The crash of the Video Game industry

[CptStern]

Who am I? I am the creator of a certain video game console. I don't want to toot my own horn, but let's just say that profits from this machine were four billion dollars higher than the Microsoft XBox.

My console consisted of a plastic milk crate with a kitten placed inside. The controller was a wooden rod that could be used to poke the kitten. I sold zero of these consoles, which cost me zero to manufacture. Therefore my profits were zero. The XBox, however, LOST four billion dollars.

Now imagine four thousand of those stacks, and then imagine someone setting them on fire. That's what the XBox has done for Microsoft. If, after I tired of playing the only game available for my console (Cat Poker Tournament) I sat down and mailed a $20 bill to every single gamer in America, I would still be $2 billion ahead of the XBox.

Think about that, and think about how Sony plans to take a $400 to $500 loss on every single damned PS3 they sell for the first few years. Oh, I know they can make that money back on the games... if the consoles sell like hotcakes in a colony for hotcake addicts during a hotcake shortage. But only if.

I hereby predict that this will not happen. Luckily for me, it doesn't take a genius.

http://www.pointlesswasteoftime.com/games/crash.html

very interesting read that hits on many good points and inescapable conclusions


funniest quote of the article:

"The yellow block in the first screen is Batman"

 

[JNightshade]

6. But the gaming industry is still growing, dung-hoarding Turd Baron.

ROFL

 

[Sebastian]

I know that the only consoles I'll be considering this generation are the nintendo Wii and maybe the Xbox. PS3 is just too expensive and you need an HDTV to play anything at decent resolution.

 

[Sparda]

LOMFL all i could do was lol.

 

[Llama]

nice article

 

[CptStern]

in other words, the ps3 is doomed to fail unless they grab a significant amount of market share ..which doesnt look too likely as ps3 doesnt really offer all that much more than the other consoles at a lower price point ..the blu-ray player just isnt enough of an incentive to purchase a ps3 ..they should have made it optional

 

[$kelet0r]

Funny
I'd come to a similar conclusion only days ago.... and it makes sense too

 

[Cormeh]

Which brings us to today. We've now advanced from realistic 3D to slightly prettier 3D and... even slightlier prettier 3D with slightly better reflection effects and slightly better animated water ripples and - oh, look! This game has the most realistic fog yet!

Hahahahaha, that's great. I for one do get sick and tired of reading a jumble of specs when it comes to gaming machines, and this is part of the annoyance, minute "realistic" improvements that have absolutely no effect on the game whatsoever.

The Grand Theft Auto series carried the PS2, with the ability to abuse prostitutes in ways that Mario only did off-camera.

 

[burnzie]

Blizzard​

Haha so true.

 

[CptStern]

7. But all they have to do is find new markets. You already said they're making games for older gamers, and new gamers are being born every day.

There are two sides to that coin, though. Yes, there's a new generation of gaming kids out there. But the thing is, the original video game generation is growing old. I know, because I'm one of them, an Original Gamer. I owned Pong as a toddler, an Atari 2600 in grade school and an NES in 1987. I've logged hours on the Sega Genesis, the Atari Jaguar, the NEC Turbographx 16, the SNES, a Sega Saturn, a 3D0, a Sony Playstation, a Casio Fungiver 5000, a 4-bit Toyota Gamemobile... you get the idea.

But I'm 30 now, worried with mortgages and job stress and coffin shopping. My peers all have their own children, the household toy budget spent on the offspring, not the adults.

I know some of us still play games at 30, studies say about 25% of gamers are now over 35. But can you play games at 40 or 50 without looking like an intellectually-stunted manchild, there in your sweater vest, the control pad tangled in your long, gray, drool-soaked beard as the creeping hand of death stalks your every thought?

We Original Gamers, the hard core, bought every machine that came on the market for two decades. But for a whole lot of us OG's, the game consoles we own now will be the last we'll ever buy. There are millions of us, and it's just a matter of time.

And I mean it's literally a matter of time. I'll pop in a DVD because a movie only requires two hours from my busy schedule of work and home repairs and chasing kids off my lawn. Getting to the end of a video game, however, requires hours upon hours of play. Not because the story is hours long, mind you, but because getting through each scene requires practice and repetition and repetition and repetition, all in the hopes of seeing that exploding Death Star cutscene at the end.

