The AAA Gaming Industry Is Going To Crash

[GonzoGamer]

Seems to me, the problems the OP talks about i.e. DLC and over-saturation are more poor business decisions than a failing market.

But I see where he's coming from as they are signs of desperation.
I don't see a crash happening as much as a petering out of the AAA big budget game market. The good thing is that we see a lot less shovelware as the people who would be making those are making free apps for phones and tablets. The bad thing is that we see the market for systems that play the current big budget games shrinking. The 360 & PS3 combined still have catching up to do with the sales of the ps2 alone when it was as old.
We still get the same amount of good quality games (so far) but we have been seeing a lot more money grubbing on the part of the industry; from publishers, retailers, and platform developers. We can just hope that they don't drive more gamers away.

 

[MrBaskerville]

I´m thinking something in the vein of Heavens Gate. At some point yet another company will release a bloated AAA game that costs milions of dollars and it will bomb big time. I think we´ll probably see less games like Mafia 2 and L.A. Noire in the future, games with gigantic open world recreations of cities. Budgets have to be decreased, there´s waay to many AAA games out there that barely even manages to make more than their production costs. Just look at the new Dead Space 3 where they expect to sell 5 milion copies, just to break even. Or how about the team of 600 people that made Resident Evil 6, how is that going to break even?

 

[Sangnz]

I don't see any major crash coming soonish.
Personally I would like to see scaling back on the advertising budgets, I'm sure more money went into the advertising of some AAA games than it actually took to make them.

I think the gaming industry needs to start working smarter instead of throwing money about like lunatics.

 

[targren]

The industry will regulate itself long before a crash ever happens.

I think that might be overly optimistic, given that the current industry seems to be "Borg all the small developers that you can under one of the big-3 third party devs (EA/VA/SE)," all of which have leadership who are currently sharing the standard "short term executive bonus" view of things.

 

[targren]

This happened before, they were just different developers.
It will regulate itself like Daystar/I/Hundreds of others have said.

Or it'll crap itself and collapse under its own weight, which has also happened before (albeit, possibly before your time).

 

[targren]

The Videogame Industry is far larger and more diverse now that, unless some sort of world-shattering Cataclysmic event were to transpire or World War 3 were to start, it won't crash.

That was my point. That "diversity" is dwindling every time a major publishing house buys up another small developer (or, as you mentioned, every time another dev house goes belly-up and closes its doors).

We have Crowd-Funding and Indie developers now that could make great games with far less money allowing for game-development and the Video Game Industry to continue and thrive, even if a big name publisher like EA were to shut-down unexpectedly.

Honestly, we have yet to see any of these major crowd-funded game projects come to fruition, as far as I know. Given how many gamers think things such as "preordering entitles you to be a beta tester," and the like, after one or two "rude awakenings" when funded projects fail or are cancelled (which happens all the time in development), things will probably get ugly with lots of ill-founded but noisy lawsuits and bad press, and it wouldn't be too surprising if crowd-funding dries up after that.

 

[Hjalmar Fryklund]

This happened before, they were just different developers.
It will regulate itself like Daystar/I/Hundreds of others have said.

Or it'll crap itself and collapse under its own weight, which has also happened before (albeit, possibly before your time).

In general, markets don't really regulate themselves as much as they just cannibalize themselves and wring as much money out of the market as possible before grabbing the money and attempting to bail out. Assuming, of course, there are no barriers for exiting the market, which would complicate things. But the presence of those would in and of itself be a dent in the rather libertarian belief that markets will regulate themselves for the betterment of all in the long run.

Hmm. Well.
The Japanese Publishers haven't crashed so much as eroded slowly.
And they were dominant at the start of the millennium. Perhaps that's the "death cycle" we're looking at? Will the Western market mirror that? Difficult to say.

