"Life After the Video Game Crash"

[Lord Nepenthean]

First, I want to give credit to The Evil Leon for finding this article.  Some of you may have already seen this, but if not, check it out:

http://www.pointlesswaste...time.com/games/crash.html
http://www.pointlesswaste...ime.com/games/crash2.html

6. Who cares about all those add-ons, you lice-ridden skank. Don't you know the future is in online play over broadband, you dung-hoarding Turd Baron?

How many people do you personally know who play games online? I'm not talking about the people you met online. I'm asking how many of your actual game-having friends actually go online with their little headset thing like in the commercials.

I know they're out there. After all, researchers gushingly announce that "Online gaming from video-game consoles will reach almost 28 million regular users by 2008."

Wow. If game makers continue to focus on multiplayer they'll have a whopping 28 million customers to sell to by 2008.

That's a big number... until you realize it's a shocking drop from the more than
90 million PS2's, GC's and X-Boxes that were sold.

I'm going to share a secret with you; the average video gamer isn't big on
fist-pumping competition with strangers. That's the territory of the jocks and the scholarship-clutching Future Businessmen of America members. Among gamers, the Unreal Tournament champions and Warcraft III prodigies and SoCom Seal wannabes are a small, hard-core faction.

Online gaming is not the same experience as video gaming. Video gaming is (was) about fun and button-mashing and imagination, not ladder climbing and hack writing and memorizing exactly how many little zombie horsement I have to crank out before I can assault my opponent's base and insult their sexuality via a mistyped text message.

If they're going to bank on online play to keep their systems new and interesting, they're accepting a future with a shrunken, flacid little bunch of customers.

I've been saying things like this for a very, very long time, but this guy says it better than I have in the past.  The rest of the article is definitely worth a read too - I'm not sure if the industry is going to crash just yet, but I agree with all of his major points.  As it is, I just don't give a rat's ass about most modern gaming.  There just hasn't been much of anything new since GTA3, and even that was only one game in a sea of monotony.  If the industry crashes in 2005, it might not be a bad thing.  At least then they might be forced to come up with a good idea or two, once again.

[Izret101]

And it would make for some noice rare titles to pick up cheap from major realtors.
I will read the article later my eyes are kinda blurry now.

[danvx6]

That is so true.  Also, not only video games, but pretty much everything, does anyone really use it like they do in commercials?

[Izret101]

I started reading this earlier today and it makes alot of startlingly true points. I also brings up some stuff i didnt know yet. Such as ATI and IBM making nearly identicle parts for each of the Next Gen systems.
I guess buying the next line up of systems will be more about price and 1 system only games.

[Hydrobond]

Just want to point out that no matter what happened, barring any in house development, there was bound to be two companies going for either ATi or nVidia.  After all, there are only two graphics companies and three console developers at this point.  There were bound to be either two companies with ATi or two with nVidia, unless all three went for the same company, which is what happened here.   So his point there isn't really as valid as one might think.

Console gaming is in trouble, but it will weather this as it did the last one.  It will not die.  This is just a lesson in economics - specifically the business cycle.  But, this decline will most likely kill Nintendo, and either MIcrosoft or Sony will drop out as well, leaving only one company in the console market.  My bet goes with Sony being the sole survivor this time.   When the next gaming resurection hits, there will be different companies and most certainly different strategies for capturing the market.

[Izret101]

I dont see any of them dieing out really. If anyone goes i hope its Nintendo though. Anyone who does drop out of the consoles race will still publish games like Sega does.
Microsoft and Sony have way more money to throw behind thier systems to pull it out of a recession though. Nintendo has no alternative market to survive in like they do.

[The Metamorphosing Leon]

I think it's the price.
          I don't know exactly how much it takes to make and distribute a modern system, but 300 bucks! And I hear double that for the next line of systems! I don't care if it looks ever better. My comp makes it look better. (Not for long) But if i need to play on the TV I'll stick to my NES. For new games I can play on my comp. Which already has all the crap they're sticking in Consoles.
P.S. I dunno if this'll make any sense, i'm just ranting.

[Izret101]

Developement alone is hunderds of millions.
And that was most definately a rant.
I also dont think that is the price point for the next gen systems. i thought they were staying at the 300 mark.
But if you think about it thats only 100 more than you're NES cost when it came out brandnew.

[Mike Leon]

IZRET brings up an interesting point. I hear a lot of complaints about the $49.99 price tag on most games. Hardly anyone EVER makes a comment about the prices being low or inexpensive. They've all forgotten how expensive games have been in the past. The SRP of a new SNES game in 1994 was $69.99. The average price of a video game has dropped $20 in the last ten years! This is due almost entirely to the low cost of silicone. A PS1 CD cost a lot less to produce than an N64 cart and so it can be sold for less, with an even high profit margin. This is an often overlooked reason for Sony's success in the game industry.

Basically, the bottom line is this; video games have gotten much cheaper in the past ten years, but for some reason people percieve them as more expensive.

