Hey guys! We're back with another episode that addresses the growing concern over a Second Game Industry Crash.

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With the unprecedented popularity and flood of video games today, especially with the iOS marketplace's "race to zero" pricing, many in the industry see parallels to the first crash in 1983: over-saturation, over-supply and under-demand. We discuss whether history is doomed to repeat itself.

What do you think?

The games industry crash occurred during the 2007-2009 credit crunch, but the ripples are taking a while to spread out still.

RIP
2008 Locomotive Games
2008 Paradigm Entertainment
2008 Flagship Studios
2009 Empire Interactive
2009 Ensemble Studios
2009 GRIN
2009 Streamline Amsterdam
2009 Ascaron Entertainment
2009 Transmission Games
2009 Pandemic Studios
2009 Atomic Planet
2010 Realtime Worlds
2010 RedOctane
2010 Luxoflux
2010 Krome Studios
2011 Black Rock
2011 7 Studios
2011 Kaos Studios
2011 Bizarre Creations
2011 THQ Digital Warrington
2011 THQ Studio Australia
2011 Blue Tongue
2011 Game Republic
2011 Team Bondi
2011 Codemasters Guildford

I don't believe in any imminent "crash".
Some companies die, others pop up, as the natural order of markets changing.

Companies heavily invested in selling very expensive games on physical media might get in trouble for needing too much overhead and using obsolete technology.
Companies who manage to cope with change and make good games at reasonable cost will survive.

We do not have the "under-demand" problem of 1983, demand seems to only increase with new markets and demographics getting interested in interactive entertainment.
Margins might be slimmer, forcing teams to become smaller, and there will therefore be less room for "corporates" to live off of the work of producing companies, and this is a good thing for product quality. (less "cooks")

Less and less people will buy their games on media, most will be downloadable, so computer game stores might have a problem.
(We can already see that sometimes, in desperation, its cheaper to get a physical copy of the game, then to download it, which is obviously counter-intuitive.)

The "race to zero" race on App Store doesn't really exist, or more accurately, what looked like that a year ago has now stabilized, and gamers are starting to learn that to get quality, you have to pay (even if its just $2-3).
Developers with a good reputation can charge more.

So, the market is changing, sure, but crashing? no.

I think there's a bit of a 'crash' on the AAA side of things. Blockbuster games just keep getting more and more expensive, and that is not a sustainable environment for a very large number of developers and publishers.

In terms of the Indie scene, with lower costs to developers and consumers, lower expectations in terms of production values and the ease of distribution thanks to Steam (and, to be PC, other digital distribution solutions), we're seeing a boon. Not a crash. The App Store is the closest thing that exists to a get rich quick scheme!

These videos do not belong in the Game Design forum.
They belong in the Lounge.

The games industry crash occurred during the 2007-2009 credit crunch, but the ripples are taking a while to spread out still.

One problem I see with this classification is that these are studios.

Publishers and distributors on the other hand are raking in record profits. Valve these days sells hats for billions of dollars - no point in trying to develop HL3, for example.


In some ways, maybe the whole model is wrong. Maybe studios shouldn't expect to survive more than a single title and instead adopt Hollywood model. Not because it's better, but over long term no real-world alternatives evolved. And there are considerable parallels.

With the unprecedented popularity and flood of video games today, especially with the iOS marketplace's "race to zero" pricing, many in the industry see parallels to the first crash in 1983: over-saturation, over-supply and under-demand. We discuss whether history is doomed to repeat itself.

The situation with IOS is a specific situation though - you've got everyone jumping on the "iPhone" bandwagon to release pointless apps (website wrappers, etc), when it's never been the largest platform. It ought to have always been obvious that it's going to be oversaturated for developers. But this doesn't affect how things are for other platforms, either mobiles which have larger installed userbases (e.g., see the recent story about Nokia's App Store having the largest downloads per app), or other platforms. And yes, if you want a get rich quick scheme, the evidence right now is that you should be targetting other platforms like Nokia and Android, but even that won't last for long either.

And come on - any industry where people were charging money for trivial apps, it ought to be obvious that this was going to be short lived as soon as everyone rushed into it. That's not a crash, that's just bringing the mobile world to the same level as everything else. Just look on desktop/laptop/netbook platforms, where there are loads of free apps, even for really complex stuff. That's not a crash - for users, that's good. It just means that to make money, you've actually got to be innovative and work on something that isn't already done for free. If someone thought that they could get away with selling apps that display graphical images (and get free advertising on the BBC! - http://news.bbc.co.uk/1/hi/8152338.stm ) forever, they were a fool. If things change so they can no longer do that, that's not a crash, it's just common sense.

(There may or may not be evidence of a video games crash in general - I don't know. I'm just saying that the Iphone situation tells us little, and isn't evidence for a crash.)

The iOS 'cash grab' was the modern equivalent of the gold rush - once the dust settled and the other fellows realized there was no more gold to be had, off they went. Others continued to mine but from the vastly lower-gain resources around.

Lesson to be had: quick cash grabs are always just a quick spike in the market before it dissipates into normality. Also, even if we were standing inbefore an iOS game crash that would hardly say anything about the PC or console market - they aren't quite as tangled as it might seem at first.

I don't have any available statistics, but with the popularity of WoW, iPhones/iPads, Androids, and Flash portals, I have to imagine the video game market has actually grown in the last few years. Typically industries don't crash when markets grow. They may change, radically even, but not crash. When I was 15 I was one of few people in my school who I would call a "gamer". It was like a dirty word and conjured up images of anti-social nerds. Now the majority of young people I know play games, either on consoles, smart phones, or through social avenues (ie WoW, Farmville, etc.).

The potential is huge, and importantly, more people have access to tap it. Indie devs have a real chance to make a living.

With the unprecedented popularity and flood of video games today, especially with the iOS marketplace's "race to zero" pricing, many in the industry see parallels to the first crash in 1983: over-saturation, over-supply and under-demand. We discuss whether history is doomed to repeat itself.

The big thing about the 1983 crash was an inability for the consumer to tell the difference between an AAA game and serious crap. Shovelware games, like "Pac-man" or "ET" look and feel like AAA games like "Tempest", "River Raid", "Adventure" or "Pitfall". There was no way consumers could tell the difference between shovelware and AAA by the box art, the price, marketing, name or brand recognition. Instead they choose to spray and pray, buying five $5 games and 1 might be good instead of one $50 title which might be terrible. It was impossible to sell anything above $5, and therefore it was impossible to make a game for above $5.

That's not what is happening here.

The causal game world is already pretty "crashed". Everyday there's 40 new casual games for facebook and 100 new games for iOS. They're all $0.99, free or free with a catch. In the same way as the 1983 crash, shovelware games "look" the same as polished casual games, making it difficult to judge based on anything except price and ranking. However, we are not at the point a person going to the store to buy a $60 FPS for a name brand console would decide to buy 50 angry bird clones and tower defense games instead. These are low investment for both the developer and the consumer, so there's no reason for the market to crash, yet. It's a situation where market forces make things less ideal, but not enough to change things.