The Game Crash of 2013?
- Thread starter Shamus Young
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He's got a point. Even if all the big publishers crash, there will even still be AAA games being made. Star Citizen just passed $15 million on kickstarter. This was a game that was only being made by a handful of people, but because they have such an intimate relationship with backers they can create the ultimate space sim game that people always wanted, but publishers wouldn't give them. The industry may be changing, but it definitely isn't going away this time.
That is a good article. The parallels are always funny despite the situation being almost complete different. There was no competition in the space. No one could self publish. The internet didn't exist. Even if Triple A were to die tomorrow, people would still be making games. It was different back then. No one could make one on their own. The tech wasn't available to the open public, the distribution wasn't there... so many things were different but everyone is afraid of a crash. It's partly because an element of fear is actually how it's completely irrational. Now, people aren't rational, this is proven scientifically, but fear is even more irrational in nature than people normally are. Great article Shamus! I didn't realize you were such a crotchety old man!
Man, all these people talking about video game crashes are just like the people who keep saying the end of the world is going to happen. It's probably not going to happen anyways.
The crash occurred because of what was basically a monopoly where the owners became too greedy for the structure to sustain itself.
We are nowhere near that, in fact we are on the cusp of a golden age not seen since the late 80s/early 90s. Where individuals and small teams of enthusiasts can make games that can compete against corporate produced content and do just fine. Even I'm making a game! (link http://nodj.host-ed.me/psylord_tactics/psylord%20tactics%20poc%202.html still in early alpha, play it, PM me w/ feedback PLEASE!)
The market is massive compared to what it used to be. Atari 2600 sold ~30 million units over its lifetime. We are now at >60%! startphone penetration. That means that 3 out of every 5 people in the WHOLE COUNTRY carry a machine in their pocket capable of playing games. Razer and Nvidia just released game systems. We even have indy HARDWARE [link href="http://openpandora.org/"]Pandora[/link] [link href="http://www.ouya.tv/"]Ouya[/link] and the transformational [link href="http://www.oculusvr.com/"]Occulus Rift[/link]
As for distribution options the retail stranglehold is done. There are dozens of options for PC games including buying directly from the developers, something unheard of even 15 years ago. Even for consoles no longer is the buyer beholden to gamestop.
We are living in a gotdamn gaming utopia. We have options we couldn't begin to dream of in our wildest cyberpunk fantasies.
And its only going to get BETTER!
We are nowhere near that, in fact we are on the cusp of a golden age not seen since the late 80s/early 90s. Where individuals and small teams of enthusiasts can make games that can compete against corporate produced content and do just fine. Even I'm making a game! (link http://nodj.host-ed.me/psylord_tactics/psylord%20tactics%20poc%202.html still in early alpha, play it, PM me w/ feedback PLEASE!)
The market is massive compared to what it used to be. Atari 2600 sold ~30 million units over its lifetime. We are now at >60%! startphone penetration. That means that 3 out of every 5 people in the WHOLE COUNTRY carry a machine in their pocket capable of playing games. Razer and Nvidia just released game systems. We even have indy HARDWARE [link href="http://openpandora.org/"]Pandora[/link] [link href="http://www.ouya.tv/"]Ouya[/link] and the transformational [link href="http://www.oculusvr.com/"]Occulus Rift[/link]
As for distribution options the retail stranglehold is done. There are dozens of options for PC games including buying directly from the developers, something unheard of even 15 years ago. Even for consoles no longer is the buyer beholden to gamestop.
We are living in a gotdamn gaming utopia. We have options we couldn't begin to dream of in our wildest cyberpunk fantasies.
And its only going to get BETTER!
It really is true about the limits of the earliest console. I've always thought that video games got an early reputation of being a "child's toy" because aside from a few exceptions & games (ex: Tetris) children were the only ones that could be entertained for extended periods of time. If I was 28 when the NES came out instead of 8 I doubt I would have spent much time with it. However I am glad that I the perfect age to get a NES/SMS when they came out and got to experience the consoles growing as I did.
Look, please stop abusing inflation CPI. It does not measure disposable income which happens to be where Video Games and entertainment fall into. It measures the cost of living. AKA Food, Housing, Transportation, and Energy costs.
