Is the AAA Console Games Market Heading for a Crash?

UNHchabo

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MartyGoldberg said:
You're talking about a company that was making about $2 billion in sales, one bad selling game they spent less than $8 mill developing and promoting isn't going to break an entire company and cause a crash - even in a small part.
I can't speak to this situation in particular because I haven't researched it, but this actually happens quite a bit in other industries.

If a company produces a defective product, it can demolish their reputation among consumers, and it's incredibly hard to get back that confidence. Bridgestone tires are one good example, after the recall in the early 2000s:
https://en.wikipedia.org/wiki/Firestone_and_Ford_tire_controversy

I know the company still is around, but in 2000 the stock price dropped dramatically, down to less than half of its pre-recall price.
 

MartyGoldberg

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Callate said:
Atari was run, on a certain level, by people who were kind of crap at their business. Hindsight is always 20-20, and all, but if you think of the cost of letting your most talented creators put a signature on their games versus the cost of having them walk out and form a competitor... Or the basic sense of not creating more copies of a game than you can possibly sell, even if you're wildly optimistic...
There seems to be some more basic myths being repeated here. What was being asked for was more than just a signature on a game, there were other costs involved as well (they felt they should be making more plus there was the issue of bonsues). And both parties were right as far as the credit and pay, the Activision guys wanted their own credit and Ray pointed out that there's a lot more people involved beyond them in getting a game out that it wouldn't be fair to single them out. Compare that to today where everyone from top to bottom involved with a game is usually credited, validating both of their viewpoints.

Likewise, there had been no previous 3rd party companies making games for consoles before, the few programmable consoles that had been released were considered closed and proprietary. While the idea of running off and starting a 3rd party competitor for a platform may seem obvious now, it simply was unheard of in the consumer game industry at the time. That's why Activision was the first.

Finally, they did not produce more games than they had the possibility to sell, that's another ridiculous myth that started somewhere on someone's website. They only produced five million ETs, while by the end of 1982 they had sold in the neighborhood of 11 - 12 million consoles since the launch in '77. Pac-Man was also produced in large quantities because it was becoming the pack in game for the 2600, replacing Combat. So of course you'd need to manufacture based on projections of sales for the console itself beyond separate copies.
 

Aardvaarkman

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Yahtzee Croshaw said:
Is the AAA Console Games Market Heading for a Crash?
Betteridge's law of headlines is an adage that states: "Any headline which ends in a question mark can be answered by the word no."

http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines

I thought Yahtzee was smarter than this.
 

nodlimax

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At this point I pretty much hope for a big crash as well.

I haven't bought any new games in months, because there hasn't been anything interesting released and I don't see anything that great on the horizon. After being disappointed with the last games I bought - one being Arkham Origins (haven't even finished the game yet) - and seeing things like the Watch Dogs graphics controversy as well as companies always lying about their games (freaking marketing BS) I've pretty much given up at this point.

I still love good games. I love games like Crysis (the first one), Master of Orion 2, Airline Tycoon, Half-Life², Civilization, XCOM (I currently even play long war) but with all that is currently happening I don't want to buy new games anymore.

If I want to have the full game I have to preorder. But I don't want to, because games I've preordered in the past have been really really bad (Homefront for example). So if I can't get the full game after release at the same price as people who've preordered it, I won't buy it.

Well I might not be the only one that acts like this. So we could move towards a major crash if people go into the same direction as me. If people burned their fingers enough with bad products they'll lose trust and stop buying the games or at least wait till after release. And as we all know for the big companies the first 4 weeks are the most important for a game release.
 

AJ_Lethal

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Atmos Duality said:
1) AAA must reduce its costs.
(While AAA has attempted this, how they have gone about it thus far has only made the problem worse.)

Commenting on this, I think it's because they want to pull off the same kind of 200 million game with less budget and that's an impossibilty at this point. Excessive ambition is becoming their undoing and gamers are aligned with their mindset, which is a negative feedback cycle: there's not enough people to sustain that.

They gotta go back on developing games with a limited set budget, so they can gain some stability: even if that means a slowing down of tech/marketing progress that would slow the spending rate, which is helpful in the long run.
 

