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Discussion This year feels like the games industry already crashed.

Mer.Saloon

Mer.Saloon

Chain Chomp
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Layoffs on a scale like we haven't seen in decades, studio closures all over, AAA games have slowed to a crawl, and the contracting console sales this year. Industry consolidation on a massive scale also. Yes, the games industry is still profitable, but who is making the profit, and who is suffering for those to still make their profit? And the sheer brain drain all these layoffs are going to have immense ramifications for the future of the industry to come.

I know in 1983, console gaming went non-existant, but if we're being historically accurate, PC gaming was still active at the time, and the Famicom's US debut was on the horizon. The market still existed also even if it went through a massive downsizing.

At what point does this horrible year become a new crash? I'm looking for just alternate perspectives on what people would define as a crash worthy event.

(And just because I feel it crashed already, doesn't mean the layoffs won't stop. I want them to stop, please STOP!)
 
Magic-Man said:
It's not a full on second crash, but this is the closest we'll ever get to having one.
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"But why?" is what I'm trying to understand. The money may still be there but of course, the industry is now so encompassing and so platform agnostic, of course people are gonna still spend money on games. But what does it matter if employees aren't seeing anything from those profits?
 
It's hard to fully analyze, but a lot of these layoffs feel like a regression to the mean after Covid spiked everything. The industry over hired and over staffed up after the big Covid boom, and now with inflation up and the cost of current gen dev setting in, the industry is having a collective panic. The AAA industry is in a bad spot, but console games are still making tons of money, PC is a growing sector, and the mobile market is huge.


Magic-Man said:
It's not a full on second crash, but this is the closest we'll ever get to having one.
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Technically the first crash was focused on consoles as well, mostly in the US. PC, arcades, and European/Japanese systems continued to do well.
 
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Mer.Saloon said:
At what point does this horrible year become a new crash? I'm looking for just alternate perspectives on what people would define as a crash worthy event.
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It won't be a crash until consumers stop buying new games. There might be fewer people working in the industry, but that's not a crash.

For the videogame market to crash, we'd need to see a huge loss of interest. The 1980s crash was brought on by super low barriers to entry and a lack of quality control in games, as a result of a US judge accidentally revoking copyright for videogames by saying that Sierra On-Line could copy Pac-Man and release it on PC.
 
Elementary said:
It won't be a crash until players stop buying new games. There might be fewer people working in the industry, but that's not a crash.
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People still bought "new" Atari carts during the 83-84 years that were being heavily discounted, excess inventory, and stores were trying to get rid of. People didn't just stop buying stuff. Nevermind the games still selling on the Commodore and Arcades.
 
If one of the following companies goes out of business or "shuts down their games/console games division" then I'll entertain talk of a crash

Nintendo, Microsoft, Sony, EA, Ubisoft, Tencent, Netease, Nexon, or Take 2.

Layoffs and reduction of studios isn't even close to what I'd call a crash. In every industry there are periods of growth and contraction, the gaming industry is currently in the latter.
 
We are only 2 months into 2024 and all of this is happening. Given the lack of notable game releases later this year its only gonna get worse too. The industry is going through a reckoning that honestly feels like it was years in the making.
 
Mer.Saloon said:
"But why?" is what I'm trying to understand. The money may still be there but of course, the industry is now so encompassing and so platform agnostic, of course people are gonna still spend money on games. But what does it matter if employees aren't seeing anything from those profits?
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The "why" is basically the end result of at least two things worth mentioning:

a) As stated above, we're seeing a return to basically "pre-Covid levels" for employment workforces, after there was a surge of hiring needed during that Covid era that, unfortunately, isn't necessary any more. Especially after some of these mergers, we've seen. It doesn't make things any better for those affected while those towards the top get their golden parachutes.

b) This is more or less what could be expected after the AAA market, especially in the west, kept pursuing a model that is seeing diminishing returns. "Infinite growth is not possible", as they say, and inflation isn't going to help with that. It could also be argued that the AAA market can't be so but "competitive" with the generation of gamers growing up that were bought up on mobile, Steam deals and persisting wares like Fortnite.


A "reckoning" is definitely the more apt descriptor for what's happening. Or even a "bubble burst".
 
