Could we could see a video game crash similar to what happened in 1983, in the somewhat near future?

[Kaeden]

By somewhat near, I'm saying in the next say 5-10 years.

If you're not aware of what happened in 1983, I'll past some info from the wiki article below.

The video game crash of 1983 (known as the Atari shock in Japan) was a large-scale recession in the video game industry that occurred from 1983 to 1985, primarily in North America. The crash was attributed to several factors, including market saturation in the number of game consoles and available games, and waning interest in console games in favor of personal computers. Revenues peaked at around $3.2 billion in 1983, then fell to around $100 million by 1985 (a drop of almost 97 percent). The crash was a serious event which abruptly ended what is retrospectively considered the second generation of console video gaming in North America.

Lasting about two years, the crash shook the then-booming industry, and led to the bankruptcy of several companies producing home computers and video game consoles in the region. Analysts of the time expressed doubts about the long-term viability of video game consoles and software. The North American video game console industry eventually recovered a few years later, mostly due to the widespread success of the Nintendo Entertainment System(NES) in 1985; Nintendo designed the NES as the Western branding for its Famicom console originally released in 1983 in order to avoid the missteps which caused the 1983 crash and avoid the stigma which video games had at that time.

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So with recent things like Activision Blizzard's stock doing bad, a lot of games doing poorly like Fallout 76 and many others like Battlefront II, do you see the possibility that something like this could happen again in the coming years? Or is the industry simply too big now where something like this is pretty unrealistic to happen? I think about the bankruptcies back then and wonder, how long these large companies, today, turn out more and more mediocre games as the players continue to demand more and more? Can they continue to soak up the losses with the occasional large hits or will it all come to a head at some point?

I can definitely see some of the larger companies merging and more acquisitions, but I'm not so sure if the entire industry would take a huge dump like it did back then. I think gaming right now is too ingrained in too many aspects of people's lives unlike in the 80's. But maybe I'm wrong.

Was just thinking about this after reading the stuff with Activision. I'm not really worried, but it reminded me of back then so figured it might be a good topic for discussion.

 

[Ramako]

These companies aren't losing money. They're just not making as much money as their investors are (unrealistically) expecting. That's why the stocks are tanking.

 

[WestEgg]

Console video games were still more of a novelty and a sideshow to the arcades in 83. They've become too mainstream culture now to go away in such a way that wipes out the industry. Could a major AAA publisher crash happen? Yeah, probably. But gaming is basically on the same footing as film now as far as cultural mainstays.

 

[Platy]

Activision, the company that just paid a CEO 15 million, is doing bad ?

No ... everyone is doing pretty good and games are breaking records as we speak

 

[crimzonflame]

Yes if the PS5 is not backwards compatible and doesn't support crossplay.

 

[Kaeden]

These companies aren't losing money. They're just not making as much money as their investors are (unrealistically) expecting. That's why the stocks are tanking.

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True. But the stocks tanking leads to other things like loss of jobs, potentially, and less products being produced, right? I mean I would think it could kind of snowball if things were to continue. Or maybe just a massive restructure is an easy fix and they just start over?

 

[vestan]

Battlefront II did not do poorly, it sold 9 million copies in three months for christ sake.

Not meeting expectations =/= doing poorly

 

[Aztechnology]

It's the Icarus syndrome nature of public companies. They grow at obscene rates and the only way to keep growth going and fiduciary goals met is to start taking extreme risks which hurts ordinary people. Sustainability isn't a huge goal often lol.

We've also hit another pocket of Moba fever. With Battle Royale. Where far too many companies will and are gearing towards that model even with it being a fairly winner take all market.

But it won't tank like that again. No way. A huge part of that was due to the market/regions and supply/demand of physical goods in NA etc. It's much easier/healthier now with ease of digital supply and many other tools that make logistics much less of a pain. Companies continue to grow, fold, die, resurrect etc. It's just the nature of things.

 

[MZZ]

No. The companies nowadays are more aware of their position in the industry than back in the day.