Haru17

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It's idiotic to root for the downfall of the AAA industry, as after the initial excitement we'll have to wander the wastelands with less quality games coming out than this year, which is already relatively low.

Fundamentally there's nothing wrong with the AAA concept; a game that receives a lot of development and marketing effort and, ideally, provides a superior experience or value to the consumer for a $60 premium. It's when DLC dilute the value so much and shatter any remnant of artistic vision left that we start to think of the AAAs as a big bad evil giant.

And the thing is, most of the time pre order bonuses and DLC aren't the problem, they can usually just be ignored when enjoying a good game. You can't ignore even minor flaws when you're not enjoying the game. The problem with aliens colonial marines was how shit it was, not the exclusive pre order content (though the bait and switch involved was a problem).

The same thing goes for publisher dishonesty. Most of the time statements aren't the problem, even if they contain half truths. People have to realize that they aren't talking to us as if we're people, they're releasing a press release or tweeting out marketing material. And all advertisements, or at least most these days, are lies of one form or another. They're just trying to manipulate people to make a profit, when they don't have a good game behind the marketing then it becomes unacceptable and the forums alight.

No one's saying it's great, but there are greater problems in the world; poverty, starvation, war, and intolerance. If you're so concerned then make a contribution in some form to improve things that way. Posting on a forum isn't going to change the actions of a huge corporation, they're just going to do what they do.
 

Aiddon_v1legacy

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A big crash won't happen. However, a small one encompassing certain elements of the industry could happen. The problem with Yahtzee's argument is he thinks gaming is as ubiquitous as film, television, music, or sports. It isn't. Not by a LONG SHOT. Gaming is currently in this weird adolescent phase where it's too old to be considered young but not old enough to be considered experienced. This is compounded by a lot of game companies (particularly those in the West) making bone-headed decisions and wasting money left and right despite profit margins thinning. They just can't seem to manage themselves properly and the exclusive, elitist attitude encouraged by a lot of the industry hasn't seen the industry grow properly thus putting its future into jeopardy. It's a lot like how comics in the 90s crashed due to short-sighted, narrow points of view that drove it into an even more niche thing. Not good for longevity
 

Carnagath

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I don't get all this negativity personally. Just because consoles are shit and the greed of some publishers are making them increasingly anti-consumer, it doesn't mean that the people working for them are not still doing phenomenal work. In the end that's all that matters, good games. And we have seen many of those lately. Definitely more than we were seeing in the "golden" 90's (I speak from experience as a guy who was born in 1982 and has owned a PC since grade school). I can't call an industry "shit" if it has, in very recent memory, provided me with games like Far Cry 3, The Last of Us, Brothers, Papers Please, FTL, Divinity Original Sin, Assassin's Creed 4 (I haven't found a single person yet that did not enjoy it) and many many others. Stop buying shit games, indeed, because there is no need to. There are plenty of great games out there, and plenty of resources that you can use to point you to them.

Also,
concentrating only on the core element of making fun things for people to pass the time with
. Yahtzee. Stop. Please. Why are you acting like an 80 year old person who is absolutely clueless about the medium? Is this really what the basic core of all games is to you? Fun things to pass the time with? Glorified Rubik's Cubes? Have you never played a game that lingered on your mind long after it stopped being a lonely evening's distraction? Do I really need to be saying things like that to someone that identifies as a critic and has been doing this for half a decade? It's fucking depressing, reading things like that. But then I remember your pathetic 2 and a half minute mention of Brothers (it doesn't deserve the term "review") where you said nothing about its unique glimpse into storytelling via mechanical interactivity, and many other examples, but I don't want to turn this into a wall of text. The term "critic", that you award yourself so carelessly, has weight and value. Sometimes, you seem to forget that.
 

Thanatos2k

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medv4380 said:
youji itami said:
medv4380 said:
If Valve went under then everyone would lose there entire steam catalogue it wouldn't be a PC games crash it would end it.
Not completely. Minecraft would still work.

Though I'm sure as an anti lawsuit policy Valve has a big red button they can push to disable all the DRM so the libraries would still work. It would probably be mandated if they had to file bankruptcy since technically they are indebted to every single gamer that uses steam, and not the other way around. The licencing shenanigans hasn't played well in bankruptcy hearings.
A while back, Valve promised that this would occur.