I don't think it'll be quite as bad as a total industry-wide collapse; indies and companies that have generally managed to keep scope/budget sane (Capcom, RGG, From Soft, Nintendo all jump to mind) will probably still be around mostly doing their thing and could potentially find even greater success when/if everything stops being constantly on fire

But the publishers/developers that are all in on either constantly pushing for bigger/more photorealistic/more expensive-looking games, or that are chasing that GaaS dragon, the "perpetual and exponential growth no matter what"-seekers, I kinda don't see how that segment of video games isn't heading straight for a cliff if they can't a) re-learn how to make small reasonably-budgeted games and b) re-teach their audience to get as excited for those kind of games as they do for the blockbusters. It's a tough pivot and I'm worried some big names aren't gonna be able to pull it off and they'll probably take even more of the smaller-to-medium names down with them

And you're right, some major brain drain seems like it'll be pretty much unavoidable in the aftermath. Lotta folks are gonna walk away from this mess and find anything else to do with their lives, and I can't imagine many watching this dumpster fire from the outside are eager to take their place. Institutional knowledge is gonna be harder to come by, and that's gonna have a ripple effect we won't even really notice until years down the road when we look back and think "hey, why aren't we getting as many great games as we were circa-2023? Oh right, they fired most of the people that actually knew how to make games and even more people were scared off from even trying"

I really hope I'm wrong and this is just me catastrophizing, but it's getting real hard not to feel like games in general (with exceptions) are on the back half of a high point and are headed for some real dire straits
 
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Mer.Saloon said:
People still bought "new" Atari carts during the 83-84 years that were being heavily discounted, excess inventory, and stores were trying to get rid of. People didn't just stop buying stuff. Nevermind the games still selling on the Commodore and Arcades.
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But not at a price that could support an industry.

Now, I could see an upheaval happening where major publishers and developers collapse under the weight of AAA game development, creating a ripple effect that ends up changing Sony and Microsoft's game business, but that wouldn't effect Nintendo, Valve, Epic, or the mobile market. But that's extremely unlikely, and instead we're just going to see a few bad years for companies that aren't the ones I named while everyone else works out how to make games more cheaply.

Shit time to be a game dev, ngl.
 
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BassForever said:
If one of the following companies goes out of business or "shuts down their games/console games division" then I'll entertain talk of a crash

Nintendo, Microsoft, Sony, EA, Ubisoft, Tencent, Netease, Nexon, or Take 2.

Layoffs and reduction of studios isn't even close to what I'd call a crash. In every industry there are periods of growth and contraction, the gaming industry is currently in the latter.
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Wouldn't they just be bought out? We already lost Activision as an independent entity. I'll give you the big 3, but for the other software only giants I mean.

Are we ever gonna even approach the point of what happened to a company like Acclaim where they got sold for parts to a bunch of takers?
 
Movies were in a worse state than videogames are in right now pre-pandemic, let alone these last few years and they are still making them. Yes, these are trying times for the industry but it has gone through worse and it will adapt.
 
Mer.Saloon said:
Wouldn't they just be bought out? We already lost Activision as an independent entity. I'll give you the big 3, but for the other software only giants I mean.

Are we ever gonna even approach the point of what happened to a company like Acclaim where they got sold for parts to a bunch of takers?
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If you go out of business you end up being sold for parts in my mind, I apologize if I wasn't clear on that.
 
You're not wrong

But I fear it is going to get worse and we won't really feel the ramifications until the next major game release cycle (3-4 years from now)
 
The industry isn't crashing. People still want to play games and spend money on them. I think the industry still employs more than than it did prior to the pandemic. What you're seeing are companies "correcting" themselves from bad investments they made. They overhired and threw money at projects that probably shouldn't have. They assumed spending would continue at its pandemic rates without considering that it would come down once people were allowed outside to do other activities. Now to satisfy shareholders, CEOs who won't pay for their mistake personally, are making job cuts to bring hiring and spending down to levels that they should have been if they had done a better job at predicting the level of growth post-pandemic.
 
Magic-Man said:
It's not a full on second crash, but this is the closest we'll ever get to having one.
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Yep. It’s not a crash but it‘s absolutely the closest thing to it.

What we’re currently seeing in the games industry is a direct result of capitalism. I know “capitalism” is an easy catch-all answer to most “why are things bad” question but in this case the cause/effect is pretty blatantly obvious.

The pandemic was a once-in-a-lifetime event that caused millions of people to stay at home. This caused game profits to spike, especially around live service games because it was a way for people stuck at home to communicate and keep up with their friends who they couldn’t see in person.

Capitalism is a stupid machine that cannot see 5 feet in front of its own face. All it literally does is assume the next 5 feet in front of itself will be exactly like the previous 5 feet. It is an incredibly stupid machine. So the pandemic caused profits to shoot up. What does that mean? Oh, well the profits will probably keep going up, right? The last 5 feet were a wildly steep incline, that’s probably going to keep happening! Let’s massively hire up and focus 100% of our resources on live service games.

