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The difference between a crash and an explosion

The difference between a crash and an explosion

Fri 08 Nov 2013 8:00am GMT / 3:00am EST / 12:00am PST
Development

Why gaming's expansion shouldn't be haunted by the spectre of '83

Can you have too many games? Recent years have seen an unqualified celebration of the opening up of the games market to indies and small developers, who have found themselves free to create and distribute games on a wide variety of platforms. Closed platform holders are rushing to engage with this new wave of development, while open platforms luxuriate in a wider range of game software than we've ever seen before. Yet problems are mounting in this new utopia. Discovery is a huge issue, with even some very good games failing to find an audience, while the wholesale copying of game systems by unscrupulous firms has caused controversy. Perhaps the voices asking whether this new openness is actually a good thing aren't so crazy after all?

A brief history lesson is in order. In 1983, the video games business in North America went into a massive recession, which over the course of two years knocked over 95 per cent off the revenues of the fledgling industry. With the benefit of hindsight, we can now see the causes of the crash fairly clearly - a convergence of factors ranging from rising adoption of home computers through to inflation, but focused around one key issue, namely the flood of extremely low-quality software which "poisoned the well", turning consumers away from video games and eroding confidence in the medium to the extent that only the arrival of new systems from Japan later in the 1980s would prompt a recovery.

In the past year, there's been a resurgence of interest in the 1983 crash among videogame executives and the industry's senior statesmen. They've not suddenly undergone a Road to Damascus conversion to become devoted scholars of the fascinating field of game history, though. Rather, they've adopted a tendency to say things like "I know it's not fashionable to say this, but...", followed by a darkly foreboding warning that it could all happen again, and that we're definitely on the path to disaster right now.

"In the past year, there's been a resurgence of interest in the 1983 crash among video game executives and the industry's senior statesmen"

Here's how they see our bright future going dark. The enormous amount of software being launched on platforms like the App Store and Google Play (among others - Steam has massively stepped up its Greenlight authorisations, for example) ends up overwhelming the ability of those platforms (and the consumers they serve) to provide for effective discovery mechanisms or to absorb and provide commercial success to deserving games. Great games end up being lost and their creators go under. The "Indie Bubble", thus far sustained by scarcity, bursts. Meanwhile, consumers unable to find good software end up being disappointed and annoyed with the low quality games they're playing. Rubbish games with grasping, unpleasant approaches to free-to-play mechanisms; relatively expensive indie titles that are rushed, buggy and incomplete; Kickstarter titles that either never materialise or miserably fail to deliver on their promises. It all adds up, until - crash! - consumers lose interest and drift away, leaving a huge hole in the industry's revenues.

In other words, it's 1983 all over again. Flooded with software that's mediocre at best and often absolutely rubbish, consumers lose confidence in an entire medium and go elsewhere to get their kicks. That's actually not all that unrealistic, by the way - the 1983 crash is far from being the only example of people deciding en masse that their time is better spent elsewhere. Interest in entire mediums - games, films, books, TV shows - ebbs and flows in accordance with consumers' perception of the quality on offer. Many of the mini-crises which the games business has encountered in its history, while not quite as dramatic as the 1983 crash, are down to a market segment turning away from the industry because they're just not all that interested any more - the decline of arcades, the Japanese industry's difficulty in keeping people playing past their college years, the desperate scrabble to figure out where the Wii's customers went after their console was put into a cupboard, the exodus from Facebook's myriad of mostly depopulated games.

One thing in this prophecy does ring true - we are most certainly in an Indie Bubble right now. That's a wonderful thing, for what it's worth - a bubble founded on creativity and promoting the discovery and rewarding of new creative ideas, new styles of play and new directions for our medium can only be a good thing - but it's a wonderful thing that will come to an end. The audience for indie games is much, much larger than anyone gave it credit for, which is why we've ended up in such a remarkable bubble, as talented developers reap huge rewards for being able to step into the gap and fulfil this pent-up demand, but sooner or later supply will balance against demand (even as that demand continues growing), and most likely, outstrip it. Revenues from indie games will start dropping off; creators will find it tougher to get noticed, tougher to find an audience and tougher to make a living. It won't be impossible; the indie scene, now established, is a part of the landscape of the industry and will not disappear, but the present bubble market, which has rewarded many creators handsomely, will eventually crash and leave some people (the "I gave up my job and remortgaged my house to make this entirely greyscale top-down RPG based on the Miner's Strike of 1984" crowd) destitute.

