, but the limitations of small screens, processing power, and lack of solid controllers means it never takes over.

>Mojang grows to become one of the new major video game companies, competing with Valve and Bethsada as it gobbles up smaller developers to build a portfolio.

>Independent developers are the real winners and, using Steam and other on-line platforms, are able to greatly expand. Sturgeon’s Law and small advertising budgets mean that word of mouth becomes vital to the indies.

>The RIAA and MPAA laugh manically as DRM fully consumes what’s left of the industry. The MPAA later cannibalizes the RIAA as the music industry implodes as well, before committing Sudoku on an ipad when Bollywood comes a knocking.

>The industry crash slams the NASDAQ and triggers a recession that drags down the whole economy. Jittery investors and analysts look at computer manufacturers (NVIDIA, Intel, Apple, etc) and wonder: who with fall next? Self Fulfilling Prophecy/domino effects ensue.

>I continue to not give a shit and read fanfics.

Last edited Aug 31, 2013 at 05:59AM EDT
Aug 31, 2013 at 05:53AM EDT
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How am I the first to say this?

>Valve will be hailed as the saviour of vidya gaems when they release HL3 and bring about a new world order as a result. Steam proceeds to take most other developers under their increasingly large and heavy wing. Nintendo would survive on their various franchises. EA would release their slaves and then we can get better games, and maybe even new games from long-lost series. (New Populous game,anyone?)

Aug 31, 2013 at 06:41AM EDT
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You’ve got a point, I have noticed too that there is an abundance of consoles and therefore a lot of competition too but to be honest there’s also a ton of games coming out for nearly all of them really.

But what more can a I say, I just think it’s getting to a point that’s similar, after all the gaming industry is massive now.

Aug 31, 2013 at 07:51AM EDT
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Natsuru Springfield wrote:

@Ann:

Without a doubt, I believe Nintendo and Sony will get past the crash with a good deal of Turbulence. Nintendo outlasting Sony if both go down.

Though things seem a bit bleak for Xbox as Microsoft Investors want to fire the CEO and also potentially Shut Down or Sell the Xbox Division for not having made any money yet.

They’re not firing Ballmer, he’s quitting. In fact, that whole article is full of crap.

Anyway, contrary to popular belief, Microsoft isn’t some tiny company that never does anything for people, because after all, they have about an 85% or so share in the OS market duopoly.

If the Xbox platform goes under, then Microsoft still survives, albeit with damage.

If the PlayStation goes under, then Sony is in huge trouble.

If one of the Nintendoes goes under, then Nintendo is just about fucked.

However, the likelihood of failure is actually an inverse of this. Nintendo has the most to lose, but is the least likely to lose.

Aug 31, 2013 at 11:05AM EDT
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Also….if Microsoft goes under…would that mean?

Aug 31, 2013 at 11:10AM EDT
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@Supreme Lurking Monitor:

For the most part I agree with you there. With the exception of the 3rd Party Being Untouched part. There are quite a few companies that are in trouble right now anyways. Again with the EA example, they are laying off HUNDREDS of employees just so they can say “Yeah, our products are making a profit.” though their teeth. Square Enix is also trying to jump ship and get into the mobile gaming market, but are having trouble with that too.

@Valve Remarks:

True. Valve is currently running a monopoly on the computer distribution market. This is why Microsoft wanted to emulate them so badly

@Katie:

As far as I am aware, the shareholders are trying to put up the “You can’t quit you are fired!” deal. Regardless, at least Ballmer is going to maintain his pride and isn’t going to jump ship to Zynga.

I also agree with that list. Xbox hasn’t even broke even yet since they started the brand, thus first up on the chopping block. But Microsoft will live because Windows. However Sony has been really leaning on the brand lately, and would be taking quite a bit of hurt. And Nintendo relies exclusively on that market, but taking them down would require them to spend down their 30 years worth of nothing but profits.

@Battletoads:

>Industry Crashes
>Xbox fails
>Nintendo makes Battletoads game
>Game industry is revitalized near instantly

Welp. Guess we are saved.

Aug 31, 2013 at 02:26PM EDT
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Natsuru wrote:

>Industry Crashes
>Xbox fails
>Nintendo makes Battletoads game
>Game industry is revitalized near instantly

Aug 31, 2013 at 03:11PM EDT
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Skeletor-sm

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