Oh wait, the pandemic is over (no it is not, not even close, but the government sure likes to act like it is) and now everyone is going out again instead of spending time indoors on live service games? Who could have foreseen this. Not the stupid machine called Capitalism.

Well, we need to maintain and grow shareholder value, so let’s lay people off and cancel these live service games. Tens of thousands of jobs will be lost and lives will be unjustly upended, but that’s okay because CEOs and Presidents and other inhuman goblin freaks who make these idiotic decisions will still get 8 figure salaries.

Totally sustainable industry!

Anyway on a completely unrelated note I’ve been replaying the Pikmin series recently. You know it’s fun to watch one hundred little guys, normally powerless on their own, all team up and completely destroy the big powerful idiot monsters. Just watching the Pikmin, the little guys who do actually do work, massively outnumber and swarm the gluttonous, parasitic monsters. They even can take the resources of these big stupid freaks and turn them into dozens of actually productive workers. Hmm. You know, it’s inspiring to know that when Pikmin come together they can accomplish so much. It’s almost like workers can be powerful in numbers, as some sort of… collective? Group? Alliance? I think there’s a word I’m looking for here, maybe it starts with U? Anyway, Pikmin, what a game.

Not sure why I’m bringing it up here, though. It’s so unrelated.
 
BassForever said:
If you go out of business you end up being sold for parts in my mind, I apologize if I wasn't clear on that.
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I mean, fair enough. I still don't entirely see it, but well, no one has gotten to that point. But I can't imagine a company like say EA just going through that. They'd sell themselves to the highest bidder before being torn apart like Acclaim was.
 
Derachi said:
Anyway on a completely unrelated note I’ve been replaying the Pikmin series recently. You know it’s fun to watch one hundred little guys, normally powerless on their own, all team up and completely destroy the big powerful idiot monsters. Just watching the Pikmin, the little guys who do actually do work, massively outnumber and swarm the gluttonous, parasitic monsters. They even can take the resources of these big stupid freaks and turn them into dozens of actually productive workers. Hmm. You know, it’s inspiring to know that when Pikmin come together they can accomplish so much. It’s almost like workers can be powerful in numbers, as some sort of… collective? Group? Alliance? I think there’s a word I’m looking for here, maybe it starts with U? Anyway, Pikmin, what a game.

Not sure why I’m bringing it up here, though. It’s so unrelated.
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You typed all this when you could have just said "Eat the rich"
 
Not a crash, but everything that's happening and why it's happening was telegraphed for years, decades even. It's like watching a car wreck in slow motion and the driver does nothing to swerve.

Nearly 20 years ago, Satoru Iwata got up on stage at the Game Developers Conference and talked about rising development cost and the challenges of meeting deadlines due to bigger, more complex games.

Everyone in 2005: Shut the fuck up, nerd.

Everyone in 2024:
Shocked-Pikachu.png
 
Mer.Saloon said:
I mean, fair enough. I still don't entirely see it, but well, no one has gotten to that point. But I can't imagine a company like say EA just going through that. They'd sell themselves to the highest bidder before being torn apart.
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Someone has to be willing to buy. If you have a shit ton of debt and are losing money, nobody is going to want that. People laughed at SE when they sold CD/Eidos for pennies on the dollar to Embracer, but that's because those were depressed assets losing lots of money. It's not like Embracer turned things around either as we see them having tons of their own layoffs and studio closures.
 
We might see certain companies like PlayStation pivot to new strategies they haven’t done before just to keep. Xbox is already going multiplatform with a few of their games.

Hypothetically speaking, could PlayStation realistically follow?
 
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BassForever said:
Someone has to be willing to buy. If you have a shit ton of debt and are losing money, nobody is going to want that. People laughed at SE when they sold CD/Eidos for pennies on the dollar to Embracer, but that's because those were depressed assets losing lots of money. It's not like Embracer turned things around either as we see them having tons of their own layoffs and studio closures.
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Fair enough. Goddamnit, it's fair enough. I guess it could get worse when you bring up that point.
 
I don't think so. It reminds me of that period I think around the great recession or just after it. There were a lot of layoffs from what I remember and the discussion then was the same as this. A crash never happened. It won't really ever happen but it can get very painful and probably will. This is probably going to continue until the feds lower interest rates which may start happening next quarter if inflation numbers get better. But it's still gonna suffer into next year.
 
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I feel like we get calls for a crash every decade or so, and this recent crisis has just amplified those calls by a thousand. There certainly won't be a crash, but I think it's reasonable to expect a realignment of sorts.
 