A 10 year-old can come home from school in the afternoon and devote the rest of the day to the task of memorizing the exact sequence of finger twitches that will get him past the dark forces of the Empire. A college kid can do the same, often while high. Most employed and married adults cannot. If I'm right about this, the gaming industry is about to face its first real exodus of existing customers, a hard-core group they've relied upon for decades to snap up every new box on the shelf. We're leaving, because while we have grown up, gaming, in many ways, has not.

I know some of you Nintendo fans were screaming at your monitor in the last section, saying the $199 (or $249) Nintendo Wii is the low-cost answer to the affordability problem. The problem is Nintendo is still so neglectful of older gamers that it borders on hostility. Everything they showed at E3 starred a cartoon character, and the games that didn't (Madden and Red Steel) appear to be very bad games. Plus, I say the older you are, the less inclined you'll be to flail around the room with their new controller.

QFT, it applies to pretty much every gamer in my age bracket (+ 30) ..which is arguably the segment of the gaming population with the most money to spend ..the original xbox will probably be my last console ..the ps3 and thwe 360 doesnt offer me anything I want (I'll probably get the wii for my son)

 

[$kelet0r]

Well it even applies to those in their 20s - the 80s was the era of videogames pong be damned
But the good news is that computers will always be around so that if there is a vidoegame crash, pc gaming will survive and even prosper under the right conditions
there is always a way

 

[Gray Fox]

Don't agree with his conclusion:
It may suffer a blow, but it can only meen a good things. Since sony and MS will come to their senses, it happend to nintendo and now they came with the Wii.

Second: Nintendo isn't really hostile to older gamers anymore, RE4 proved that.
And with the low costs of the dev kit, it may very wel attract dev that make the kind of games you find on sony's and microsoft consoles.

Third, I'm afraind it posibbly won't even get a blow, seeing as PC gamers still pay much more to be able to play all the newest games and they do it more often then console gamers. So 600 dollar consoles may not be that much of a turn of to most people.

And fourth, the thing about the nintendo booth that made the lines so long was mostly that it wasn't as open as sony's and microsoft's. Scott Miller wrote on that on his blog, so sony's and microsoft future isn't looking so bad compared to the Wii.

 

[WhiteZero]

Every console manufacturing company, but Nintendo, have lost money selling consoles. This is elderly news.

 

[Gray Fox]

Every console manufacturing company, but Nintendo, have lost money selling consoles. This is elderly news.

Yes but this time it may be to much to make up for it in sales of games. PS2 may have been sold without profit, but sony made by far the larges profit, it may not have been relativly the largest profit, but that doesn't matter. 10% of a billion is still 100 million, while 50% of a hundred million is only 50 million. This time all but N may have big loses.

 

[WhiteZero]

Yes but this time it may be to much to make up for it in sales of games. PS2 may have been sold without profit, but sony made by far the larges profit, it may not have been relativly the largest profit, but that doesn't matter. 10% of a billion is still 100 million, while 50% of a hundred million is only 50 million. This time all but N may have big loses.

You really think that all these companies would have built these systems, knowing their actuall cost and their street price, and have gone along with it if it was going to be "too much to make up"?
lol

Not going to happen.

 

[CptStern]

Don't agree with his conclusion:
It may suffer a blow, but it can only meen a good things. Since sony and MS will come to their senses, it happend to nintendo and now they came with the Wii.

Second: Nintendo isn't really hostile to older gamers anymore, RE4 proved that.

one battle does not win a war ..and the wii doesnt seem like it's offering anything different than the gamecube

And with the low costs of the dev kit, it may very wel attract dev that make the kind of games you find on sony's and microsoft consoles.