(Notably, EA with Origin has NOT)
 

Callate

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MartyGoldberg said:
There seems to be some more basic myths being repeated here. What was being asked for was more than just a signature on a game, there were other costs involved as well (they felt they should be making more plus there was the issue of bonsues). And both parties were right as far as the credit and pay, the Activision guys wanted their own credit and Ray pointed out that there's a lot more people involved beyond them in getting a game out that it wouldn't be fair to single them out. Compare that to today where everyone from top to bottom involved with a game is usually credited, validating both of their viewpoints.
That there was more than a signature involved, I grant; it was an over-simplification of the issues. But far, far more than today, a video game in the Atari 2600 era was the work of a single person. It was not untypical for Atari 2600 cartridges to hold only four kilobytes of ROM; very tight programming was the biggest concern, programming that was sometimes arcane to make the best use of hardware tricks, and multiple programmers would have gotten in each others' way.

Likewise, there had been no previous 3rd party companies making games for consoles before, the few programmable consoles that had been released were considered closed and proprietary. While the idea of running off and starting a 3rd party competitor for a platform may seem obvious now, it simply was unheard of in the consumer game industry at the time. That's why Activision was the first.
If all they had to lose was their best programmers the unwillingness to negotiate and referring to those programmers as though they were expendable and interchangable was still a stupid move. Note the comment regarding "hindsight".

Finally, they did not produce more games than they had the possibility to sell, that's another ridiculous myth that started somewhere on someone's website. They only produced five million ETs, while by the end of 1982 they had sold in the neighborhood of 11 - 12 million consoles since the launch in '77. Pac-Man was also produced in large quantities because it was becoming the pack in game for the 2600, replacing Combat. So of course you'd need to manufacture based on projections of sales for the console itself beyond separate copies.
Pac-Man was produced in quantities that exceeded the consoles sold at the time, as documented here and here. Pac-Man only became the pack-in title later in production (by one report, in 1983, well after its initial release and at a point when the industry was already considered to be in decline). Even factoring in it's sale as a pack-in, it reportedly sold only 7 million units of 12 million produced.
 

CaitSeith

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Sgt. Sykes said:
This thing doesn't happen. The video game crash was very specific and unique. Was there ever any other such event in history? Where consumers just stop buying stuff with no external reason? I can't recall any. You get market crashes for different reason - market disruption, recession, market bubbles, maybe market saturation in some cases - but consumers just stopping to buy stuff? No that doesn't happen.

Besides today, quality doesn't sell. Demand no longer drives supply. Now, marketing not only sells but also creates the demand by making up the product. And then sells it. And then replaces it. The consumers just keep buying, replacing, upgrading, not thinking if they buy what they need or want.

Also, where would the games go? People still want to play videogames. If someone wants another COD or GTA, then Papers, Please isn't going to cut it as a replacement.
The video game crash didn't happen just because consumers stop buying. That was the last nail in the coffin for the video game crash to happen (the final element for the perfect storm). We can theorize about the causes by examining what we know about those years. This is something I learned recently:

- Arcade game crash of 1982 just happened.

The top arcade machines sales (to the operators) went from 100 thousand units a year (Pacman and Asteroids) to 20 thousand units (Pole Position in 1982) and eventually 4 thousand (Marble Madness in 1984).
The arcade game industry had a huge variety and fragile economics at the time (one play was a quarter, and each machine costed $2,500, so 10,000 plays were required before it gave profit). And then the point of saturation was reached (1.5 million games in the USA market) and inflation had dropped the dollar value by over 30% since 1979. Operators didn't find profitable to buy new machines anymore.

Why is this relevant? Because arcade games were much more important in the videogame industry than home consoles at the time. Atari was a success in console market, but their main focus was the arcade games. When things went bad in the 1983 for the home console, this is what possibly happened:

+ Those companies that were in for a quick buck cutted their loses and ran away.
+ Those who were both in home consoles games and arcade games decided to focus in saving the arcade gaming.
+ Those who were only in the home console bussines had to endure the storm or do what everybody else was doing and quit.

