Can a crash happen again?

[ussexplorer]

I was thinking the past couple of days. Right before my brain exploded I came up with the following thought. Most talk about how many things caused the big game blow out in the early 80’s. One of these was to many carts on the market. So I jump forward to the early 90’s and see tons of left over NES and Genesis games. I picked up a few new genesis goodies based on this. Yet the game industry is still going good. Now I look at the Play Station. Tons of PS and PS2 games everywhere. So why is the industry still going strong? Are we building up to another blowout? Are their just not enough other factors going on?

 

Enjoy,

 

Josh

 

P.S: Please add to this for additional questions. Yes, I do know home computers were hitting it big at the same time.

[Ze_ro]

Well, I doubt it... the market is just so big at the moment that these companies can release garbage and still make some sort of profit. Besides, the rubbish games on the PSX and PS2 often have at least some redeeming factor... at least enough to make them better than Sneak 'n' Peak.

 

Frankly, with the state of video gaming nowadays, where 90% of games are either a strategy game, an FPS game or a Resident Evil ripoff, I wouldn't be too upset if there was a crash.

 

--Zero

[Nukey Shay]

It wasn't exactly "too many games" alone...you have to consider the manufacterer's side of the issue. If a game doesn't sell well enough for a company to recoup the costs of producing it, they'll have no choice but to stop producing it (unless they have another way of support)...liquidating/scrapping remaining stock of the title. Snes/Genesis games are no longer part of the equasion, since they are no longer in production. What happened during the crash is that there were too many OEM people after the same dollars, so that nobody ended up making a profit. When the list of badly-done games increased, and public interest began to wane, it only compounded the problem.

Since newer systems rely on CD/DVD as the medium, the production costs are lower for the game manufacture itself (not including design costs, of course). And the gaming comunity is much larger that it was in the past, naturally...so there is a larger user base to market the titles to.

[oesii]

I think a crash by some companies is still possible. Not the whole industry unless the economy tanks some more. I was looking at the releases that Nintendo had for the next year, and a lot of them where GBA rereleases of Mario, Kirby, Zelda, or Donkey Kong games. The GameCube is getting new versions of all their franchises but a lot of it made me think of the kind of stuff Atari was peddling with their 5200 and 7800 rehashes. It got old after awhile.

[cryptik76]

One of the big reasons for the video game crash of the 80's is not that there were too many games on the market (though the market was not really big enough to support that many games as it was), but the fact that so many companies were releasing complete crap. The industry wasn't moving forward, and games were not evolving like they should. How many blocky variations on Space Invaders does it take before people are sick of them?

 

At least now, there's a huge market for games and there are enough innovators that things are kept fresh. As long as the industry (and games) continues to evolve, I think it will be fine.

[chrisbid]

i dont think the industry will crash the same way it did in the 80's, but i do think the industry can slow down and decline somewhat.

[Vic George 2K3]

There was also the mentality that videogames were nothing more than a passing fad, an introductory step into the world of computers, and marketing shifted from doing videogames to doing personal computer programs and games. People who wrote videogame magazines back then couldn't foresee the possibility of a videogame market revival like the one that took place in the late 1980s with Nintendo taking the dominant spot over the former king-of-the-hill Atari. It was definitely not a transitory time at all between one generation of game systems and another; it was more like the Tribulation period that left people wondering what could possibly follow in the absence of videogame systems.

[shep]

I think a crash by some companies is still possible.  Not the whole industry unless the economy tanks some more.  I was looking at the releases that Nintendo had for the next year, and a lot of them where GBA rereleases of Mario, Kirby, Zelda, or Donkey Kong games.  The GameCube is getting new versions of all their franchises but a lot of it made me think of the kind of stuff Atari was peddling with their 5200 and 7800 rehashes.  It got old after awhile.

 

Yes but the GBA isnt just getting rehashes.

[AtariDude]

While it is within the realm of possibility, I don't think it is likely to have a crash like you had in the 80s. A gradual decline might occur but the video games industry is doing a good job of getting the kind of games that people enjoy so as long as that occurs, the industry will survive.

[Ze_ro]

One thing that I think has changed since the 80's is that people know how to pick games better. Instead of just blindly buying games based on the subject matter ("Ooh, E.T. was a good movie, the game must be just as good!"), people usually look into games before they buy them... rentals, magazines, internet, etc. Plus, we usually take for granted that movie tie-ins are usually bad games, and that sequels aren't usually much different.

 

There's still a lot of bad games, but companies generally have to be better to survive now than they did in the 80's I think.

 

--Zero

[cryptik76]

I think a crash by some companies is still possible.  Not the whole industry unless the economy tanks some more.  I was looking at the releases that Nintendo had for the next year, and a lot of them where GBA rereleases of Mario, Kirby, Zelda, or Donkey Kong games.  The GameCube is getting new versions of all their franchises but a lot of it made me think of the kind of stuff Atari was peddling with their 5200 and 7800 rehashes.  It got old after awhile.

 

I think it's unfair to look at the GBA as an overarching example of the market in general. People have entirely different expectations for a handheld system than they do for a regular console system.

 

On a handheld system, ports of classic titles are often welcome (at least by a certain percentage of GBA players) because it's nice to have a version of one of your favorite games "on the go," unless you're the kind of person who doesn't like to revisit old favorites. Even though I have both Doom and Doom II on my PC, I snatched up both titles for the GBA because it's very cool to be able to play these games on a handheld system.

 

Plus, these re-releases of classic games only make up a relatively small percentage of GBA releases. Nintendo's list also does not include 3rd party titles, of which a number of interesting and innovative titles will be seen in the next year or so.

