GamesBeat

Why another game industry crash could set companies straight

This post has been edited by the GamesBeat staff. Opinions by GamesBeat community writers do not necessarily reflect those of the staff.
Editor's Note from Stephanie Carmichael:
Bobby has a bold idea of where the video game industry is headed. Agree or disagree, it's hard to argue that some companies aren't treating their customers right.

- THQ bankrupt and its assets sold off.
- Capcom’s consistently haphazard downloadable content and the cancellation of Mega Man Legends 3.
- WarZ’s poor release attempt and rerelease amounting to a description change.
- Aliens: Colonial Marines’ poor release and subsequent (as well as preemptive) whitewashing.
- SimCity’s numerous issues stemming from poor planning on the part of Electronic Arts.

I could go on for a long time detailing the problems major developers and publishers are suffering from, but the full list would be too long to print. What is evident, however, is a trend of abuse and mistrust that these corporations are perpetrating toward their customers. The frequency is increasing almost to an alarming rate. Game budgets are becoming increasingly bloated, reaching over $100 million per title. This has led to games requiring several million in sales worldwide just to break even and few hitting that mark despite selling in larger quantities than before.

It’s not the first time that this has happened. In 1983, a similar event occurred. Publishing glut was rampant, trust in video game companies were at an all time low, and game companies were ignorant to these issues. The result was a series of failures and bankruptcies that caused the entire industry to collapse and create more far-reaching effects, including a lack of confidence in American game studios that lasted for years.

The similarities now are staggering, and the phrase “those who do not study history are doomed to repeat it” certainly applies.

The rise of crowdfunding sites such as Kickstarter is indicative of this new collapse as more titles are being funded not by publishers but by consumers. More developers are going this route, and even publishers are trying to get into it, which has resulted in accusations of double dipping.

All of these developments are simply symptoms of a greater issue. Developers and publishers are detaching themselves from their customers, whom they try to garner “loyalty” from at an accelerated rate, resulting in a state of hubris that mirrors if not dwarfs the conditions that led to the video game crash 30 years ago. A new crash is inevitable, and game companies are speeding it up rather than trying to reverse its course.

I, for one, welcome it.

Don’t get me wrong, I do not wish ill will on the people looking to put food on their table, and this is their best means of doing so. I sincerely hope that they can find work elsewhere in the industry should they be caught in the downfall. When something becomes too bloated to sustain itself, however, the only solution is to pare down the costs and accept a lower accompanying gross profit until everything stabilizes.

That isn’t happening, and these key representatives of the industry are going to suffer large and crushing financial fallout when they collapse. A lack of quality control and horrible public relations are only going to worsen the effects. When these companies have to recover their debts by selling their assets, they’ll realize no one wants them.

So how do they avoid this? They don’t, and I don’t want them to. Despite their claims that they are “too big to fail,” they are not the sole defining part of the industry. Independent developers are rising up in droves with quality games that people want to play and customer relations that earn genuine loyalty that’s given freely, not coerced.

Will this result in a copy of the crash from 30 years ago? In some ways, yes; in others, no. I don’t foresee an immediate crash but instead one that will unfold over time as more and more major publishers tank. It also won’t be as complete as the last one. Independent companies will survive it mostly intact due to their more honest business practices.

On the console side, I see Sony and Microsoft walking away and focusing on their other divisions. Nintendo stands a chance of surviving due to their focus on first-party titles. The Ouya is uncertain as there is extremely little information available about it. Most major publishers will either go bankrupt or become little more than small developers as a result of their efforts to stave off bankruptcy. How developers and publishers go from there will depend largely on their reputation, and they will have to learn to earn loyalty rather than expect it automatically.

That will be a welcome sight.


Screen Shot 2014-03-25 at 2.00.11 PMGamesBeat 2014 — VentureBeat’s sixth annual event on disruption in the video game market — is coming up on Sept 15-16 in San Francisco. Purchase one of the first 50 tickets and save $400!
0 comments

GamesBeat is your source for gaming news and reviews. But it's also home to the best articles from gamers, developers, and other folks outside of the traditional press. Register or log in to join our community of writers. You can even make a few bucks publishing stories here! Learn more.

You are now an esteemed member of the GamesBeat community. That means you can comment on stories or post your own to GB Unfiltered (look for the "New Post" link by mousing over your name in the red bar up top). But first, why don't you fill out your via your ?

About GamesBeat