"The audience for indie games is much, much larger than anyone gave it credit for, which is why we've ended up in such a remarkable bubble"

For what it's worth, I would play the hell out of a greyscale top-down RPG based on the Miner's Strike, but that's really not the point.

Even if I agree that the Indie Bubble will come to an end and make life tougher for creators, though, I can't agree with the rest of the prophecy. The spectre of the 1983 crash is a scary one to wave about, but Hallowe'en is over, and this comparison requires far too many false equivalences to stand up to any scrutiny. For a start, the 1983 crash was brought about in large part by large companies making terrible, terrible games and then releasing them with huge marketing budgets and charging the same amount for them as every other game on the market. Compared to the present situation, where cheaply developed titles are put on the market with minimal marketing support, relying largely on word of mouth and effective leverage of discovery mechanisms, and priced at much lower cost than AAA software (often free, in fact, with IAP mechanisms to make a profit if and only if the player actually likes the game enough to pay), this is a radically different situation. A player who spends lots of money on a heavily marketed game that sucks is absolutely likely to step back from the medium, especially if it happens several times; a player who downloads a handful of cheap or free titles that were recommended by friends and doesn't like some of them is a completely different proposition.

Moreover, the industry's revenue sources are very different today than they were in 1983. The video game crash came about largely because the terrible games being manufactured were being sold to children - or rather, to children's parents, who rapidly stopped spending money on them when the kids were disappointed. The situation at present is very different. The consumers who access indie titles are not children, for the most part, they're pretty well informed and genuinely interested adults, spending their own money. Titles aimed at broader demographics are often free-to-play, which has its faults but is certainly insulated from a 1983-style crash simply by merit of being perhaps the most pure expression imaginable of the "try before you buy" philosophy. Titles for the fickle kids' market, meanwhile, are arguably better quality than they have been for years, not least thanks to the sterling recent track record of companies like Nintendo and Activision in the console field, and the rise of excellent innovators like Moshi Monsters elsewhere.

"It's easy for someone who's used to games being created to make money to fear the market being altered by this new wave of undirected creativity"

It's unkind, perhaps, but one can sense an undercurrent in the negativity - a fear that all of this new wave of indie creators, these thoughtful students, high-falutin' literary types, strongly motivated feminists or politically minded activists, and all the rest besides, are bringing an uncommercial and even anti-commercial sentiment into the industry. They're turning out countless games, from the bigger releases that end up on Steam or the App Store down to the dozens of games that end up being available after Game Jams or other such contests. Many of them are using games as a tool of expression rather than an instrument of commerce. It's easy for someone who's used to games being created for one single-minded if slightly soulless purpose - to sell to enough consumers to make money - to fear the market being flooded and inevitably altered by this new wave of undirected creativity. That, I think, is where the fear of "too many games" and the summoning of the unquiet spirits of 1983 finds its origins.

This is a creative industry, and we should never be afraid of creativity. A creative industry that fears creativity is one which has lost its voice, or run out of things to say, and video games do not fall into that category; on the contrary, the upheaval we see in today's industry is a result of finally learning to speak and beginning to grapple with the complexities and challenges of language, of form and of communication. The book industry faces challenges, but those challenges are not the result of the easy accessibility of pen and paper to the masses; the very lifeblood of books lies in the fact that anyone may pick up a pen or a open a new Word document and start creating, and some of those who begin to create will end up performing magic. Freely available, cheap film cameras gave us Spielberg and his entire generation; good quality cameras in every smartphone will give cinema its next generation of auteurs. And games? We should absolutely rejoice in the fact that smart, creative, expressive, angry, thoughtful people are choosing games as a medium in which to express and explain their feelings and their experiences - that our medium is becoming a way for a generation of artists and creators to share with others, just as writing and music and film have been for other generations. The seeds we're sowing right now aren't the seeds of another video game crash. They're the seeds that will grow into the most extraordinary, visionary and innovative generation of game creators we've ever seen. Don't fear it; feel privileged that we get to see it happen.