- The Atari President & CEO made inside stock trading just before a negative earnings report (arcade game crash, remember?), and caused the Warner Communications (the owners of Atari at the time) stock to drop by 40%

What comes after the biggest player's stock value falls that much? Fear between the investors. The bubble just popped. The home console fad is ending. We better stop before losing more money on these toys.
 

Canadamus Prime

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Is the AAA Console Games Market Heading for a Crash?
I sure as hell hope so. The AAA industry needs a wake up call and I think nothing short of a crash would do it. However that's never going to happen, is it? Far far too many people are willing eat up the crap the AAA industry dishes out in the name of instant gratification.
 

Qage

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The AAA Console market may as well have crashed for me, the last big budget console game I ever bought was Halo 3. After being really into that for the longest time I eventually stopped using the 360 altogether and haven't touched it since.

But do I think the AAA Console market is going to crash? Not really. Not crash, anyway.

I find it more likely that the AAA industry will try everything it can to cling to life for the time being and eventually new changes in leadership will step in and maybe those new presidents of various companies will actually care about their games and the consumers that buy them. Maybe.

That, or the companies themselves will just begin to phase out. New companies will arise with better business practices and/or producing higher quality games at AAA console prices and the existing companies will just crumble into ruin.
 

fenrizz

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Most video game companies, like all stock based companies, are dependent on growth, and nothing grows into the sky.

I don't think there will be a crash, but I believe the industry will hit the ceiling soon and it won't be pretty.
 

MartyGoldberg

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Callate said:
That there was more than a signature involved, I grant; it was an over-simplification of the issues. But far, far more than today, a video game in the Atari 2600 era was the work of a single person. It was not untypical for Atari 2600 cartridges to hold only four kilobytes of ROM; very tight programming was the biggest concern, programming that was sometimes arcane to make the best use of hardware tricks, and multiple programmers would have gotten in each others' way.
Again, not accurate as far as the development and certainly not accurate as far as the released product. The one man programmer was a certain era of 2600 development, by the early 80s that included additional programmers and artists (Atari Inc. was the first company to start a graphics group to assist with both their console, coin, and computer game graphics) and even sometimes people for the music. Perfect example is E.T., where the graphics and intro were done by another person who assisted Howard. As far as the released product, there's project managers, graphic artists (box, label, and manual), writers (box, manual, other material), marketing specialists, etc., etc. all involved in getting the finished product (the cartridge, the box, the artwork, the manual, the manufacturing and assembly, etc.) out the door and onto store shelves as well, which was Ray's point, and he was right on that as well. The Activision guys were also right that credit should be given. However, it should have been given to everyone. What should have been done was what's done now as I said, where everyone involved in the entire product overall is credited.


Pac-Man was produced in quantities that exceeded the consoles sold at the time, as documented here and here. Pac-Man only became the pack-in title later in production (by one report, in 1983, well after its initial release and at a point when the industry was already considered to be in decline).
Nope, you'd need to dig up better sources than that, as what you're trying to state is wrong not to mention the sources are both suspect by normal research standards. One's Wikipedia, which isn't really known for accuracy and quotes two book sources for sales that are in turn questionable with their own original sources for said material. The other is the Internet Archive which just presents a summation of materials presented elsewhere for a blurb next to a game ROM they have up and in no way represents an actual reference.

In comparison, by actual internal documents donated by ex-Atari employees including the person in charge of manufacturing and distribution, and direct interviews with said people(which were all for Atari Inc. - Business Is Fun, ataribook.com) Pac-Man was planned as the pack-in title from the beginning. Specifically for the "darth vader" 2600 model that was being introduced in '82. What it became the pack-in cartridge for in 1983 was the Atari 5200. Additionally, the manufacturing figures are for a period of time not all at once. Pac-Man was manufactured from November '81 through December '82, at which point the directive to stop manufacturing them came through. (For a short time at that time after that in '84, Space Invaders was the pack-in).

