@swfcfan: No it's not going to crash, though the recession has hit it pretty bad.
Your primary argument for why it will crash seems to be a list of similarities between now and the crash of 82 (or therebouts), but they have a couple of real differences. The market back then was as yet unsaturated, without a significant developed "core audience" that were really into games (like us basically), and the plethora of games that were being released were really shitty. There are a lot of quality games out now, with franchises that build loyalty, and there are organized, developed ways for people to track the quality of games (like gaming websites such as these). Competition just means that times are tougher for the big publishers, and the pressure is on them to deliver to the goods to their stockholders. That doesn't mean that people will in general stop buying games like in the E.T crash.
I think someone mentioned above that there will be a shift to indie games, but that's not true either. I think that's a secondary effect--companies will continue to produce very high quality expensive games, just like how Hollywood shifted towards big-budget high concept entertainment. This is for a couple of reasons: as I said earlier, as competition increases the onus is on the publishers to find hit products that will sell millions of copies. Also, due to network effects (i.e. people want to play each other on Xbox live, word-of-mouth) and limited disposable income for gamers (they'll only buy one console and a couple of games), this means that there will be a couple of huge hit games and a lot of quality ones that don't sell well. We've been seeing this. This means that the market is getting riskier, and companies will invest heavily in 1) sequels and 2) franchises that might be the "next big thing."
However, not all companies can afford that kind of risk, which leads to integration. Only companies with deep pockets can afford to fund multiple expensive projects and hope that at least one will be a hit. This is why the industry is dominated by companies like Activision and EA, and why even id sold themselves to Bethesda. The era of the garage developers for AAA titles is over.
Of course there's niche stuff and a burgeoning indie marketplace, but again think of that as the indie circuit in Hollywood. It can foster a lot of creativity and great games, but it isn't the primary source of profit and thus not the primary point of interest for most publishers. As the scene develops no doubt we'll continue to see more great games, but the big gaming companies and the other conglomerates to follow aren't going to disband and suddenly shift their efforts to indie gaming.
Log in to comment