11 Comments

Tosin Balogun
Studying International Business

23 21 0.9
Very good post, i completely concur with the reasoning in this article. The Industry has matured enough for another 83 to happen and to be frank, the indie scene is where most recent creativity seem to come from as the AA space gets shackled with the rising cost of production. We can also see these indie people as a tip of the sword since they have easy access to all platforms available, that way they can access people who do not usually have interest in video games and maybe eventually bring those markets into the traditional home video game space.

Posted:9 months ago

#1

Greg Wilcox
Creator, Destroy All Fanboys!

2,156 1,076 0.5
Nice article. As someone who was around back in 1983 (OK, before that), I have to point out a few interesting things:

1. Back in 1983 (and before that), there were not many video game-centric retail stores and nowhere near the massive used games market as we have today. Games were sold in department stores of varying sizes and some electronics stores and some of these shops didn't take returns on open software. The ones that did from what I recall, didn't seem to know what to do with used games other than to mark them down (often considerably) and hope they sold quickly to someone who wanted a good deal.

2. People used to keep games around longer - there wasn't a huge "play and trade-in" mentality like there is today and if that did happen it was with friends. I can recall the "shoebox trades" where friends would bring a shoebox full of carts to school or to a friends and swaps were made (sometimes with someone trying to dump that crappy game they got as a gift from a family member who walked into a store and bought the first thing they saw because they knew nothing about what was popular or GOOD).

3. A crash and an explosion usually have victims if there are enough people (i.e. game studios) in the impact zones who don't get out of harm's way. If (and when) today's bubble bursts, the industry as a whole will be fine. But people losing jobs as a result will need to all land somewhere and get back to work at some point. Of course, with hundreds if not thousands of copycat games waiting their turn for some sun time, I don't think the most casual end users will notice or even care at thanks to so many games being more or less the same (outside some cosmetic differences).

4. I see some of the same problems with having too many great to crappy (and expensive) console games back in '83 and way too many great to crappy indie and AA games for nothing to whatever few dollars an indie bundle costs today. In both cases people may be buying them initially, but at some point, no one is playing everything they're spending money on. I bet a lot of folks here have a stupidly sized backlog from all those sales. Mine is now 2.7 years worth (I counted)...

Posted:9 months ago

#2
For some time back last year we tried to discuss the topic of the 83/84 crash and how the Xbone seemed to be fueling another perfect storm; but were cut down and shut down from opening up the discussion by various media sites - I remember a certain site not a million miles away from here pulling a discussion on this very topic!

Now the situation is so tangible that its impossible for the trade and media to ignore so we now see articles such as this appear as if this is the first time it has been considered. That said this is a well presented observational piece; though fundamentally the issue has to be that the executives have fathered their own demise, many of whom are leaving the sinking ship with great Golden parachutes!

However, I want to avoid the revisionist view of the 83/84 crash - as one that lived through this collapse - I note that many of the 'elder statesmen' of our industry that remain in positions of any note like to paint a different reality of what led to the crash than the real reasons - especially as many had a part in causing the situation.

A disenfranchised audience, duplicitous media with brought reviews, under-performing hardware, and over hyping of product, seem the best markers of the last crash - and it would seem that the industry and its "too big to fail" publisher structure are sleep-walking down the same road again!

Edited 1 times. Last edit by kevin williams on 8th November 2013 11:51am

Posted:9 months ago

#3

Mihai Cozma
Indie Games Developer

123 34 0.3
Very good article. Let's hope you are saying is true, or I'll have to switch to web development and web services as my trade (low level desktop apps and indie games) would fade away :)

Posted:9 months ago

#4

Brian Lewis
Operations Manager

127 79 0.6
@Kevin

As another person who experienced the crash in 83, I will agree that there was more too it than is commonly expressed by the media. This was often pushed as an economic adjustement, caused by market forces. As one of those 'market forces' I have to disagree. The games/entertainment industry as a whole didnt take a hit... the console industry did. Sure, the console industry was the 'hot' new thing, and it was where the money was at the time... but there was only a visible crash, because the console bubble popped. If they had not been generating such a volume of content that no one really wanted, it would have never been noticable.

