Why did I play this?Why did I play this?

Posted on Jan 26th 2013 at 12:33:25 PM by (SirPsycho)
Posted under SirPsycho, atari, nintendo, facebook, valve, ouya, steam box

Is the home video game industry charging headfirst into another market crash?

I ask myself this question because there are so many signs pointing towards another crash when I look back on the previous ones. We are on the cusp of the 8th console generation really getting ready to begin, only Nintendo having dived head first into these potentially treacherous waters. Unlike the 7th Generation, where the current Big 3 stepped in to tango against each other largely without disturbance, they will have competition from fan favorite Valve, as well as some more unknown companies. So let's take a look at some of these and extrapolate the events and lessons learned to the modern era.

In 1977 there was a major crash of the video game market that is largely ignored by the public and even by gamers that were around at this time. The major problems that lead to this crash were centered around the insane popularity of Pong through the early to mid 70's. This game was so popular in the arcades that every company wanted to make a standalone Pong system for home consumers. Even the beloved and mighty Nintendo is guilty of this. By 1977 the market was flooded with so many Pong and dedicated systems that consumers had no idea which ones were good, which were bad, or which one was made by the original creators of the game.

Nintendo's Color TV Game. Exclusive to Japan.

However, one piece of the video game market continued to grow through 1977, the handheld market. If you're a bit younger like me you'll probably remember the Tiger handhelds with crappy LCD screens and primitive beeps for sound. These standalone handhelds are a relic of this growth in the late 70's, and they kept going strong through the 80's with some still being released today. Nintendo had their hit Game & Watch brand of handhelds while they moved into the arcade market and dipped their toe into the home console market with some VCS ports.

But SirPsycho, you may be asking, didn't Atari release their VCS/2600 in 1977? They did, and they managed to survive this crash on the strength of their brands and high quality products they put out in the arcade, which was untouched by this 'crash'. The Atari VCS did not really take off until 1980 when the company secured the rights to port Taito's enormous arcade hit Space Invaders to their system.

So what lessons does this archaic crash have for today's incredibly diverse market? Too many systems on the market at one time is a bad thing for the game consuming public, and all of these systems did roughly the same thing, they all played Pong with fancy names like table tennis, raquetball, handball, they were all the same game at heart though. None of these machines offered interchangable cartridges, the machines that did are not considered Pong consoles even if they had a Pong clone cart.

Even if some upcoming tangential systems secure a foothold in the market, like the Ouya from Boxer8, it is essentially a modernized Pong console if all of their promises and features will deliver. The Steam Box from Valve is roughly the same idea, all digital distribution, firmware updates, and streaming. You push a button or flip a switch to change modes. Valve has a massive leg up on Boxer8 however, a huge, hardcore, and loyal fanbase. There's also the GameStick on Kickstarter right now, which just looks like its an Atari Flashback in USB form.

The Ouya from Boxer8.

The North American Crash of 1983 is highly publicized so I will not write about it much here, but the lessons from it are primarily software related. The crash of 1977 left Atari and Magnavox competing against each other in the late 70's, Magnavox and its Odyssey^2 could not keep up and they bowed out. By the time the '83 crash happened Atari's renamed 2600 was holding a gigantic lead over Mattel, Coleco, and its own 5200 before the ground crumbled beneath them as a result of their own leadership, knocking their two competitors out at the same time.

Low quality software from Atari themselves left fans feeling betrayed so they left the system and company behind. A lot of Atari's veteran talent left as a result of their barbaric employee treatment. A handful of talented developers founded Activision before the crash, and Atari lost a court case against the fledgling 3rd party that lead to a huge growth of 3rd party developers and publishers. There were many new and inexperienced 3rd parties that did not help Atari's case either.

One case of a third party bad Atari game.

What markets thrived during the down years between the 1983 crash and the release of the Nintendo Entertainment System outside of Japan? The arcade market entered what could be considered a Silver Age. Long time arcade developers released new, cutting edge machines that kept the fans that built and crushed Atari happy. The PC market really hit its first major stride and many of the initial 3rd parties that began as console developers and publishers for Atari's 2600 and lacked any arcade experience, made a swift move to the home computing market to survive.

There was another swell of parties that entered the console market in the early to mid 1990's seeing Sega's success against Nintendo as a call to action. Philips and 3DO tried and failed. Atari's last gasp with its agile Jaguar fell flat on its face. SNK's high priced Neo Geo could not penetrate the larger market and remained a small, insignificant niche, their steamlined Neo Geo CD not doing much to expand their audience either. Apple and Bandai's partnership led to one of the worst selling systems of all time, the Pippin. Sega themselves proved that console add ons do more to alienate a fanbase than to reinvigorate it.

