Is Another Videogame Crash Around the Corner?

There has been a ton of speculation going around that another videogame crash like the one from the early 80s could happen again because of the oversaturation of the market.  There are others who say it’s impossible because the videogame market is simply too strong today.  While true the market is at an all-time high, people tend to forget their history.

The arcade industry went through two crashes and was never able to return to glory afterwards.  What caused the first crash was a combination of things, but mainly the oversaturation of the games available.  After all there are only so many different versions and clones of Pac-Man and Donkey Kong one can really enjoy.  The second crash occurred because of the strength of the home console market.  Why would gamers pay $0.25 a life when they could get an entire game for $60 that actually looked and played exactly the same on their home console as the arcade version did?  The age-old appeal of the arcades, where games were leagues better than they were at home in terms of audio visuals, was lost when the Dreamcast hit the market in 1999.  Players’ taste in games had already began to change thanks to the introduction of the Sony PlayStation in 1995, but the true nail in the coffin was the Dreamcast.

The first home console to offer better-than-arcade quality graphics.
The first home console to offer better-than-arcade quality graphics.

In terms of the home videogame collapse of the early 80s, that comes down to the same thing.  The Atari 2600 was the king of the old-school consoles, but the market became saturated with consoles from a wide variety of manufacturers including ColecoVision to Mattel’s IntelliVision, and many, many others.  Then there were the games, towards 1981 and into 1982 the market was being flooded with lackluster software, which combined with the wide assortment of consoles led to the infamous videogame crash of 1983.  To give some perspective, in 1983 the gaming industry hit a milestone of $3.2 billion in revenue, but by 1985 it had shrunk by almost 97 percent down to 100 million.  Thankfully Nintendo was able to bring the industry back with their Nintendo Entertainment System, but had the market not been so saturated it’s possible Atari could have kept their lead in the industry.

Just look at how many consoles were released in 1982 and '83.
Just look at how many consoles were released in 1982 and ’83.

Fast forward to today where the home console market is still thriving, but for how much longer?  Once again companies are looking to enter the home console market with flashy set-top boxes that promise to do everything, but everyone is forgetting their history, and you know what they say happens when you forget your history…you’re doomed to repeat it.

Amazon, Valve, Google, Samsung, and Apple are all expected to enter the home console market with set-top boxes within the next two years.  This is on top of a wide assortment of micro-consoles like the OUYA.  Then there are the big boys, Nintendo, Sony, and Microsoft whom already have ‘next-gen’ traditional consoles out in the marketplace.  Given the wide assortment of systems poised to enter the market in the near future, it really makes you wonder where things are heading.

Then there’s the software.  Development costs associated with creating a AAA title have ballooned to Hollywood levels.  Games costing a few hundred thousand dollars now cost tens of millions.  This stifles creativity because publishers want to ensure success so more often than not they will copy whatever fad happens to be in.  Case in point, look at how many first-person shooters are available, it’s staggering.  By putting the focus on making money instead of creating unique and innovative gameplay experiences, we could repeat exactly what happened in 1983, too many consoles to choose from, and a dearth of quality software.

The problem of old could very likely happen again, where consumers lose interest because of oversaturation.  One need only look at the mobile market to see just how saturated the market has become.  For every good game there are countless clones, and filler titles that fail to make any money.  Should the same thing happen in the home console market we could very well see the collapse of the entire videogame market as we know it today.

I can truly see something like this happening unless something dramatically changes in the next few years.  What do you think companies can do to ensure gaming doesn’t fall from grace?

2 thoughts on “Is Another Videogame Crash Around the Corner?”

  1. This was a fantastic read. It is frightening the future of videogames in general. Games have become way too expensive to make, in my opinion, it shouldn’t be. Games like Last of US and GTA V make tons of money not because they are visual masterpieces (it helps), but because they are amazing fun games that bring new experiences to the industry. Nintendo has tons of success creating software on a budget so I can’t see why other companies can’t thrive with a good strategy.

    The mobile market hurts unfortunatly and since people won’t stop buying phones anytime soon, the handheld market is pretty much doomed. The 3DS is an enormous success but still will probably never reach the sales of the GameBoy and DS line. Same with consoles, all these set boxes probably won’t offer more then glorified clones and mobile games (except for the Steam Box of course, that thing should rock) so eventually people will get fed up.

    The Wii U is already suffering, even though the product itself is pretty solid if you ask me. The PS4 and Xbox One are off to a fantastic start but who knows if it will last… or even more interesting, if there will be another Playstation or Xbox after this generation. Sony pretty much confirmed there won’t be with their playstation now platform.

  2. Yeah the future is really uncertain right now. There are just way too many players entering the market. Even with the Steambox, it’s not one product, but many, across multiple manufacturers and multiple specs. I get what Valve is trying to do, but with so many different options available, it’s getting completely out of control and who knows if they’ll have enough force to really unify the industry. One thing is certain, the traditional videogame console as we know it is finished.

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