The Western (American/Canadian/European) Market in comparison has shown to be a crescendo, starting from about 2003-04 to present, with the Japanese share falling slowly, and proportionately (well, to be expected, that's how proportions work. You can't gain 1% without someone else losing 1%, even if the entire market grows empirically)

I don't think the AAA market is going to crash per say...certainly not yet.
There are too many stable avenues of revenue for its biggest members.

However, I can see this scenario happening at a very low probability. The key to look for is consolidation within the pillars of industry. Namely, larger publishers cannibalizing each other and consolidating the actual developers beneath them.

The fewer publishers there are, the more likely one of them is to under perform at some point, and that will result in HUGE slashes to production across the board. And that's before factoring in problems stemming from monopoly; we're already seeing problems from oligopoly springing up.

Do you know where I could find any decent statisics for the roughly estimated profits of the western video game industry? I am feeling like doing some derivatives of them.

 

[Vegosiux]

Well, some AAA companies may crash when they fail to stop driving their budgets through the roof and trying so spin it as if a game having to sell 5M copies just to break even is a good thing.

 

[General Twinkletoes]

Oh of course it won't, gaming is fine.
Although, the people going "Yeah, I want to go back to the good old days, where it was niche and there were none of these AAA brown shooters!"

Oh for gods sake. You've got enough awesome indie games still coming out. The ratio betwee them and to AAA shooters is declining, but who gives a fuck? There are still more coming out now then there was 10 years ago.

 

[sanquin]

I do think the AAA market will crash. AAA companies will fall, leaving a sudden massive hole in the market. Then, indie developers that are doing really well will take over and become the new AAA companies, starting the process over from the beginning.

That's what I see happening at least.

 

[Zaik]

On first inspection it looks like doomsaying is more common around here than it is everywhere else in the world, but upon closer inspection it is only slightly more common than everywhere else.

What is with the fascination of being around for terrible things to happen anyway?

 

[Atmos Duality]

Do you know where I could find any decent statisics for the roughly estimated profits of the western video game industry? I am feeling like doing some derivatives of them.

For the United States, publicly traded companies are required to post profits/losses for each business quarter. But private companies (like Valve for example) tend to keep that information out of the public.

A decent estimate would be to start with the stock values of publicly traded companies, which while far from being precise, will give you a good idea of how much the industry has fallen (seriously; 2007, EA had a stock value well over 50 dollars/share. Microsoft never reached that high. Today, EA struggles to stay above 12 dollars/share).

EDIT:

Yup, EA did it before and they'll do it again (as will the other companies). I remember that that the start of this gen the hatred towards EA seemed to have peaked, they changed their ways and released quite a few new IPs like Dead Space and the money started rolling in...

...Then they started to whore out those IPs and they are nearly back at square 1.

*sigh*

And that's precisely why I don't buy anything from EA.
They've been doing this for nearly 15 years. They never learned, they never changed.
I had hoped they had learned when they started taking chances on off-beat game IPs (Hellgate, Mirror's Edge and Dead Space) and then they went right back to gouging the consumer once they thought they earned their trust.

Of course, they might be right; after all, quite a few of our fellow escapists apparently think Mass Effect 3 is still the best (or one of the best) games so far this year, despite the entire month of March being endless bitching.

It's like a snake eating its own tail...

 

[Tony2077]

for me this ranks up there with the doomsday stuff on the bullshit meter

 

[Greni]

- One reason the gaming industry may do better than the movie or music industry is that, as much as we hate DRM, it has actually been a lot better at controlling piracy than the music or movie industry. Being able to worry about whether consumers are buying their products second hand is a luxury those other industries wish they had.

Lolwut? It's about as effective as the anti-piracy ads before the dvd starts and about as annoying. (Except for Ubisoft and EA, their DRM is horrendous)

 

[Brendan Stepladder]

Well, yes, it will crash, but only if the same system keeps being used indefinitely. It's like predicting your goldfish's inevitable doom by assuming that nobody will ever change the filter in her tank.