The Neo Geo CD isn't a bad looking system either.

Now let's take a look at today's market. Facebook has risen to become a powerful social and casual gaming hub, and fallen quite quickly as well, perhaps needing to learn the lessons of the 1983 Crash the hard way. Smartphones have been hyped to threaten Nintendo and its handheld dominance while the 3DS started slowly. Now Nintendo's system is really starting to fly off the shelf, crushing every other system in Japan on a weekly basis. With Pokemon X and Y releasing this year the global market can be expected to fight over incoming shipments of 3DS consoles, perhaps leading to a temporary shortage and more money printing for Nintendo.

News of Sony's patent filing that would essentially eliminate the used game and rental market, as well as social borrowing and trading, is hitting the community hard. Many gamers are already pulling out their pitchforks, even longtime Sony faithful fans. If this is implemented I can see Sony going the way of Sega, maybe not until the 2020's if they try and save themselves and bow out with honor. This patent, if implemented in the PS4, would be the beginning of the end. Sony's recent add ons, the Eye Toy for PS2/PS3, and the Move which uses the Eye Toy sold decently well, but again failed to be a gaming reimagination that they wanted their fans to experience.

Microsoft has been quiet about its 360 successor, already having lost the major advantage it had in the Seventh generation, launching first, to Nintendo's WiiU. But, sales are still strong, especially after the holidays. Their Kinect for 360 has become nothing more than a dance simulator with a few iOS and Android ports that make decent use of the technology. Most real AAA efforts have released to critical failure. Still, I believe Microsoft would be foolish to not show their new console off at a major convention this year. What would be even more idiotic would be if MS released another console that is as sloppily designed and prone to failure as the fat 360s are. Gamers handled it for one generation, they will not deal with it for two in a row.

My one true nemesis!

If handled well, and the home console market survives, this could be the time where Valve steps up and knocks one of the current 3 major players out, letting it have an effective stranglehold on PC gaming with Steam, and at least have a slice of pie on the home console front with Steam Box. Of course it would have help from the company in question, Sony and Microsoft look the most vulnerable at the time of this article's writing. If there's one lesson to learn by looking at the entirety of the home gaming, arcade, and handheld market, it is to never bet against Nintendo. There has never once been a worldwide video game crash, for every one that has happened gamers quite quickly moved onto other ways to play, like handhelds, the arcade, or PC gaming.

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Very well written.

I don't foresee a crash of any type soon, I wouldn't be shocked to see some transitions between market leaders this time around. Primarily I have to be concerned with how well Sony will be able to make the leap. Financially they have had it rough, the Vita has been a flop, and they are scaring away gamers with their patent filings before they even announce new hardware. Personally, if there was no PS4 that would be fine with me.

Ouya and its ilk are a tough sell in my mind. The 3DO/CD-i business model didn't work the last time around, so what has changed? The software distribution methods? Not enough, and having multiple SKUs by different manufacturers just lead to consumer confusion. Even Nintendo didn't do very well their first time offering different hardware SKUs at launch with the Wii U. I could be wrong, but I am already willing to write most of this off.

I think Microsoft has behaved the best so far. They are doing really well with the 360, and is willing to sit back and hold its cards close to their chest. It looks like when everything finally settles for this generation that the 360 will be the top console. Making the transition well between console gens is tough, but I think they will do well.

As to Nintendo? They are Nintendo. They don't need to sell piles of machines to do well. The 3DS is king, and the Wii U will sell well enough strictly on the strength of their 1st party titles like they always do. They need to work hard at returning to profitability, but some of this is a currency issue and tough for them to deal with directly.

Finally, Valve. I think they could do well if they limit hardware SKUs and push their discounted library. I don't think they can reach a number one position in the market at this time due to many countries including the US still not having enough broadband infrastructure to put a purely digital distribution system in the driver's seat. That is changing rapidly though, so perhaps at the end of a 6 or 7 year console cycle they could be there. Personally, I'm not interested even in the slightest about a Steam Box, but obviously I'm not the target market.

It should be fun to sit back and watch!
It very well could happen, but the question is will we even notice.  Every you get more than three main consoles on the market there is some sort of crash, but the only one that really gets any credit is the one in the early eighties (or The Big Crash).  None of the others were noticed until years later, when their faults could be examined with some historical perspective. 

Lets look at the players:

Nintendo: I think Nintendo will never die.  Like you pointed out, every time they screw up they manage to recover. 

