Now and Then: Death of The Console
By Sabrina Bellemare
The North American video game crash of 1983, the impact it had on modern gaming, and the possibility of a recurrence in the fall of the console.
Between 1978 and 1983, the videogame industry experienced a period of prosperity and mass appeal. Arcade gaming reached a high point thanks to Space Invaders, and home consoles became a big hit. the video game industry began to outstrip other entertainment industries in profits. While the foothold it had gained with the public made the lucrative industry seem infallible to some, it wasn’t to last. The video game crash of 1983 was a massive recession in the video game industry which lasted about two years, during which time several companies in the production of consoles and home computers went bankrupt. Between 1983 and 1985, the Video Game industry plummeted from $3.3 billion to just $100 million. The crash was a significant event in video game history which left fledgling industry crippled, and resulted in the end of the second generation of console gaming in North America.. Despite doubts about the lifespan of the video games industry, it recovered a few years later with the widespread success of the NES. There were several causes behind the great crash, and when measured against the circumstances of today’s modern game industry, one must ask ourselves if the current business model is sustainable, and whether or not we are heading in the direction of another crash.
There were many causes for the crash, but the main cause was saturation of the market. At the time there were more than a dozen or so consoles on the market, and each one had its own individual game collection, produced by the manufacture, and some had a massive array of games produced by third-party developers. There were far too many games, and most of them were reiterations of a previous release, hardly distinguishable from each other. Companies were releasing game after game with no real new content, and consumers were losing patience with developers. Loss of publishing control resulted in a slew of bad amatur games, as anyone who could program and had a means of distribution could create and sell a game. As a result the market was flooded. With a complete lack of quality checks to ensure the games were any good, more often than not, gamers would find themselves unsatisfied with their expensive game purchases, and as a result, sales dropped. With a sudden influx of consoles and games, and little to no quality control, consumers were left with too many bad choices.
Then came the high-profile disaster games, such as Atari’s notorious Pac-Man and E.T. games, damaged the reputation of the entire industry and lost the faith of the consumer. Atari is often fingered as the culprit behind the crash because of their two famously costly 1982 releases, Pac-Man and E.T, both rushed to be completed. In an attempt to take advantage of the arcade game Pac-Man’s success, Atari produced a console version the Atari 2600. The games was rushed through production and marketed heavily in order to hit christmas sales. Despite decent sales, Atari had grossly overestimate the success of the game, and sold a little over half of the cartridges they produced. Atari took massive losses over their poor projections. Following this was the rushed release of the 1982 adventure game, E.T. the Extra-Terrestrial, today widely considered to hold the title of ‘worst game ever’. The game was meant to capitalize off of popularity of the newly released E.T. movie, by being released in time for the holidays while hype was high. This meant that the game needed to be completed in five and a half weeks by its creator, Howard Warshaw. The results were a drop in quality that stung consumers, who were already quickly souring with Atari. The reaction to the game’s massive failure, a second ill-received Atari release, was detrimental to the industry on a whole. The combination of overproduction and the sheer volume of returns, resulted in serious financial losses. Millions of unsold Atari cartridges famously rumored to be buried in a landfill in Alamogordo, New Mexico .This remained a popular urban legend until 2014 when when an excavation showed the rumor to be accurate. Former Atari manager James Heller then revealed that 728,000 cartridges of various titles were buried. The widespread news of Atari’s failure was attributed as the cause of atari’s fall and one of the catalysts for the crash, but by no means was it the only culprit, or the most major. Atari made several questionable decisions the culminated to its demise.
Poor public perception and a flooded market wasnt all the video game industry had to worry about. The superior competing technology of computers was also a major issue for the industry at the time. Computers were more widely distributed, had better graphics and sound, were multi-use (word processing and accounting) and were competitively priced. This led a great deal of consumers to believe that computers were simply a better investment of their hard earned money.
The North American crash had lasting effects on the industry as a whole. the first of which being that the home console market shifted to Japan with the booming success of the NES.
Secondly, The crash resulted in the implementation of important policies and measures to control third-party development of software.
The NES had a strict licensing policy that involved adding lockout chips to the console and placed their seal of approval on licensed games released for the NES. Nintendo claimed that this was in order to protect the consumer against lesser quality games, however as well as preventing the use of unlicensed games, it helped prevent piracy.
Many of these methods were implemented by subsequent console manufacturers and remain in use on every major video game console today, albeit with more sophisticated technology. Consoles protect themselves today by controlling quality, plagiarism and the number of releases a studio can release per year.
In the decades since the crash, the industry has once again achieved enormous growth and success. No longer a niche consumer product, video games have expanded to include online and mobile gaming. There are more gamers than ever before, and more ways to game still coming, making the industry far less centralized around consoles, and therefore giving it more lasting power. However, with a rapid shift in gaming habits, and an ever-growing number of ways to game, dedicated consoles and AAA games are now rather precariously perched on their thrones as rulers of the industry.
We’ve recently entered a new generation of consoles, the three major competitors being the Xbox One, the Playstation 4, and the Wii U. This means that the reigning titans of the industry’s console market remain Sony, Microsoft and Nintendo, with a few lesser competitors showing up now and again. Console games are costly, around $70 on release, and consoles themselves are around $400-$450. This can be prohibitively expensive for some, especially when the alternative of PC gaming exists. PCs are multi-purposed, and therefore are a more savvy investment, echoing the consoles’ issues in 1983.
A new report by Superdata, a NY-based research consultancy that specializes in interactive entertainment, warned that the market for consoles is already crowded, stating “Industry veterans will remember the crash of 1983, when the games market was saturated with hardware devices. Today, the industry runs a similar risk, as [with] a higher-than-ever console installed base, consumers may be resistant to adding more hardware to their living rooms.”
The report suggests gamers are gravitating to more multi-purpose platforms like PCs and mobile devices, much like in 1983, then the consoles were competing with the more versatile home-computer. This means that while there are more gamers today than ever before, the increase in demand for consoles, while there, is not proportionate.
In 2008 42 percent of gamers played primarily on a console platform, 37 percent favored PCs and a mere 5 percent gamed on mobiles. These number shifted to 51 percent of gamers now playing primarily on PCs, and only 30 percent on consoles.
Now, with the arrival of new consoles, such as the Ouya and Valve’s Steam Box, as well as rumors of a possible Apple console in the future, the market could very well become saturated as in once did before the crash. This could spell disaster for all dedicated consoles.
Games being released also echo the conditions before the crash. Third-party titles have been a stream of indistinguishable shooters with high sales. AAA development seems to be adopting a formulaic production trend, making solely profit driven decisions and ignoring the demand for unique content. This is similar to the trend in 1983, when every game was an iteration of a previous release, only slightly different. While the development costs for these games have become staggering, low budget games like Angry Birds have made millions.
According to new research conducted by Digi-Capital, “Online and mobile are spearheading the game industry’s growth to a potential total valuation of $83 billion by 2016, the global games investment review states that online and mobile could have a revenue share of $48 billion in 2016, 55 per cent of the entire game industry.” The rising use of mobile phones for gaming might make consumers less inclined to buy dedicated handheld gaming devices, such as the Nintendo 3DS or the Playstation Vita. This could mean yet another hit for consoles.
It is also important, in this shifting landscape, to take into account the growing indie game industry, which delivers new and exciting content at a far lower price. The digital market makes the distribution of these games possible and the advent of sites like kickstarter have allowed independent studios to gain funding without investors. The spirit of creativity and innovation found in the independent game industry, as well as reasonable cost and ease of accessibility on PC, could be what finally topples the dedicated console and AAA games from their respective thrones.
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