Where the "more cartridges than consoles" comment originates is an author who ran with an industry analysts comment from the time without actually researching the context. When Atari originally announced their own analysts were predicting possible overall production of 12 million games (driven chiefly by how extremely popular Pac-Man was at the arcades and in pop-culture at the time), this industry analyst questioned that forecast considering they only had about 6 - 7 million consoles in home at that time (late '81). Atari in turn stated that they were including it as the pack-in for the 2600 that year and were looking to recreate the fervor from '80 when people bought the 2600 just to get Space Invaders. They were proven right in console sales and total 2600 units jumped to 11-12 million units by the end of '82 and around 15 million by the end of '83.

Even factoring in it's sale as a pack-in, it reportedly sold only 7 million units of 12 million produced.
Again, that's missrepresentation of facts. Sold units means individually sold, pack-ins are never counted in those figures. Atari first started packing in Pac-Man with the "darth vader" all black model released in 1982 (which also marked the official change from Video Computer System to 2600 to coincide with the upcoming release of the 5200) as mentioned above.

Where Atari's big issue really was, is not in the manufacturing of specific titles. Rather it was in not having a system that monitored production vs. actual store sales of *all* their products. i.e. they based their overall manufacturing of all their games and consoles on "sell in" numbers which is demand from retailers, vs. "sell through" numbers which is actual units moved by retailers. There had been a shortage of Atari's console games in '81 (which caused great demand by retailers when ordering for '82) and then the exact opposite as they went through '82. It was compounded by retailers returning merchandise for credit with Atari as well, which meant even more stock not moving. That's what lead to the destruction of several blocks of that returned merchandise in '83, including most famously the one in Alamogordo in late '83 (which was not a mass dumping of E.T. but rather around 750,000 games consisting of 21+ titles (some very popular titles) for both the 2600 and 5200 as well as hardware and peripheral, all returned from stores for credit). Warner was a big part of that blame though, they used a heavy hand (often forming a dual management at Atari) to keep those sales up and in return their own earnings and stock value.
 

SecondPrize

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The consumer base for video games is too well trained now. They'll buy whatever and they'll happily buy it for preorder bonuses without having any idea what the product is like. AAA games will sell now and into the future.
 

Kameburger

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It isn't a question of IF there will be a crash but more so where are these markets vulnerable and what could cause them to crash. Mobile for instance is facing it's toughest resistance based on legal restrictions on monetization and platform restrictions on advertising. That is to say the important news to look for in this case would be for instance Apples recent uneasiness about in app advertising, or the EU ruling on F2P labeling. These kind of rules can send huge shock through a market resistance to change. The case for this would be the Japanese social game giant Gree which exploded back in 2010 and by 2012 imploded because Japan tightened laws against one of their key business strategies.

Consumer gaming is a bit more difficult. Companies that we tend to see as the most vulnerable to these kinds of crashes really aren't as vulnerable as you might thing. Nintendo for example has caught a lot of flack in recent years because of poor Wii U sales, however the reality is as a company, Nintendo is sitting on a massive pile of money where Iwata had even said a few years back that Nintendo could afford to take a few chances and would survive some failed hardware releases if they happened. But even Nintendo aside, the Japanese giant publishers are mostly pretty safe because a lot of them have pretty diverse revenue streams that soften the blow of poor performance in one area.

The western publishers are a little more vulnerable because the market is more competitive in terms of hardware and a little less diverse in terms of business practices. EA has positioned itself in such a way that even it's name being complete poison to consumers still doesn't effect sales. There business is set up that way. The company to "worry" about in this case is actually Microsoft but the Xbox One nonsense is fixable, and it's Microsoft.

I would say that the more likely problem is the over saturation of the indie market, which could lead to a plummet in indie game sales, which would be harmful, but this would likely lead to companies like EA buying up the smaller studios for the talent.

Actually ironically, Yahtzee pointed out an interesting avenue that could cause a slippery slope effect, which would be if Games plateaued technically. If the game industry were to reach a point where they could no longer offer any novel experiences then first the buck would fall to game quality and in an over saturated market there is a chance that people will loose interest. But things don't seem to be going that way.
 

the_retro_gamer

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I don't think it will ever crash. There are too many people willing to buy triple A games thus it will sustain the market. The only thing I see happening is publishers spending too much money on development costs which might affect what type of game we will get.