Today's market is both similar, and different. The console market is at the end of a very long cycle. They are starting the next cycle, with a new generation of products that dont promise to change the market. They are competing against the new 'hot' market of mobile, and honestly seem to be out of touch with the consumer. I dont think anyone will be surprised if this generation of consoles doesnt take off like previous generations, and if the AAA gaming industry goes looking for a new platform.... which is the real risk.

AAA gaming has basically ignored mobile for years. They are now realizing this folly, and are looking to invest in both the stable PC business, as well as the up and coming mobile business. However, they are not coming into the new market as the leaders, but rather the followers. Indy's have pushed the innovation in both PC and mobile for years, while the AAA companies have missed the boat. They are now looking at having to catch up... and having to do so in markets that they dont understand.

2014/15/16 is going to see some major adjustments in the gaming industry. We have already seen some consolidation happening, but expect to see more. The consumer market might not crash like 83... but I expect the business market to take the hit this time.

Edited 1 times. Last edit by Brian Lewis on 8th November 2013 3:17pm

Posted:9 months ago

#5

Yvonne Neuland
Studying Game Development

34 59 1.7
Excellent article. I agree with almost every single thing stated, except for this.
Even if I agree that the Indie Bubble will come to an end and make life tougher for creators, though, I can't agree with the rest of the prophecy. The spectre of the 1983 crash is a scary one to wave about, but Hallowe'en is over, and this comparison requires far too many false equivalences to stand up to any scrutiny. For a start, the 1983 crash was brought about in large part by large companies making terrible, terrible games and then releasing them with huge marketing budgets and charging the same amount for them as every other game on the market. Compared to the present situation, where cheaply developed titles are put on the market with minimal marketing support, relying largely on word of mouth and effective leverage of discovery mechanisms, and priced at much lower cost than AAA software (often free, in fact, with IAP mechanisms to make a profit if and only if the player actually likes the game enough to pay), this is a radically different situation. A player who spends lots of money on a heavily marketed game that sucks is absolutely likely to step back from the medium, especially if it happens several times; a player who downloads a handful of cheap or free titles that were recommended by friends and doesn't like some of them is a completely different proposition.
The problem with this statement is that I don't think people in the AAA industry realize that there is an ENORMOUS difference between how micro-transactions are used in AAA games/hard-core indie games vs how micro-transactions are used in casual-mobile games.

Micro transactions in AAA games /hard-core indie games are carefully balanced so that they don't affect gameplay in ways that will induce players to feel punished.

Mobile games, on the other hand, are carefully balanced to use the entire operant-conditioning model of learning to trick players into believing there is a game, when actually the game mechanics are a variable ratio positive and negative behavior modification research study that rewards players with a "game mechanic" event each time they pay money (yes $ = positive reward), and punishes players for not paying money by withholding "game mechanic" events for increasingly larger intervals (no $ = negative reward), adding less free game mechanic events as time goes on (no $ = negative reward), the layering in of more paid events (no $ = negative reward && yes $ = positive reward) and the addition of punishments to game outcomes if certain items aren't paid for (no$ = negative punishment).

To top off this gross misuse of psychology, the games are monitored extensively by built in data tracking analytics, under the guise of ad tracking. Mobile developers use the "ad tracking" to LITERALLY Conduct double-blind controlled human subject experiments on the players using multiple copies of the game to introduce different test states (i.e. The games present things with slightly different schedules of events) to differentiate experiment groups, track the test research subjects for statistically significant correlations between test states, use statistical software such as SPSS to determine if test states resulted in statistically significant results, and then alter the variable rate intervals according to the study's results to improve the variable rate schedule's payout results.

Experiment on people, to make money. Literally.

I have a degree in psychology from Stetson University. To graduate from their program, students have to design a real research project, present their proposal, conduct the experiment, use SPSS to examine the results and write up an actual peer-reviewed research study article.

My professor used mine as a source in his own research study and cited me as a contributing author when he presented the results to a conference at a convention. I know what the methodologies and criteria are. The only criteria missing from the studies done by developers of mobile games are the informed participant ethical criteria and the peer review provess.