Now, about the crash. It could VERY likely happen in the next generation, but I don't think it'll happen because of online gaming. There are two reasons for this:
1. Most online games are also playable as a 1-Player game. Thus, the games are just as marketable as games with no online play. Most of them are MORE marketable because, in addition to single player gamers, they capture the small market of hardcore online players.
2. The online only games (Everquest, FFXI) are extremely, incredibly, disgustingly profitable. Even if they don't sell that many copies, you have to think about it in dollar amounts here. If the average FFXI player stays with the game for a year, at $15 a month, he spends $180 on account fees. Now if a hosting company can run my website for $4.99 a month and still make a profit, you know that Sony is exaggerating their cost for the persistant servers by quite a long shot (it wouldn't be the first time they've "exaggerated" their spending). In other words, it's money for (practically) nothing. All of the Everquest and FFXI players are literally giving their money to Sony. So if there are 28 million gamers playing these kinds of games online by 2008, each of those gamers will be paying more than 3 times the amount of money per-game that the offline players are paying, which means game companies would be making MORE from 28 million online gamers than 90 million offline gamers, AND it's at a lower cost to the producers. The only disadvantage is that most of the online gamers will only buy one game (maybe two) at that rate, but that's okay because they're still spending more on that one game than most offline players spend on multiple games all year. Worst case scenario: they break even on online only games.

The biggest possible cause for a crash isn't online gaming. I know a lot of hardcore gamers don't like online gaming for their own reasons, and that's fine. But the fact is that it's very profitable for the game companies, even if the games aren't any good.

I think the biggest problem the industry faces in the next generation is the cost of the hardware. I haven't paid much attention to what Sony and Microsoft are doing, but I understand they are both outsourcing most of the technology used in their next-gen systems. This results in more expensive systems, with a smaller profit margin for the company doing the outsourcing. Furthermore, all sources indicate that both companies next-gen systems will have DVD and some PVR capabilities. In Sony's case, they're using a cell processor to draw power from other nearby systems through some kind of network. Come on guys!!! This is ridiculous!!! I just want to play video games. I don't want a Ray Bradbury novel come to life in my living room. I think I'm pretty progressive when it comes to video game technology (I pioneered online gaming) and so if I don't feel like I'm ready for what they want to do, then I KNOW the vast majority of the public isn't going to be cool with it.

It might sound stupid, but right now my bet is on Nintendo for the next generation. Nintendo has implied that they are going with a nice, simple, video game system that doesn't have all of this extra crap attached to it. It'll be cheaper, and most people are going to feel more comfortable with it than the brainwashing boxes that the other companies are putting out.

Of course, if Nintendo's system sucks (quite possible), then you get the crash we're all talking about.

[Lord Nepenthean]

Okay, first, I want to remind you that before SNES, many cartridge games were originally priced at about $30.  You're absolutely right that SNES (and later N64) games were often originally priced at $70, and even $75 sometimes.  However, many 8-bit carts WERE cheaper.  Granted, $30 in 1985 would buy you more than it does in 2004, but $30 still didn't equate to the $70 we had just a few years later.  So, yes, there has been a decrease, but that was only after an increase in price.  Another thing that has been nice in this generation is the various greatest hits/player's choice markdowns.  $15-$20 is a GREAT price for some of these games, and we didn't have this on any comparable scale until N64.  Sure, there were isolated instances of it, but this has been a nice and welcome change in prices of video games.

Good comparison about the web hosting costs to the game server hosting costs.  Not all games charge for online play, but fewer and fewer have an option to play online for free.  As Leon said, the profit margins are ridiculous there.  Why take a hit with server costs when you can charge for it and make away like bandits?

(I still hate online *console* gaming for a lot of reasons I won't get into here though.)

As for Nintendo being the success story of the next gen....  I want that to happen very badly because of exactly what you said: they're creating a machine to play video games, and nothing else.  I don't want Ray Bradbury in my living room either.  I'm afraid, though, that Nintendo's perceived reputation as a "kiddie game maker" will be their undoing.  And, Sony's "PlayStation" name will do nothing but help them.  You've said yourself that people often base $50 video game purchases on nothing more than cover art.  I'm afraid the same may go for consoles and which one has the reputation as being the "coolest."

[The Metamorphosing Leon]

Wow you guy's cleaned house with me. And now that I think about it I've always thought games were to much.

[danvx6]

I agree completely with Nep and Evil Leon.  As soon as I heard about the PSP i was like "This in't a game system!! It's a massively overpriced MP3 player that just happens to play games!"  All I wanted was a new game system, and hopefully Nintendo willl stop all of this connectivity stuff they've been doing for the past few years and do something that will actually make money.  I love Nintendo's franchises, and I bought the Gamecube solely for them.  Many people have said Nintendo milks them too much, but who cares? They are cool games and they DO make more money than a lot of the new Nintendo experiments.  As for online gaming I wouldn't know because dialup is keeping me ten steps behind. I am curious Nep, please indulge me in the reasons for your hatred of online console gaming.

[Mike Leon]

I've never understood his bizarre hatred of online console gaming. He really hasn't played any online console games (except for Dreamcast but that doesn't count).

P.S. I knew about the 8-bit pricing, but it just didn't seem worth mentioning. Those prices were part of a whole other world, before gaming was a mainstream way of life.

[The Metamorphosing Leon]

Dreamcast had online games and people play them?

[Mike Leon]

People played them, once or twice, when men were men and giants roamed the earth.

I just now actually read the article that was the reason for this whole thread. It's all true.