I hope you're right

Third, I'm afraind it posibbly won't even get a blow, seeing as PC gamers still pay much more to be able to play all the newest games and they do it more often then console gamers. So 600 dollar consoles may not be that much of a turn of to most people.

only a small percentage of gamers have pcs that will run the latest games at full specs ..only 15% had current high end cards in the valve hardware survey and less than that had dual cores or other high end specs. Some of the hardware on that survey was older than 5 years ...what we as hardcore gamers dont realise is that the bulk of the pc game buying audience never visits gamespot/gamespy/shacknews, wouldnt dl the latest crysis video, watch the e3 feeds, or check out the latest UT2007 screens. Many games are bought on impulse (just go to any retailer on the day of a major game release ..the people waiting in line to buy are mirror images of each other: late 20's to 30's, hardcore gamers. i remember the line up for the nintendo gameboy ..every last one of the people in line were my age...the only exception to this that I can think was the release of halo 2


http://www.steampowered.com/status/survey.html

And fourth, the thing about the nintendo booth that made the lines so long was mostly that it wasn't as open as sony's and microsoft's. Scott Miller wrote on that on his blog, so sony's and microsoft future isn't looking so bad compared to the Wii.

it doesnt matter ..far more people were watching e3 than attended e3 ..first impressions in this industry go a long way

 

[VictimOfScience]

I think all of this is just rabid speculation until these next two consolesactually hit the streets. It depends on how they are all marketed to kids/adults/elderly. It depends on how much visibility/word-of-mouth they get on TV and in ads. Its easy to say Nintendo will be the winner because its the default console of choice (seemingly). And its easy to say that Sony will be last this generation because the price is too high. Its easy to say that MS will be first because of their head start and lower price. What's difficult is accurately predicting the future.

I am of the mindset that the prediction that states that MS will stay ahead til sometime in 2007, then the PS3 will move ahead of the 360, is true. Of course, nowhere in that scenario is the Wii. The Wii is a total wildcard and should have a TREMENDOUS impact on videogames sales, both hardware and software, come this holiday season. I am very interested to see how it affects sales of the 360/PS3. A world with Nintendo on top of the videogame industry is a world I want to live in (mostly because the days when Nintendo ruled in the past bring back such fond memories for me)....

 

[Gray Fox]

I do not completly agree on the PC thing, only a small percentage may havet he latest cards. But that just means that they do not dish out 600 every year, which I did say, so you are right about that. But pretty much every gamer does give atleast 2000 every 5 years. Unless you only play old adventures.
Now consoles are not only popular because of the price, it also the easy of use. I mean no installing, a game will look like it looks on the box, way more is gotten out of a console.

As far as the Wii not offering anything different then the gamecube. Well Nintendo is not offering any new IP's , but the new controller could make anything look fresh, plus like I said it's dev cost may make it easier and cheaper for devs to make new Ip and in the end it may end up devlivering the most variety.


Victim of Science I see it exactly as you. A little bit like the sims, it's wierd and it's either going to fail or it's going to be a huge succes.
And I also agree about what people say about succes, a lot of people here need to realize that tehy probably said the same of the N64 and the gamecube and those were both outsold by sony. So the fact that you may like a console doesn ot mean it will be a succes.

 

[VirusType2]

I think all of this is just rabid speculation until these next two consolesactually hit the streets. It depends on how they are all marketed to kids/adults/elderly. It depends on how much visibility/word-of-mouth they get on TV and in ads. Its easy to say Nintendo will be the winner because its the default console of choice (seemingly). And its easy to say that Sony will be last this generation because the price is too high. Its easy to say that MS will be first because of their head start and lower price. What's difficult is accurately predicting the future.

I am of the mindset that the prediction that states that MS will stay ahead til sometime in 2007, then the PS3 will move ahead of the 360, is true. Of course, nowhere in that scenario is the Wii. The Wii is a total wildcard and should have a TREMENDOUS impact on videogames sales, both hardware and software, come this holiday season. I am very interested to see how it affects sales of the 360/PS3.

The wildcard. Well said.

A world with Nintendo on top of the videogame industry is a world I want to live in (mostly because the days when Nintendo ruled in the past bring back such fond memories for me)..

I still like most of my games with cutting edge light reflective blood flying everywhere though, so I'm interested in cutting edge graphics systems also. But the Wii does seem like it will be fun too, particularly games that use the controller really well. If the game is programmed right, the controller will put me in the game, but if it isn't, it will put me out. I will be watching the reviews.