Secretly doing human subject research experiments and calling the data collection "ad tracking" rather than human subject experiments doesn't change the fact that they are experiments. It just makes them unethical experiments.

Unethical experiments conducted solely for the purpose of increasing profit.

They may be free to install, but they are not free to play.

They cost thousands of dollars to "play."

The only intended audience is the elusive whale, and there is absolutely no aspect of the games that is intended to do anything besides drive the profit-margin on the whales.

In my opinion, this is far more insidious than the high price of games in 1983.

I was born in 1984, I played my first video game on a Japple II. A game called Adventure. I believe it was the first text based RPG ever manufactured. My first console was an intellivision II, BurgerTime is still the best platformer ever made, and Advanced Dungeons and Dragons was the best maze-crawler.

80's games didn't make me mad. Mobile games infuriate me.

Edited 2 times. Last edit by Yvonne Neuland on 8th November 2013 9:31pm

Posted:9 months ago

#6

Matt Walker
Production Coordinator

41 23 0.6
I can't imagine that there's enough mainstream money going into indie titles to merit the thought of an "indie bubble breaking". What we should really be concerned about is whether consumers are going to get so used to F2P that they eventually refuse to pay for games up front. Then we'll really see revenue drop.

The devaluing of software. Iwata-san cautioned against it at GDC years ago and everyone thought he was nuts.

Posted:9 months ago

#7

Steve Peterson
West Coast Editor

108 73 0.7
Excellent essay, Rob. As one who was in the game industry through that time (albeit in paper games in 1983) I do think today's situation is very, very different. For one thing, the 1983 crash was due to inventory becoming unsalable; retailers were investing millions in games that were completely unsalable, and when that hit retailers stopped buying games. Now, when a game fails it's not a retailer who takes the hit, it's the developer or publisher. Still not good but not industry-threatening. Mobile games are perhaps more problematic, but ultimately people will still keep playing mobile games even if many publishers and developers disappear.

Posted:9 months ago

#8
It is an interesting topic, and I would say" never say never". While I dont think we have the exact same forces at play asin 83, there is and should be some reasons for concern. Most are noted above. There is one giant headwind however that this industry always seems to just ignore and its the macro economies of the world. Europe has a huge unemployment problem, especially among the young, It has been fighting years of recession, the Us is just living off the Fed printing, China has all sorts of problems just below the surface, and Japan has more problems than you can imagine, the world economies and currencies are currently one big bubble. Coming from a Wall street background, this worries me much more than a replay of 1983. I am very worried about a replay of 2008, but this time only much worse. The world has painted themselves/ourselves into a corner via debt/central bank money"printing"/currency manipulation. Math tells us this will have to end very badly. When the next credit crisis hits, when consumers are more worried about heating their homes than buying "games" , no one will be immune. I think there will be another industry wide implosion, but this time I dont think it will be our fault.

Edited 4 times. Last edit by Todd Weidner on 9th November 2013 4:29pm

Posted:9 months ago

#9
@Steve,
For one thing, the 1983 crash was due to inventory becoming unsalable; retailers were investing millions in games that were completely unsalable, and when that hit retailers stopped buying games.
Though the premiss is accurate the reason's omission is telling - why those games / hardware were unsalable is a factor that mirrors much of what we are seeing today. The fundamental issue with the hype regarding the 1983/84 Crash and the reality is that too much of the indicators that were ignored at the time have started to appear again - will be ignore them this time?

Posted:9 months ago

#10

James Ingrams
Writer

215 85 0.4
Good article, but you can have selective crashes as well, like the PC games crash in '93 when the major publishers went over to CD-Rom only titles before gamers had CD-Rom drives. The publishers just believed gamers would upgrade to play their games, but there was a recession and gamers generally didn't upgrade for another year+.

The smaller U.S. publishers like me survived because we were still releasing floppy games, or putting the CD-Rom in with the floppy.

This recession is much more pertinent to what's going on now I fear where the major AAA publishers struggle and die and indie goes from strength to strength "re-booting" the industry for another try, where this time we may get it right.,

Posted:9 months ago

#11

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