 

[violent]

DRM, GaaS, always online, multiplayer paywall, on-disc dlc, multiple SKUs. 50 or 60 more of these kinds of tactics and gamers will start thinking of possibly considering getting fed up.

 

[Dr. Caroll]

The videogame crash has been exaggerated by console-oriented gaming history canon where Nintendo "saved" gaming. Gaming was absolutely fine. Consoles floundered. Home computer and arcade gaming flourished in many cases. The scene in the UK was doing totally fine during that period.

The rise of mobile, streaming, etc -- not to mention how globally focused gaming is becoming, means that consoles could vanish and business would go on as usual.

 

[Video Games Are Dumb]

Nope.

And the proof is that we've already had tons of small crashes along the way. The mid 90s saw dozens of developers fold. The past decade completely killed the AA publisher tier. But the overall machine keeps on rolling. How are mobile developers doing right now? How many are dying? Probably a bunch, but video games are forever.

 

[Aztechnology]

True. But the stocks tanking leads to other things like loss of jobs, potentially, and less products being produced, right? I mean I would think it could kind of snowball if things were to continue. Or maybe just a massive restructure is an easy fix and they just start over?

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Staunching the bleeding is usually what it's doing by cutting as much fat as compan...ly possible. Then building up their stables again, growing again. Then scaling back, lay offs again. Cycle repeats.

It's why I won't do the video games industry. It's not a secure industry at all.

 

[Kaeden]

Battlefront II did not do poorly, it sold 9 million copies in three months for christ sakes.

Not meeting expectations =/= doing poorly

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How do those not go hand in hand to you? If a game doesn't come even remotely close to the companies expectation, how do they not consider it a poor release? Don't these companies spend money today somewhat based on what they think they'll make in future off of titles coming out in the near future? I'm clearly not sure how this part works, it's very possible I'm way off here.

edit: Well I was way off in my comment as it appears EA's expectation was for 10m but actually hit 9m. So yeah, this specific example of mine was wrong. My apologies.

 

[Video Games Are Dumb]

The videogame crash has been exaggerated by console-oriented gaming history canon where Nintendo "saved" gaming. Gaming was absolutely fine. Consoles floundered. Home computer and arcade gaming flourished in many cases. The scene in the UK was doing totally fine during that period.

The rise of mobile, streaming, etc -- not to mention how globally focused gaming is becoming, means that consoles could vanish and business would go on as usual.

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And this myth can be killed in one word: Europe.

Not taking away from Nintendo's achievements in the 80s but video games continued to thrive that decade without them in other countries.

 

[Mauricio_Magus]

No, that's not going to happen.

 

[Imitation Of Life]

Short answer: NO.

 

[Bishop89]

In this day and age, probably as likely as a crash in Hollywood happening.

Different era now. Gaming was different back then.

 

[Theta]

No. Video games are more diverse nowadays than they ever were during the 1980's, espeically with the inclusion of indies and middle market games becoming more prominent in the industry, in addition of being more successful than they were for the previous/past generations.

 

[Dankir]

That's a negative OP.

 

[Megatron]

No chance. The difference in the environment between then and now is night and day.

 

[BlahBlahWords42]

A Correction, perhaps, but not a crash. One big publisher sinking, maybe, the indie scene collapsing under its own weight, probably but it would still be around in a scaled down manner. Even the 1983 crash itself is exaggerated.
The console market is basically locked down with a few companies also making glorified HTPCs that aren't confusing the mass market, the companies big enough to even possibly make an entrance are more interested in streaming. You can't get a repeat of the 2600 being flooded with unapproved shovelware anywhere except maaaaybe PC, and there you still don't need to worry about physical shelf space being taken up by stuff not selling.

 

[Deleted member 8468]

Nah, the hardware market is still plenty healthy and there are less physical supply concerns overall with digital, not to mention the cost of a disc vs cartridge.

The inherent risk in the video game market is incredibly low compared to the 80s.