To be honest in 83 the median citizen had more disposable income then they do now. They have less now because Inflation has grown faster than wages consistently since the 70's. Between the cost of living, and flat/falling wages we have less money to spend on disposable income today. In 2001 the 50th percentile of the country made about 54k per year. To keep pace with inflation by 2011 the 50th percentile would have to make about 68K per year, but now we make 50. Wages haven't grown or moved for the middle or lower class for a long, long time. A 40$ game in 83 would be more like a 5$, or less, game now. That is because disposable income is deflating not inflating. Only the cost of Living is inflating.
Inflation is a far more complicated issue. Stop using it, or educate yourself better.
To be honest in 83 the median citizen had more disposable income then they do now. They have less now because Inflation has grown faster than wages consistently since the 70's. Between the cost of living, and flat/falling wages we have less money to spend on disposable income today. In 2001 the 50th percentile of the country made about 54k per year. To keep pace with inflation by 2011 the 50th percentile would have to make about 68K per year, but now we make 50. Wages haven't grown or moved for the middle or lower class for a long, long time. A 40$ game in 83 would be more like a 5$, or less, game now. That is because disposable income is deflating not inflating. Only the cost of Living is inflating.
Inflation is a far more complicated issue. Stop using it, or educate yourself better.
The problem as I see it is that I'm not buying much of the new games. Not because I don't have time or money or anything like that. It is because the games being put out no longer catch my interest. I no longer look forward to the next shooter or spend hours a day playing COD multiplayer. I look forward to so few games my budget for games is safely capped at about 200 bucks. I used to spend 5 times that in a given year. Its even come down to I seem to only buy from the same studios who make the games I want to play still. I will buy Rome 2, GTA 5 and Wolfenstein probably week 1 if not day 1. Everything else is something I'm passing on or might buy when its 5 bucks. I just do not understand why the Wii U doesn't have strategy titles on it, or why I have to see the same boring FPS games every year. I understand companies want to make money but your not gonna make it by stagnating.
A neat exploration about the crash in the '80s. I had a moment in my youth similar to the one described here where I just didn't want anything that was available, no matter how cheap it had become. (I'm getting there again, I'm afraid, though games aren't near so cheap.) I didn't realize what had happened in the industry, I just thought I'd outgrown video games. Oh, how wrong I was.
Also, that was a weirdly brilliant example of how little memory the Atari had.
One bone of contention, though. And not with anything the author himself argues, but with something gaming culture believes. E.T. was good! I liked that game! I'm not saying that from a place of hipsterlike irony either. When that game was new, I had it, I played it, and I liked it. Getting E.T. to the ship made me feel like I'd accomplished something. Sure, I was only like 8 or 9, but come on. I mean, Dr. Jekyll & Mr. Hyde was a worse game than E.T. and it was a whole console generation later.
--Morology!
Also, that was a weirdly brilliant example of how little memory the Atari had.
One bone of contention, though. And not with anything the author himself argues, but with something gaming culture believes. E.T. was good! I liked that game! I'm not saying that from a place of hipsterlike irony either. When that game was new, I had it, I played it, and I liked it. Getting E.T. to the ship made me feel like I'd accomplished something. Sure, I was only like 8 or 9, but come on. I mean, Dr. Jekyll & Mr. Hyde was a worse game than E.T. and it was a whole console generation later.
--Morology!
We're definitely headed for a crash, just not like the one in 83. As mentioned, that one nearly killed the industry. The crash we're headed towards is much more tame. This one is just going to kill off some big names who are spending TONS of money on games, needing to sell unrealistic numbers to make back what was sold, and are antagonistic towards their fans.
But 1-3 large companies going away or getting much smaller won't be a real crash, it is just going to open up the game space for others to step up and/or for more smaller games to get more attention.
We're not headed towards a crash, just a shift. And it's going to be a fun one.
But 1-3 large companies going away or getting much smaller won't be a real crash, it is just going to open up the game space for others to step up and/or for more smaller games to get more attention.
We're not headed towards a crash, just a shift. And it's going to be a fun one.
Shamus, unfortunately I find that most people who point to the crash of '83 actually do so as a populist warning than any sort of familiarity with it, that Wikipedia link included. First, the crash started in 1982 and not in 1983. Starting with Atari's adjusted earnings report on December 7, 1982 that caused a backlash in the industry illustrated by a massive stock drop across the rest of December for all the companies in the industry followed by layoffs in early '83. With Atari as 80% of the consumer industry at the time, when it has problems, everyone else is going to as well - especially when Wall Street analysts had been bucking for it to happen and complaining about the volatility of the market for some time.