 

[VictimOfScience]

I still like most of my games with cutting edge light reflective blood flying everywhere though, so I'm interested in cutting edge graphics systems also.

I hear you. That's why I am watching the other two systems closely in terms of what kind of seriously amazing-looking stuff they can come up with that I will actually enjoy as well as drool over. Its funny though, the games I go back to the most are games with anything but cutting edge graphics (I am thinking of all the classic arcade games I play and also the classic adventures from the 90s like Monkey Island, Fate of Atlantis, Simon the Sorceror, etc).

But the Wii does seem like it will be fun too, particularly games that use the controller really well. If the game is programmed right, the controller will put me in the game, but if it isn't, it will put me out. I will be watching the reviews.

I know! Not only the controller, but the fact that hopefully since dev kits are so cheap (comparatively), many more indie developers will see their games on the Wii as opposed to other systems that would require much larger intitial capital. I want lots and lots of creative new thought to be nurtured by the Wii. High hopes...it'll be exciting to see what happens....

 

[CptStern]

I do not completly agree on the PC thing, only a small percentage may havet he latest cards. But that just means that they do not dish out 600 every year, which I did say, so you are right about that. But pretty much every gamer does give atleast 2000 every 5 years. Unless you only play old adventures.
Now consoles are not only popular because of the price, it also the easy of use. I mean no installing, a game will look like it looks on the box, way more is gotten out of a console.

yes but the article touches on the fact that to have the next gen you need to spend $1000 - $3000 (wii being the exception) ...for that price you can get a high end pc that does more than just play games ..but yes ease of use is a deciding factor but sooner or later it starts to wear thin ..I hvent made an xbox game purchase in a few years because I really see no point as most of the games offer me nothing in comparison to their pc counterparts ..simplification will sooner or later lead to boredom ...which is the point of the article

As far as the Wii not offering anything different then the gamecube. Well Nintendo is not offering any new IP's , but the new controller could make anything look fresh, plus like I said it's dev cost may make it easier and cheaper for devs to make new Ip and in the end it may end up devlivering the most variety.

ya but the controllers could also become a novelty (anyone remember the nintendo glove, Virtual Boy or the powerpad

here read this ..nintendo has identified the decline in the market but their solution is to bring in more casual gamers by making them easily accessible ..with thiscurrent stragedy they seem to be pulling away from the mature market not embracing it

 

[skarrob]

Sounds like oil company profits lol

 

[Gray Fox]

But the power isn't there to only be used for graphical goodness. Could a game like supcom be made on a n older system. Nope. So high power systems can be pricy. But for that devs to get more freedom and their imaginations doesn ot need to be limited by the specs of teh system that much anymore. Besides they get the ability to deliver even more memorable experiences. A game like FEAR wouldn't be as good without modern shaders, that kind of an experience could only be deliverd by new technology.

But the thing is why most people are exitied about the Wii, even like me who liked sony's philosophy on games a lot more then Nintendo's is because the Wii current gen and the Wii allredy posess the needed specs to make a good atmosphere and to be able to see emotions.

The thing is, the fact that the differance btween the gamecube and n64 and the ps2 vs ps1 was only in terms of graphics did not bother me that much, cause the old systems were not strong enough to let dev's deliver a truly great atmosphere, and since I liek story driven games that weas important for me. It wasn't only about more shiney new stuff. Which is a lot less with the new generations, altough looking at how much power physics need and a lot of other stuff, I may be wrong.

yes but the article touches on the fact that to have the next gen you need to spend $1000 - $3000 (wii being the exception) ...for that price you can get a high end pc that does more than just play games ..but yes ease of use is a deciding factor but sooner or later it starts to wear thin ..I hvent made an xbox game purchase in a few years because I really see no point as most of the games offer me nothing in comparison to their pc counterparts ..simplification will sooner or later lead to boredom ...which is the point of the article

I henstly do not get that totally, everyone is aying that it only looks good on HDTV, but the thing is, more polygons, better and sharper effects can all be seen on a regular tv. The only thing you truly need a HDTV for is the Blue Ray movies. But I may be wrong, a lot of people are of the opinion that HDTV truly makes a world of differance, I simply cannot see how. I mean a monitor needs to look shar cause you are sitting in front of it, but a TV.