 

[Kaeden]

Interesting thing I didn't know about which was showing in the wiki article I linked in the OP:

Nintendo reserved a large part of NES game revenue for itself by limiting most third-party publishers to only five games per year on its systems (some companies tried to get around this by creating additional company labels like Konami's Ultra Games label); Nintendo would ultimately drop this rule by 1993 with the release of the Super Nintendo Entertainment System.

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Nintendo... that was pretty damn smart of you.

 

[Ayirek]

I doubt it. Home consoles were almost seen as something of a fad when the crash hit north america. It's now a multi billion dollar industry.

 

[Lindsay]

As the article points out that was a North American crash. Gaming kept on truckin' elsewhere in the world. With things more globalized now and many, many more countries with access to gaming, it seems kinda unlikely to happen again imo.

 

[gdt]

No.

 

[Kaeden]

A Correction, perhaps, but not a crash. One big publisher sinking, maybe, the indie scene collapsing under its own weight, probably but it would still be around in a scaled down manner. Even the 1983 crash itself is exaggerated.
The console market is basically locked down with a few companies also making glorified HTPCs that aren't confusing the mass market, the companies big enough to even possibly make an entrance are more interested in streaming. You can't get a repeat of the 2600 being flooded with unapproved shovelware anywhere except maaaaybe PC, and there you still don't need to worry about physical shelf space being taken up by stuff not selling.

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Yeah that was a large part of what happened in the 80s with not enough shelf space, games left in bargain bins, etc. Don't see that being a big problem today with digital since the physical production cost is becoming less and less.

 

[CrazyDude]

The industry is a lot bigger than it was back then. You might as well be asking if their is a movie or music crash coming as well.

Didn't gaming make more money than any other entertainment industry last year?

 

[Servbot24]

No. Investors wanting more money doesn't mean the industry is failing. There are too many people who want to play games for it to crash.

 

[skeezx]

generally speaking, no, gaming is "too big to fail" at this point. just way too diversified with several different actors working within different business models with billions of dollars pumping through the whole thing. but i do see some turbulent course correction ahead, sort of like what you're seeing with Activision where they tighten their belts and investors freak out, and that alone will probably reverberate through the industry negatively for awhile.

i think worst case scenario a real economic recession hits (which is statisically likely in a few years) followed by a string of AAA "failures" and the EA/ubi/activisions are relegated to a f2p/service ghetto for awhile. games that would make Battlefront II seem like 'the good ol days'. but even then, it'd come to pass

 

[LazyLain]

I could see there being certain bubbles within the industry that might burst in a somewhat violent manner, but no... gaming itself isn't a bubble that's at risk of popping.

 

[eathdemon]

generally speaking, no, gaming is "too big to fail" at this point. just way too diversified with several different actors working within different business models with billions of dollars pumping through the whole thing. but i do see some turbulent course correction ahead, sort of like what you're seeing with Activision where they tighten their belts and investors freak out, and that will probably reverberate through the industry negatively for awhile.

i think worst case scenario a real economic recession hits (which is statisically likely in a few years) followed by a string of AAA "failures" and the EA/ubi/activisions are relegated to a f2p/service ghetto for awhile. games that would make Battlefront II seem like 'the good ol days'. but even then, it'd come to pass

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yup. there are enough indie/mid teir to entertain me, so yup I fully expect a severe correction.

 

[Dremorak]

And this myth can be killed in one word: Europe.

Not taking away from Nintendo's achievements in the 80s but video games continued to thrive that decade without them in other countries.

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I wonder if thats part of the reason why Nintendo has been not as big in Europe as US

 

[eathdemon]

I wonder if thats part of the reason why Nintendo has been not as big in Europe as US

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even in the US video games didnt die, just consoles did, its a massive myth.

 

[Kaeden]

even in the US video games didnt die, just consoles did, its a massive myth.

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Weren't consoles back then considered 'video games' and arcades were... arcades? Maybe splitting hairs here but I always thought "Video Game Crash of 1983" was just referencing the home console market.