The problems that caused it were already in full swing by the Summer of '82, long before any claimed games like E.T., and purely had to do with the lack of any logistics or inventory control, all in an effort to keep up with Warner's profit demands to bolster it's own stock. In 1981, Atari couldn't keep up with manufacturing demands so distributors started doubling their orders in an effort to get enough product for the year. This was further compounded by the fact that in October 1981 during a meeting with it?s distributors, Atari had asked them to commit to ordering product for almost all of 1982. Unfortunately, manufacturing caught up by '82 and distributors were left with mass amounts of overstock due to the competitive climate (by Summer '82 there were six consoles on the market, with three more announced to enter that year along with an exploding third party software and cottage industry). As Geoffrey Wheeler, editorial director of Game Merchandising magazine would tell in the New York Times on December 9th, ?In June 1982, there were about 100 different game cartridges on the market; now there are about 400, and more every week. We?ll be glutted by next year.? Richard Simon, an analyst with Goldman, Sachs & Co. would also state in that same New York Times interview, ?1981 was a wonderful window to enter the business; you could build up a power base immediately; Yet if those same companies tried to enter the market in 1982, with the same talents, they would find it much more difficult. It?s a tough business now.?.
So by the Summer of '82 you now had order cancellations and returned stock piling up in warehouses and no strong communication with manufacturing, because Atari had never dealt with the possibility of this scale of returns before. Losses from warehouse overstock were already at $65 million by the beginning of August and only getting worse. By Fall, Atari started playing games with it's reporting to cover the mounting losses, including adding extra time to the quarter, but it finally caught up by the earnings report that December (and the situation is also what lead to Ray Kassar getting in trouble when he had sold some stock and was accused of insider trading).
Additionally, that's not correct regarding E.T. That was Warner who forced that situation, not Atari. And specifically Warner chairman Steve Ross, who was trying to woo over Spielberg to Warner, and set up the deal with him over a weekend party at his house in the Hamptons and then sprung it on Atari. It was that deal and Spielberg's demands in it that lead to the accelerated timeline and the need to manufacture so many just to break even because of his guaranteed royalties.
The results of the crash that started in '82 were spread out over a one year and seven month time period, coming to a conclusion in July '84 when Steve Ross decided on his own to split up Atari Inc, selling it's Consumer Division to Jack Tramiel to start up Atari Corporation. During that time, just about every other major competitor left the Consumer market. Likewise, 90% of the third party or cottage industry went bankrupt, with a small percentage (such as Activision) jumping over to the Computer software industry (and the personal computer industry itself had just come out of it's own major shakeout thanks to Tramiel's Commodore).
The problems that caused it were already in full swing by the Summer of '82, long before any claimed games like E.T., and purely had to do with the lack of any logistics or inventory control, all in an effort to keep up with Warner's profit demands to bolster it's own stock. In 1981, Atari couldn't keep up with manufacturing demands so distributors started doubling their orders in an effort to get enough product for the year. This was further compounded by the fact that in October 1981 during a meeting with it?s distributors, Atari had asked them to commit to ordering product for almost all of 1982. Unfortunately, manufacturing caught up by '82 and distributors were left with mass amounts of overstock due to the competitive climate (by Summer '82 there were six consoles on the market, with three more announced to enter that year along with an exploding third party software and cottage industry). As Geoffrey Wheeler, editorial director of Game Merchandising magazine would tell in the New York Times on December 9th, ?In June 1982, there were about 100 different game cartridges on the market; now there are about 400, and more every week. We?ll be glutted by next year.? Richard Simon, an analyst with Goldman, Sachs & Co. would also state in that same New York Times interview, ?1981 was a wonderful window to enter the business; you could build up a power base immediately; Yet if those same companies tried to enter the market in 1982, with the same talents, they would find it much more difficult. It?s a tough business now.?.
So by the Summer of '82 you now had order cancellations and returned stock piling up in warehouses and no strong communication with manufacturing, because Atari had never dealt with the possibility of this scale of returns before. Losses from warehouse overstock were already at $65 million by the beginning of August and only getting worse. By Fall, Atari started playing games with it's reporting to cover the mounting losses, including adding extra time to the quarter, but it finally caught up by the earnings report that December (and the situation is also what lead to Ray Kassar getting in trouble when he had sold some stock and was accused of insider trading).