Microsoft: Say what you will, but the Xbox 360 carried the generation for the core audience, regardless of design mistakes made in their hardware.  Microsoft's biggest screw up?  The Kinect, and how they just won't let the darn thing die.

Sony: Sony, oh, Sony.  Sony only really has one enemy:  Sony itself.  Forget about the big MS, Sony shoots themselves in the foot plenty enough.  The Vita, anyone?  And we can only hope things go smoother than they did for the launch of the PS4.

Everyone Else: This is where the crash will happen, I think.  With all the Android systems and crazy Steam devices it will come crashing down violently around their heads.  The only survivor will be... The PC.  Again.  Steam won't die, I think, but neither will their Steam Box break into any new ground (unless it is >$300, and even then not until the generation of the PS5).
@bombatomba:Yeah, I'm stupid. It should be a "
Ouya supposedly launching at 100$s and having access to the OnLive library(currently 300 titles) AND already having the backing of some major companies (SquareEnix supposedly will have Final Fantasy III[Japanese version] as a launch title).

Steambox has me intrigued also. But again digital only kind of kills it for me.

I loved my PSX and PS2 i have seen some cool stuff for PS3 but nothing to make me go out and drop the money on the system. Especially not after MS already got their hooks into me. My cuz being a HUGE MGS fan went out and bought the console/game bundle day 1. A week later i was asking him how his new paperweight was doing. Like me he went from being a Sony supporter spending a few grand a year on their games to having something like 10-15 games.

360 successor is going to have quite a bit of difficulty winning me over as well. I have quite obviously put the most time into my 360 this gen. But i have no plans on moving forward. I absolutely loved the online, cross game party chats, achievements etc. But especially after last year i have grown pretty disenfranchised with it also. Unobtainables, sever closures, games pulled from market place, and a few errors of gross programing negligence on top of being lied to about discounts that never came.

I actually lost interest in the Wii well before owning the 360. Which honestly is a shame because there were quite a few games i would have picked up for it. Primarily first party releases but even so it is a shame Wii couldn't have kept my interest in it so they could have ended up with the nearly 10 thousand+ dollars i poured into the 360. Online multiplayer was a complete let down, motion control was a let down, updated motion controllers coming out was a let down.

I am honestly leaning towards Nintendo over MS for my next gen console purchase. Just barely but i still am. That being said as it stands now i have no interest in the next gen. I am sure i will end up buying something a few years down the road one way or another though...
How are you guys considering Kinect a failure? Last I heard it outsold the Gamecube. A freakin peripheral. Its doing extremely well for the Xbox brand.
I've said it before, but I like the Kinect. The voice commands work well in some games, and my kids love the dance games. It's added enough to the 360 experience for me to welcome an improved version next time around. It has sold very well as a peripheral and the tech is probably here to stay.
To be fair, Crab, I didn't say failure.  On a personal level I've was never convinced of the viability of motion controls, regardless of sales numbers.  Kind of like when Kanye West brags about his music being "better"  than band "A" because he sold more albums.  I've never thought the 360 and PS3 aping motion controls was a good idea, though the 360 sales have apparently proven me wrong.  I should have prefaced that comment with a "I believe."  I apologize.
The people who say kinect is a failure have never used one.

It definitely has flopped on what should have been some AAA releases and it seems like a bunch of games just have something tacked on to use with/reward those who have it.

But i have played a fair number of kinect games and for the most party they have not been that bad. The biggest problem is definitely the space needed for some games. And from what i have been led to understand the Nyko Zoom doesn't work that well. If memory serves it is a fisheye lens so things get distorted.
I will agree that a sort of "gaming recession" is upon us. We ARE being flooded by poorly made games that are essentially the same. We DO have too many consoles on the horizon, most of which are just cellphones hooked into a TV.

It may be too soon to declare it a "crash" yet. If PS4 is announced to have "anti-used" games, I can see it tanking really really fast. If microsoft can keep doing what they have been, as well as make a more reliable system, I can see them staying for the long haul. The real interesting thing to worry about is the steam box.

Depending on the power/price of the steam box, we may be in for a real treat. One of the reasons people choose console gaming over PC, is hardware cost vs performance, with new computer components becoming obsolete in 6 months or so. If steam can make the box powerful enough to play hardcore games, as well as get developers on board to optimize their games for it, things could get messy for everyone else...especially since games on steam are usually much cheaper/ go on sale more often.
@Crabmaster2000: I'm not saying its a failure either, its just some technology that ended up being shoehorned into little more than Dance Central clones, Fruit Ninja and Eye Toy kinds of games, voice commands in regular games, and then random horrible games based on popular series.