 

[ThorHammerstein]

Lessons from then are pretty well known.
It's not like any publisher is going to be as foolish as to make more copies of a game than they have made consoles again.

 

[eathdemon]

Weren't consoles back then considered 'video games' and arcades were... arcades? Maybe splitting hairs here but I always thought "Video Game Crash of 1983" was just referencing the home console market.

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it is, but when most people talk about it, they assume it was all games, not just consoles. its worth stating that it was just console just to clear that myth up.

 

[Platy]

Totally related :

 

[Video Games Are Dumb]

I wonder if thats part of the reason why Nintendo has been not as big in Europe as US

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More or less. It's not like Nintendo is disliked in Europe. There were just cheaper options with more variety than the NES during the 80s.
It really wasn't until the N64 era where Nintendo began to have a real presence, and even then was vastly outsold by the PS1.
I have no proof for this but I believe their sudden uptick in visibility came largely from RARE, who were well known for their ZX Spectrum work.
But long story short, it's hard to sell people on nostalgia when that nostalgia doesn't exist.

 

[Man God]

There basically was another soft crash in the mid 90's before the SNES resurged and the PSX came out. There were a lot of aging consoles like the Genesis and a bunch of flops with the 3DO and CDi, Sega CD/32X.

 

[nsilvias]

it's not a matter of if but when. those saying it won't happen are kidding themselves. you can't look at the industry rite now and tell me this is sustainable.

 

[Kaeden]

Totally related :

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That was a really good video and yeah, very relevant to this topic.

I think in the very short term, as many have pointed out, there's no CHANCE of this happening. And I'm not referring to a complete collapse of the industry, but a big change up like others have mentioned. And like Jim's video illustrates, the industry is indeed very volatile right now and I could see some real dire scenarios playing out if the upper top continues its greed like they're doing now... while the lower level staff continues to pay the price.

But as others have mentioned, obviously this not unique to the gaming industry.

 

[Video Games Are Dumb]

There basically was another soft crash in the mid 90's before the SNES resurged and the PSX came out. There were a lot of aging consoles like the Genesis and a bunch of flops with the 3DO and CDi, Sega CD/32X.

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This really can't be overstated. People like to pretend there was only one video game crash and tend to forget how many huge publishers and developers up and died in a fast string. Heck, THQ died because it tried to escape the dying AA system. Today it's indie or AAA.

 

[Man God]

This really can't be overstated. People like to pretend there was only one video game crash and tend to forget how many huge publishers and developers up and died in a fast string. Heck, THQ died because it tried to escape the dying AA system. Today it's indie or AAA.

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The major difference is that the second generation US crash happened when games were still considered a toy fad. A profitable one to be sure but when the 2600 exploded the toy buyers thought it was over. When the same thing happens a decade later to a smaller degree they just figured a new generation refresh would happen and it did, because it was a real business by then.

 

[OneBadMutha]

Nope. Gaming is addictive. I mean that in a literal sense. It's addcitive, it's reached critical mass, it's social, it's viral and it's ingrained in our culture as deeply as drinking. Gaming will go under when beer companies all collapse.

 

[Deleted member 17210]

it is, but when most people talk about it, they assume it was all games, not just consoles. its worth stating that it was just console just to clear that myth up.

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Yeah, as long as there's still misinformation about that era, it's worth clearing up.

There has never been close to any industry-wide wipe out so I'm not expecting that to ever happen. What does happen is that certain segments of the industry can rise or decline over time. Dedicated consoles suffered in the late '70s with the rise of programmables, PC gaming had a slump before Steam, arcades peaked early on, etc..

 

[AstronaughtE]

I doubt it. I think some dinosaurs will die, but games are a lot different now than they were 35 or 36 years ago.

 

[Windu]

no.

 

[entremet]

People forget that the crash was an American thing. America is a huge market, but it was still mostly an American issue. The industry supports three major platform holders, mobile, and PC. It's fine.