[Xot]

Not to be overlooked is the CD format's contributions. In the past, producers had to bet on the popularity of a game in order to make the right number of carts. If you make too many, well, ET, need I say more?

 

But if you don't anticipate a hit and produce too FEW carts, the turnaround on the second batch of carts is so long that the game gets cold and those newly released carts aren't wanted anymore.

 

CD's you can make as little or as many as you need and the cost and turnaround is almost neglible.

[Jetboot Jack]

Xot -- if only that were true, unfortunatley you STILL have to make fixed quantity production runs at fixed times for the current formats...

 

Many CD and DVD's are rotting unsold, just like carts did

 

Sure its a bit cheaper, but not nearly as much as you would like to think, all format owners charge royalties per disc and upfront manufacturing costs gotta be paid...

 

Truth is th emarket is very much more stable than the 80's because companies like Sony and Nintendo are GOOD at their business, and are looking further ahead than Xmas!

 

And because the softco's are now very mature too, they are less like 80's video game companies and more like the "other" media now (books, film, music, tv etc)....

 

sTeVE

[holygrailvideogames.com]

I think another crash is possible. Microsoft is taking a killing on the Xbox. Sega is just keeps losing money and Capcom isn't doing that great. The PS2 and Xbox are easily modified to play copies and no one is buying the Gamecube.

[Xot]

Xot -- if only that were true, unfortunatley you STILL have to make fixed quantity production runs at fixed times for the current formats...

 

Many CD and DVD's are rotting unsold, just like carts did

 

Sure, but far FEWER than carts. Let's say you make a game, and you don't know if it's going to be a hit. You can make a small run of say 2,000 discs and if they sell like hot cakes you can have another 10,000 out the doors in days. If the game bombs, you're out 2,000 discs.

 

With carts, that turnaround would be much, much longer, and during the waiting period interest in the game may wane.

 

Also, with carts, you wouldn't have the option of the 2,000 run - you'd have to do the whole 10K and hope they sold.

 

Numbers are theoretical, but I think I've illustrated my point.

[bergbros]

A crash is always a possibility especially in a slow economy. The videogame glut of the the eighties is becoming like now except there is now a CLASSIC game market as well as the current stuff. It is important for the industry to keep innovating or else people will stop buying. The number of retrospectives and Top 100 lists are pretty ominous. If people start yearning for the "good old days" too much, the industry will take a big hit.

[+kisrael]

One thing that I think has changed since the 80's is that people know how to pick games better.

 

That's a good point. Legions of kids now have the net (like gamefaqs chatrooms) rather than just the sears catalog to go on.

 

Also, some argue that the crash is overstated. I'm not sure how much of a dip arcade games took, if it's just console only, but a lot of people just started playing games on Home Computers, where games were more sophisticated and piratable. At this point, the PC vs console market is rather mature. And arcades are already dead. So given the premise that people never really stopped playing games, and probably never will, then consoles seem poised to retain their dominant place and unlikely to suffer a crash. A slowdown, maybe.

[Jetboot Jack]

Xot -- sorry to have to disagree, but 14 years in the games industry has educated me well...

 

Sony/Nintendo/M$ wouldn't do a 2000 unit run, maybe a small 50,000 one if you were lucky, and were not confident of the products sell through.

 

But chances are that such a game wouldn't have met with their approval to begin production (you need them to WANT the game before you can even start development -- unless you are a proven company). A follow up run of 50,000 units after a first run of 500,000 is not unheard of though.

 

On all formats you book production time ahead of your product completion and then it takes weeks to get another slot, once your first run is sold thru or if you miss your dealines and product approval, in one of the manufacturing plants.

 

Also remember that its not just the disc that's made in that production run, but the packaging and manual too -- the cost of goods of these items is not insignificant.

 

Your ideas are true for a product that is manufactured by a publisher themselves, but that is limited to PC type products, and even then lead times can be significant at CD plants in the busy periods (September to December)...

 

sTeVE

[+kisrael]

Also remember that its not just the disc that's made in that production run, but the packaging and manual too -- the cost of goods of these items is not insignificant.

 

Your ideas are true for a product that is manufactured by a publisher themselves, but that is limited to PC type products, and even then lead times can be significant at CD plants in the busy periods (September to December)...

 

I have no game industry experience, but some software development...and I'd guess development costs, staff salaries, are a huuuge part of the overall budget. At least half I'd guess. And except for little gimmicky games, those costs are fairly fixed, if you sell 2000 or 50,000.

[Jetboot Jack]

Kisrael,

 

I wasn't alluding to any costs of the development production of the game itself, those are a whole other the issue. And indeed these far outway the manufacturing costs of the goods themselves, and don't forget the marketing money too (often a huge portion of a game's budget).

 

I was responding to the notion that it was the cheaper media CD/DVD vs Carts that was or was not possibly contributing to the possility of another industry crash, a notion I personally do not believe will happen again for the reason I outlined earlier...

 

sTeVE

[Raijin Z]

There will never be another crash, because video games aren't the niche electronic toys they were in the eighties.

[MegaManFan]

I think an economist might argue that there's no such thing as "never" when it comes to trends. People thought the rise of the Dow Jones Industrial Average would never end during the 90's, and got a rude awakening in the 21st century. The "trend" right now might be that a crash couldn't happen, but we're actually seeing the weak economy cause a deflationary effect on goods and services across the board, something that hasn't happened in half a century. If money is tight, people will stop buying new big ticket entertainment items first, and you guessed it that will be game consoles. The market right now can support three major consoles, but just barely. If a legitimate fourth player entered the field (someone with enough money and guns to go after the other three and squeeze out retail shelf space) it could knock over the whole house of cards.