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I may lack some of the intellect that quite a number of the users here have (some of the stuff in the hardware thread is like trying to read Sanskrit to me lol) but I've watched gaming grow, change, and evolve since the days of the NES and Genesis and my takeaway as to what is happening right now is the industry has outgrown its britches. If you keep going for bigger, flashier, longer, profit driven and more exhausting games you're going to eventually hit a wall at high speed.

Sony especially needs to stop listening to the vocal minority of their fans that only care about graphics, narrative, and specs. Go back to the ps1-ps3 days of bolstering creative talent and releasing a varied catalogue of RPG/shooters/platformers/action/puzzle/simulation games. We need the return of A and AA.
 
the amount of games i'm interested in coming out goes up more and more every year with this year having a notable spike even compared to last year

some of the stuff companies like Sony are doing isn't sustainable but overall it's easier than ever to put out a video game
 
Some people won't want to admit it, but Nintendo's way of developing games, the time and resources along with the style of games, is the way the industry will need to go towards. If not, I expect this to get even worse without even including AI.
 
BassForever said:
If one of the following companies goes out of business or "shuts down their games/console games division" then I'll entertain talk of a crash

Nintendo, Microsoft, Sony, EA, Ubisoft, Tencent, Netease, Nexon, or Take 2.

Layoffs and reduction of studios isn't even close to what I'd call a crash. In every industry there are periods of growth and contraction, the gaming industry is currently in the latter.
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Embracer is definitly the most likely atm
 
AAAA games appeal to an industry to small to afford to make them.

For as many succes stories as there are there are 100’s of failures.

Some companies that were more careful with their budget are going to be on the winning side of the coin here.

things are to expensive to make in general using new tech.


This is going to b harder than the jump to 3d and the move to hd for many companies.

I think most companies know this but no one wants to be the first to announce their next game will be smaller and less impressive technically than the last one.
 
To a lesser extent you are seeing this in other entertainment industries due to attempts to marry everything to tech, but I think it’s most pronounced in gaming. It certainly isn’t fun feeling like my hobbies are on fire right now.
 
It’s less a crash and more the car veered into the lake and we are watching the water levels outside the windows go up.
 
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Layoffs don't cause a crash. The big giant corporations will continue on and keep making games, the people who were laid off will hopefully find work elsewhere and some will be back or new companies will be formed.

What caused the crash was a deluge of garbage cheapo knockoffs flooding the market and killing consumer trust. And hey look at that, you have that on Steam these days with the ginormous wave of "indie" garbage that's really just some idiot stealing ideas and doing an asset flip or using AI to crap out some trash in a day or just people copying games all over the place.

Keep your eye on that segment because the big guys will eventually be fine. The indie space is going to be (is already) drowned in garbage, completely impossible to sift through or trust without an enormous amount of vetting. Your 3 man teams will not survive.
 
AAA taking a hit is fine by me. Unsustainable business models and every company wanting to have its own soul sucking live service game has got to be one of the worst outcomes coming out of the pandemic.

The fact that studios also dump their games at fire sale prices never sat right with me. People accuse Nintendo of keeping their prices artificially high, i'd argue it''s the opposite. Primarily western publishers pad their sell through and try to juice up DLC sales by selling the core game at fire sale prices, setting customer expectations of 50 to 70% price collapses of major releases months after release. Then these CEOs cry poor and lay off staff everytime they miss their targets.
 
it's more like the AAA market specifically was slowly(and now surely) collapsing for a variety of interconnected reasons

  • budgets and scope for big games are ballooning out of control with no end in sight

  • dev times for games are getting longer and longer(Sony has no big games this year and barely had any on the PS5 in 3 years, can you imagine? Rockstar went from a dozen games a generation during PS2 era to like... 1 over 10 years now)

  • people want bigger and bigger games with open world becoming the standard

  • you need insane sales on any given big game just to justify its budget at all

  • all the while massive crunch in the workplace needs to happen just to maintain this hellish landscape

and all of this happening in the middle of COVID providing a temporary boom? the disaster recipe is complete, and the result has been entirely predictable.

as a new medium we didnt know what direction to go with games long-term, and following capitalism's infinite growth, the industry's starting to properly pay for it

but, it's for the best that we reach the end of that now. games need to be scaled back. majorly. until there's technology that can do the same level of work at scale that takes us 5 years now to do in 1(AI is getting there), and we can do it reasonably without fucking over employees, it's what we need.
 
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Feels more like a contraction due to the unsustainability of the AAA business model of five-year bets on massive projects with ballooning development costs, combined with the post-pandemic bubble finally bursting.

