5 Reasons the Video Game Industry is about to Crash...

[vivster]

Salnax said:

vivster said:

Just to ask, what would a video game crash entail? I can't imagine people would just stop playing videogames. And if they are playing they are willing to pay for new experiences. I don't think it is possible in this day and age for any (major) entertainment product to "crash". The market is just too huge for that.

A crash would entail a major decline in the revenue of the video game industry as a whole within a short period of time. 1983's crash reduced the size of the American market by over 90% within about two years. A modern crash would not necessarily be so severe, but it is implied that a large, at least double-digit percentage of the entire video gaming industry would be removed from the equation.

People didn't just stop playing video games in 1983. 1983 was a perfect storm. The previous (2nd) console generation was ending; the Atari 2600 was out in 1977 and the Magnavox Odyssey in 1978, so they were each already getting old. The big new console meant to start the 3rd gen of consoles, the Atari 5200, had a poor opening, lacked backwards compatibility and original games, and had a crappy controller. Not to mention it cost a whopping $270, $70 more than the Atari 2600 did at launch. The only other viable contenders on the console market the SG-1000 and the Famicom, were just released in Japan, meaning that they really couldn't be localized very quickly, especially in the days where both companies were small. Throw in some high profile failures (The ET game lost Atari $100 million in an era where the entire industry was only $3 billion in the USA), the lack of reliable gaming media to distinguish between good games and shovelware, and competition from other devices, and people just stopped buying games.

They kept on playing the games they already had. They just stopped buying new titles.

 

Could that happen today? I doubt it, but there are some parallels. The 8th gen consoles have generally had decent launches, but have lacked killer apps to set them apart from older systems as well as backwards compatibility, so they might not be adopted by the mass market quickly. The old consoles are definately declining, especially the former titan that was the Wii. Possible contenders, like the Android consoles, are too small to penetrate a market where you must be this high to ride. The gaming press has been losing credibility as of late, as fewer people trust reviewers. And mobile devices offer another way to waste time for a cheaper price. All that's missing now is a huge failure, and we have similar conditions to 30 years ago.

 

If a crash happened today, it almost certainly would not be as big. Instead of taking out 90% of the American console market in two years, it might take out 50%. That said, maybe the crash is already happening. In 2010, about 19 million consoles were sold in the USA. In 2013, it was 17 million. In 2012, it was 14 million, even with the release of the Wii U. That's a roughly 25% drop in two years. So far in 2013, even after Black Friday, only about 8 or 8.5 million consoles have been sold in 2013. Even if a million are sold a week for the rest of the year, that's down from 2012, despite the new Wii U and the "amazing" PS4 and Xbone launches.

 

By that explanation a crash in the last generation would've been much more likely.

There are a number of things that will prevent a crash:

- the biggest market of games and gamers in history

-a heap of highly anticipated games on all platforms, not only in the coming months but years

- myriad of games in all price categories and numerous funding possibilities

-the (informed) core gamers are a small percentage of the market, so most mishaps of the industry wouldn't even be noticed by the majority of gamers and thus wouldn't prevent them to to continue to consume

For a crash to happen all those things would have to be reversed