 

[CptStern]

yes but most casual gamers couldnt care less about graphics

you really should read the article ..it touches on many of the things you mention

 

[MuToiD_MaN]

All three companies are going to make money. More than any of us will ever see.

 

[Gray Fox]

yes but most casual gamers couldnt care less about graphics

you really should read the article ..it touches on many of the things you mention

I did read it Stern. I know what Nintendo's plan, they are a little like sims. Going for a still hugly unexplored market, thats what I said, it may fail miserably or succeed really well. But on the other hand avrage Joe is as much impressed by the new lucas arts effect as nerd are, it's just that they have other things to do with their money. Sony and MS would be serious contenders for their time if they were cheaper. But MS does have large portals where many avrage joe's and/or janes play which they are making accesible via X-Box life. So Wii and MS are in more competition then they dare to admit.

 

[CptStern]

no no I meant the death of the video game industry article

 

[Gray Fox]

no no I meant the death of the video game industry article

You mean crash of the video game industry. And I did. But I do not understand your point.( what you are trying to say?)
Honestly.

 

[Asuka]

Dont agree. 90% of the people who wanted the PS3 in the 1st place dont care about 600$ price that AKA ME. People will still buy it TONS or it.

You really think that all these companies would have built these systems, knowing their actuall cost and their street price, and have gone along with it if it was going to be "too much to make up"?
lol

Not going to happen.

Exactly.

 

[CptStern]

you fail to realise that sony/xbox/nintendo dont make the bulk of their money from hardware sales ..they make it through licensing. Their hardware is just a means of facilitating licensing because in the long run it's profits from game sales that makes the most amount of money ..no matter how much money they have or how many potential buyers they have ..should they miss their target rates in terms of installed user base, no amount of cash flow will stem the steady flow of revenue loss from lack of licensing

grey fox: yes crash not death ..what I'm getting at is that the article touches on many of the things you've said ..the crash will be perpetuated by a steady decrease in the number of gamers, turned off by the sameness of one generation to the next ..the article argues that it is the all important older generation (those with purchasing power) that are the ones to be affected first ..it is they who tired of the same old thing will move on to other forms of entertainment

 

[SAJ]

Im glad his rant has finally been updated.
A fun rant but one has to hope he's completely off the mark.
Take a look at his conclusion:

As for what will fill the void in the mean time, well, no one thing has to fill it. Do you honeslty think there are fewer entertainment options now than the last time gaming went out of style in 1983?

Shit............telly.......forever?



NOOOOOOO!

 

[CptStern]

god I forget how crappy tv was back then (god the facts of life ..I hated that show when I was kid ...who watched that crap?) ..but it's far worse now

 

[SAJ]

god I forget how crappy tv was back then (god the facts of life ..I hated that show when I was kid ...who watched that crap?) ..but it's far worse now

Yep, another reason why people will continue to buy games in huge numbers; to get away from crap telly.

 

[VirusType2]

you fail to realise that sony/xbox/nintendo dont make the bulk of their money from hardware sales ..they make it through licensing. Their hardware is just a means of facilitating licensing because in the long run it's profits from game sales that makes the most amount of money ..no matter how much money they have or how many potential buyers they have ..should they miss their target rates in terms of installed user base, no amount of cash flow will stem the steady flow of revenue loss from lack of licensing

Microsoft said that the average amount of games purchased by X360 owners was 4.5. Four and a half games on average for each X360 sold... so far. That's really good. I will be buying one plus many games, and they have 6 more months of being the most powerful console out there as well, with 160 games due out around the time the other next-gen consoles even come out of the gate.

I predict the Wii will sell like hot-cakes becuase of it's low price, innovative controller, great first party titles, and great fan-base. And with huge console sales = success.

The PS3 is not easy for me to predict. Personally, I think this system is sort of a joke, and none of their exclusives appeal to me, but this system is the follow up to the extremely successful PS2. It also should be successful in Japan - which, despite being only 1 country, there are allot of gamers hailing from there.