There’s still tons of of great indie games coming out all the time. It’s just that the most visable part of the industry, being these giants that don’t give a shit about their workforce and have been mismanaged for a long time, have had zero interest in what was foreseeable a long time ago and that concepts like ‘restraint’ and ‘caution’ and ‘sustainable’ could have dealt with. Because that’s not really in the dictionary of most of these multinationals that want all the money and will lay off staff in lean years to pay for their own poor planning or ludicrous gambles. No, the industry can’t support dozens of live service games at once. No, spending 5 years developing a game that now needs 500 staff but now also needs to sell 20m copies to break even, risking a studio collapse or mass layoffs if it doesn’t, isn’t a good idea for any project with no realistic reason to expect it could pull that off. That isn’t a crash in the sense of the US console business in the early 1980s, it’s not like the hardware business is completely being upended due to lack of consumer confidence. But it is a crash in terms of a warning of unsustainable business models around AAA software management and development.
 
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Djehuty said:
AAAA games appeal to an industry to small to afford to make them.

For as many succes stories as there are there are 100’s of failures.

Some companies that were more careful with their budget are going to be on the winning side of the coin here.

things are to expensive to make in general using new tech.


This is going to b harder than the jump to 3d and the move to hd for many companies.

I think most companies know this but no one wants to be the first to announce their next game will be smaller and less impressive technically than the last one.
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It’s actually pretty easy to make an an HD game nowadays. For example, the Celeste team can crank out a small, but very polished 3D platformer in just a week.

Nintendo has teams that Crank out games almost yearly, including HAL, Intelligent Systems, Game Freak, ND Cube, Camelot.

Capcom has also produced games on a yearly basis, and has drastically upped the quality of their resident evil games, while even lowering the budget. And their games have just gotten better.

Even Sony has had massive success from that front too. Miles Morales was a smaller game than Spiderman, and it still sold gangbusters, and everyone seemed pretty happy with it.

publishers just need to stop with bigger, and more so focus on different.
Also, it turns out that keeping around talented, and experience staff around instead of laying people off all of the time, makes teams more efficient, and also keeps budgets under control. Who would have thought?
 
I wonder why is Sony claiming to be struggling to turn in profits. Maybe the guy with an electric guitar that stylishly shoots out rays with a guitar and battles with the spirit of a baby in the body of a samurai robot can help us out.

No shame on Kojima at all, that looks dope, but it's no wonder why are expenses so high, the big publishers are rapidly approaching a point where they'll feel confronted with the task of selling pieces of reality with extra shiny effects. Overhiring is just one piece of the puzzle of the current situation.
 
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The gaming industry as a whole needs to realize that no studio is going to become the next Rockstar, Naughty Dog, Bungie, or Epic Games. Stop trying to replicate others success and make your own. Just look at the three biggest breakout games from last year: Baldurs Gate 3, Lethal Company, and Dave the Diver. Hell, look at any indie breakout or any Nintendo game. If you're trying to replicate another studio or game, you're going to fail. Be unique.

Also, keep your dev teams on the smaller side and just have lots of dev teams making different projects.
 
Don't worry, it's just the beginning...

...also i wouldn't call it a crash. It's more like a recession. As the other commentatore already mentioned. The time of cheap money from the covid- era is over. Also there are so many games releasing on the market, that it's impossible to buy or even play them all.

So it's a shrinking to adjust the market capativity. There will be enough games and studios after all. Just not as much as now. It's a new start on a lower Level.

Sucks for the employes of the industry and their workforce of course. But if i'm honest. When i look at the society i live in. Their are enough jobs vacant where workers are urgently needed...
 
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It's almost as if giant multi million dollar budgets and consoles and games that chase the highest end graphics are a problem. Almost as if part of the same problem is the people who keep pushing for better and better graphics, becoming more and more entitled and getting to the point where they refuse to accept games costing X amount because it doesn't have the right amount of FPS or resolution or it's 2D instead of 3D.
 
Mango said:
It's almost as if giant multi million dollar budgets and consoles and games that chase the highest end graphics are a problem. Almost as if part of the same problem is the people who keep pushing for better and better graphics, becoming more and more entitled and getting to the point where they refuse to accept games costing X amount because it doesn't have the right amount of FPS or resolution or it's 2D instead of 3D.
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So the consumers are fault? There are some which complain on the highest level, but they‘re only a vocal minority. And in some countries like Canada or Brazil complaining about pricing is absolutely justified. The problem are the companies which have hyped up realistic graphics and overblown open worlds, starting in the PS3 era, which gets unsustainable at some point. And the madness continues, as they make more and bigger live service games and invest in “AAAA“ games, from which 1 of 1000‘ll pay off.
 
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