Additionally, that's not correct regarding E.T. That was Warner who forced that situation, not Atari. And specifically Warner chairman Steve Ross, who was trying to woo over Spielberg to Warner, and set up the deal with him over a weekend party at his house in the Hamptons and then sprung it on Atari. It was that deal and Spielberg's demands in it that lead to the accelerated timeline and the need to manufacture so many just to break even because of his guaranteed royalties.
The results of the crash that started in '82 were spread out over a one year and seven month time period, coming to a conclusion in July '84 when Steve Ross decided on his own to split up Atari Inc, selling it's Consumer Division to Jack Tramiel to start up Atari Corporation. During that time, just about every other major competitor left the Consumer market. Likewise, 90% of the third party or cottage industry went bankrupt, with a small percentage (such as Activision) jumping over to the Computer software industry (and the personal computer industry itself had just come out of it's own major shakeout thanks to Tramiel's Commodore).
I could be way off on this, but as far as I'm aware inflation is the decrease in value of currency, where as in 1983 $40 has the spending power of almost $100 today. How are they misusing it? I understand there are many more factors such as median income but it seems completely appropriate in the context.medv4380 said:Look, please stop abusing inflation CPI. It does not measure disposable income which happens to be where Video Games and entertainment fall into. It measures the cost of living. AKA Food, Housing, Transportation, and Energy costs.
To be honest in 83 the median citizen had more disposable income then they do now. They have less now because Inflation has grown faster than wages consistently since the 70's. Between the cost of living, and flat/falling wages we have less money to spend on disposable income today. In 2001 the 50th percentile of the country made about 54k per year. To keep pace with inflation by 2011 the 50th percentile would have to make about 68K per year, but now we make 50. Wages haven't grown or moved for the middle or lower class for a long, long time. A 40$ game in 83 would be more like a 5$, or less, game now. That is because disposable income is deflating not inflating. Only the cost of Living is inflating.
Inflation is a far more complicated issue. Stop using it, or educate yourself better.
Wow, never thought anything like that crash might ever happen anyways. But interesting to know.
I think even if the big publishers would topple, there'd be enough indie etc. to grab their market share.
I think even if the big publishers would topple, there'd be enough indie etc. to grab their market share.
It's a common miss conception. CPI, or the Consumer Price Index, is what is referred to as Inflation. That index only measures the cost of living. Currently, it's being debated as to whether or not Chicken should be included in the calculation instead of Beef. Discretionary goods are never, and will never, be apart of that calculation.balfore said:
Edit:
Here's another real world example.
The Music Industry unit sales have increased every year for decades. A decade or so ago they made about 38 Billion Dollars. If you applied the inflation values into it you'd think they should be making 50 Billion. However, people can't afford 20 Dollar CD's any more, and even though sales are up they only made 16.5 Billion. Prices have had to fall a lot to keep people buying. That's because discretionary prices are deflating. The inflation of the cost of living coupled with flat wages has eaten away at the consumers ability to pay high prices for luxury goods.
http://www.nytimes.com/2013/02/27/technology/music-industry-records-first-revenue-increase-since-1999.html
Born in 1983... this makes me feel less old 
but seriously intresting comparison... 30 years on have we leant anything? I think so I think indy is there to pick up if the main publishers bone themselves over in the coming years. Games will go on and well... anyhow to cut myself short good article cheers as always Mr Young.
but seriously intresting comparison... 30 years on have we leant anything? I think so I think indy is there to pick up if the main publishers bone themselves over in the coming years. Games will go on and well... anyhow to cut myself short good article cheers as always Mr Young.Shamus, you say that the AAA developers currently dominating the console industry could make more money if they understood and cared about their product and their customers. I'm assuming that your reasoning is rooted in sound business principles and not just wishful thinking as a consumer of games. Can you elaborate on how this would work? And if making a good product and being in touch with your audience is such a big deal, why hasn't some indie upstart swooped in and stolen EA's lunch by now?Shamus Young said:
Should we be taking away the conclusion that, yes, EA plus Quality would make more money than EA, but no, Quality alone without being EA has no chance of doing so?
Thirty years is a generational gap. It's more than enough time for an entire class of business experts who never knew the last disaster to convince themselves that they are inherently immune to such stupidity and thus have no need for caution.LordMonty said:Born in 1983... this makes me feel less old
So from what I've gathered, the boat isn't headed towards an ice berg, it's just that the toilets have stopped working.
Not sure if I like that scenario either.
Not sure if I like that scenario either.