The Video game industry crash article is annoying. Someone posted it last year on here and it bugged the shit out of me. The guy is one guy. He does not represent everyone. When I read it last year, he said, "the graphics aren't getting better in huge leaps like they used to" The fact is, they are jumping just as high. Seriously. I've witnessed the graphics of every system ever released, save for a few abstract failures. The difference from Atari 2600 to 5200 wasn't very much. Each step has NOT been a huge step. The CD ROM of course made a huge difference and a huge step up in graphical ability since the cost of a CD ROM is a few cents. Previously every game bought included an entire chip-set called Cartridges. The bigger you made the game, the less profit you could make. Now that we have CD's, DVD's they can include 10 CD ROMS if they want.. The Blu-Ray discs will be expensive again, like cartriges, but ...

Beyond that huge step with Optical discs, we are back to smallish steps. But even if the graphic leaps from generation to generation aren't that much better anymore, in his pessimist view, I have always seen the jumps in graphical ability huge with every generation of consoles. Always. Shadows, physics, high rez, photo realistic, real-time lighting, impressive shading, etc. These steps are just as large. This is much better then Goldeneye. Plug this game in and you will remember.


He doesn't have time to play games anymore so he assumes that means there is a huge video game crash coming. It's just not so. They are ****ing huge business. So he is a wind-bag.


Possibly soon enough, there could be a huge technology improvment that will again create a huge leap in graphic ability like the optical disc did.


I think the market can support 3 consoles these days because theres almost double the Earth population since video games were invented(double the wallets), the games are all high quality now (as opposed to the plague of crapy games from developers that took advantage of an exploit that was due to the fact that consoles were new and uncharted territory. That's what crashed the industry in the 80's and it still came back stronger than ever.)

Video games will never die.

 

[ericms]

Defiantly the Wii for me and then a PS3 sometime down the line. What attracts me to the PS3 is it's open architecture. It can very well be more then a gaming system and if the stuff they say is true then it will be. I'm sure we'll get alot of indie games as well.

 

[Cole]

The CD ROM of course made a huge difference and a huge step up in graphical ability since the cost of a CD ROM is a few cents. Previously every game bought included an entire chip-set called Cartridges. The bigger you made the game, the less profit you could make. Now that we have CD's, DVD's they can include 10 CD ROMS if they want.. The Blu-Ray discs will be expensive again, like cartriges, but ...

Nintendo liked Cd's..hell Sony and Nintendo researched them togeather. The problem with CD's is that they have very very slow load times compared to Cartriges. Where are the loading times on the N64?
The Gamecube even uses specially designed smaller DVD's to get very fast load times.

 

[WhiteZero]

Nintendo liked Cd's..hell Sony and Nintendo researched them togeather. The problem with CD's is that they have very very slow load times compared to Cartriges. Where are the loading times on the N64?
The Gamecube even uses specially designed smaller DVD's to get very fast load times.

Uhh... I was sure the size of the a has nothing to do with it's transfer speeds. It's all in the rotation speed and the drives general throughput.

Mind linking to some article or just something solid on that?

 

[Gray Fox]

Nintendo liked Cd's..hell Sony and Nintendo researched them togeather. The problem with CD's is that they have very very slow load times compared to Cartriges. Where are the loading times on the N64?
The Gamecube even uses specially designed smaller DVD's to get very fast load times.

A Cd also has 700 mb of memory space while a cartrigde has 30mb, and is far more expensive then a CD, plus you can play Music CD's. All the while the PSX costed less then the N64.

 

[MuToiD_MaN]

A Cd also has 700 mb of memory space while a cartrigde has 30mb, and is far more expensive then a CD, plus you can play Music CD's. All the while the PSX costed less then the N64.

Don't turn this into a console war. The gaming industry is thriving right now. It will continue to thrive. As long as the myspace generation uses its newfound purchasing power for video games, anyway.

 

[Gray Fox]

Don't turn this into a console war. The gaming industry is thriving right now. It will continue to thrive. As long as the myspace generation uses its newfound purchasing power for video games, anyway.

I was under the impression that it had allredy turned in to one.