I think a lot of more casual gamers moved onto 360 after they got tired of the Wii, and the Kinect made a lot of sense for them to get, so they bought it and all they want to do is get a little drunk and play Dance Central.
@NeoMagicWarrior: I could be wrong on this, but from what I've heard Steam plans on licensing Steam Box tech, which I think could be pretty disastrous.  One of the things non-PC gamers don't understand is that PC gaming has a cycle just as consoles do.  While not as visible, the change can be seen in the CPU requirements of newer games, where many more are moving towards favoring Quad Core/i-series processors.  I even saw one game recommend DDR3 RAM, which is a major change!

I could see the Steam box standardizing PC gaming a bit more, but not expanding PC gaming at all unless they can get the price under control.  I can put together a gaming PC that could chew up and spit out current console graphics, but that price is still twice as much as that comparable console would cost!  This is a hard pill to swallow, even if you can guarantee massive price drops on games.
If there would be a crash in the home console market it would be the result of launch price and software distribution formats. It's just the sign of the times that everything is going digital.

I also think that the major console developers would make a big mistake about unveiling their systems at a conference like E3 where they have to share the spotlight, or have limited stage time. They'd be better off taking a page out of Apple's books and hosting their own reveal events. This point wouldn't influence a market crash, but it certainly has an impact on the companies' presence and name recognition.
@bombatomba: Sorry for putting words in your mouth. I thought that was what you were suggesting by calling Kinect a "screw up".

As much as many of us gamers like to call gaming "art" I really doubt that's how Microsoft (or most other companies) are going to look at it though. They are going to simply look at sales numbers and revenue and then call their product a success or screw up. I'd say the Kinect has been quite successful in expanding the Xbox brand even if most of us (myself included) don't care much for the product.
Not that I see the home console dying, but I think what defines the "home console" will be greatly challenged in the next few years.  Think about how many Blockbusters and other movie rental stores have closed down (almost non-existent now) due to Redbox and NetFlix.  Now NetFlix and Blockbuster have moved on to create streaming video, which will eventually wipe out RedBox and other clones as we now know them.  Books, CDs, they've all gone digital and I think this will continue.  The majority of our society doesn't have much of a care for the tactile anymore and we've also seen these trends coming about in the home console via downloads.  Sure, down the road there may be a box near your TV with a certain familiar logo on it, but I don't think we'll be purchasing games from stores anymore (probably only hardware).  Instead of having to trek it to the store, why not just order from the convenience of home?  Why wouldn't these companies eventually take out the middle man in terms of software sells?  What's to stop them?  "Home console," I think it will just be a buzz word we use for a highly fragmented version of what we use to have.  I know that sounds bleak, but this "trend" has lasted more than a few years and is becoming the reality more and more with each passing day.
I don't see Steambox or Ouya wiping any of the Big 3 out of the console market anytime soon.  They don't have the cache that the Big 3 have with casual audiences, and the lack of physical content will generally limit these consoles' appeal to collectors.  That being said, I do find them interesting.  I have no plans to buy either, however.

Nintendo will be Nintendo, which means they'll continue to do their own thing and make money.  I don't think we have to worry about Nintendo, at least not for the foreseeable future.

Like bomba said, Sony's biggest enemy is Sony.  I think they have a very large chance to regain a large market share percentage, but only if they don't continue to do Sony things.

Rumors have Sony releasing the PS4 this Christmas, so at least they won't be last to market.  Another new feature they have just released info on is the ability to record and upload the last 15 minutes of gameplay online (which could be incredibly useful for uploading trophy/achievement guides without a capture card).  However, Sony is liable to screw it up initially, and then fix it years later when no one cares anymore.

I think Microsoft is going to play their cards carefully in the next generation.  The success of Kinect has shown that they can create innovative hardware, but the costs of adding a Kinect-like peripheral to an initially expensive console release could easily drive the price of entry up.  It will also be key for them to integrate achievements from the 360, but I don't think they'll have a problem integrating it.  As long as they continue making sound decisions, they'll only have to wait for Sony to do something stupid.

All in all, I think the upcoming generation of hardware will be of the least concern to me.  I have a greater fear in developers' lack of ability in squashing pre-release bugs, fixing broken games, etc.  I also think publishers are going to try and push the limits of digital distribution and microtransactions, and see just how much money they can pull out of customers' wallets.  All in all, I think this will be a pretty tumultuous generation.
Hehe... Sneak n Peak. Played the hell out of that as a kid

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