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Most (not all) of this article is complete nonsense. I don't have the time or energy to dissect everything he says, but this quote shows the problem with a major part of his argument:

Mario Party 8? Same thing; average review score 62. It’s sold well over a million copies in the U.S. alone. I played it every night with Eli for over a month. It was goofy, and kind of strange, and fun. It was fun together.

He neglects to mention that previous Mario Parties were extremely well reviewed. The problem with this one was that it didn't improve on its predecessors and it didn't make good use of the Wii controls, not that the critics "didn't know how to review it." There's always been room in the mainstream industry for games that are "just fun," without specific goals and motivations, no matter what he says.

As for an industry crash, I don't think we were on the verge of anything so dramatic as that. It's true that game budgets and development times can't keep ballooning the way they have recently, but that's a problem of adapting development and marketing strategies. It's nothing the industry wouldn't come out of just fine after perhaps a few shaky transition years. There are hundreds of millions of game players out there, and as long as they're demanding games, there will be plenty of profit to be made.