Is the video game industry going to experience another video game crash soon? It’s possible, but it depends on many factors.
The video game industry today is quickly evolving, and many gamers may not like where things are headed. I remember back in the early 1990’s when CD’s were first becoming the popular new media choice for video games. There were some debates back then about switching from cartridge to CD’s, and many gamers (myself included) felt that CD’s were cheaper quality, could easily scratch, and wouldn’t last as long as cartridges. Today however, looking back on it, it wasn’t too bad of a move at all. In fact from a consumer’s viewpoint CD’s have better audio capabilities than cartridges, and more data can be stored on them. My CD’s from the early Sega CD, Turbo Grafx CD, and 3DO systems days are actually still playing fine to my surprise. From a developer/publisher’s perspective CD’s were cheaper to make and easier to produce. The move to CD’s ended up being a win-win for everyone involved.
So, what is the next step for video games? I like to consider video games along the same lines of other media entertainment today including music, movies, and books. Let’s see…music…has gone digital…movies…are going digital…and books? Well they’re going digital too. So as our friend Spock would put it, “it seems logical” that video games are headed to becoming more digital as well. In fact we’re already seeing it happen. Take Steam for example. Steam is an platform to distribute online digital PC games for gamers. Valve Corporation launched Steam back in 2003, and today there are more than 1,500 available games and over 54 million active users. Let’s also take a look at Apple iOS and the Android Marketplace. Billions of games have been downloaded for all of these mobile devices, and 1,000’s of games are available with only the touch of the screen.
These are two examples of how digital gaming has been successful, but it’s not all rainbows and sunshine for digital games. The notorious PSP Go (or PSP “NO Go”) was released by Sony in 2009 as a digital download only handheld platform. The PSP Go was an enormous flop for Sony and it is no longer being sold in stores. Another example of an unsuccessful attempt at digital gaming would be with the OnLive or as I like to refer it to, the “UnLive”. OnLive was founded in 2003 and offers a cloud gaming service. Cloud gaming is essentially the ability to live stream games from servers located sometimes thousands of miles away. There is no data being stored in the system itself, but rather users play through the remote servers. Recently OnLive has been taken over and appears to be on their last leg despite a lot of advertising money being spent to spread the word about their service.
So why are some digital gaming attempts successful, and others fail? The reason the PSP GO and OnLive didn’t work wasn’t because they were digital games necessarily, but because of other reasons. Sony from day one hardly put any work into marketing the PSP Go. They also had the PSP available at the time which offered the same graphics and capabilities, was cheaper, and gamers could trade in PSP games and not PSP Go games. It doesn’t take a rocket scientist to figure out that the PSP Go failed before it even hit the market. So what happened to OnLive? I believe that OnLive was just too ahead of it’s time. In order to stream a game with few lagging issues, the gamer had to have a very strong internet connection. Not everyone has a strong enough internet connection to make the game stream good enough for it to play well.
So is digital gaming good for us gamers? Let’s take a look at the pros and cons. The pros include convenience. It is much easier to download a game rather than going to a retail store and purchasing the game in person. That’s about where the pros end for me. The cons include resaleablilty. Gamers are not able to trade in most digital games, lend them to friends to try, or sell them back. In addition will we be able to play digital games ten years from now? Or will they be obsolete because there are no updated patches or updates to play online anymore? From a developer’s perspective digital gaming makes sense. Think about it. They’re far less expensive to distribute, and more importantly for them, they don’t have to worry about people selling used copies.
On the topic of used games, the gaming industry has been making a big fuss with retailers who sell used video games for years. EA and other publishers have charged extra to play used games online to help counter some of these apparent loses. Publishers see it as money out of their pocket every time a gamer buys a used game and not a new one. Who’s fault is that though? It certainly isn’t the gamers fault…or is it? Every time I walk into a GameStop the retail clerk asks me if I want to buy the game used, even though I have a new copy in my hand and willing to pay full retail price. The clerk tells me “I just want to try to save you money”. Is that true? What they really mean is “I just want to increase our profits”. You see retailers only make a small margin of profit on new games, but make a huge margin on used copies. For example I want to bring in my copy of a game that came out only two weeks ago. They’ll offer me an insultingly low number for cash, but offer a 50% trade in value for in store credit. They then go and turn around the same game I sold for $15 in store credit for $45 or $50. The fault lies on those gamers who are ignorant enough to sell games back for so cheap, when they should be doing it themselves on sites like ebay, etc. The video game industry wants nothing more than to move into digital games more than anything else. Rumors has it that the upcoming unreleased Xbox 720 and PS4 consoles will have a strong influence in digital games, and even may lock out used copies.
Many of us gamers like to display our games in our game room, and often when filming a video have our collection displayed behind us. What will we do as gamers if these tangible games go away? What will we display? I picture a gamer sitting in front of his computer and pointing to their computer bragging that this is his gaming collection.
Also in today’s video game industry millions of dollars are put into many games for today’s consoles. Publisher and developers have blockbuster budgets, and in return expect blockbuster returns. When the returns don’t meet the publisher’s expectations, sadly they close down and fire the developers. Take what happened to Radical Entertainment the developers for Prototype 2 as an example. When sales didn’t meet Activision’s “vision”, they closed down the studio and laid off all of the employees at Radical. Radical had been around developing games since 1991. It is do to these high expectations that we see multiple games in series. How many Call of Duty’s do we really need? Don’t get me wrong series in gaming has been around for a long time. Look at Mega Man, Super Mario Bros., Legend of Zelda, etc, but today there are a lot less new and innovative games coming out than ever before because developers don’t want to take the risk of it failing, or not meeting the publisher’s high expectations. So what do gamers want? If we take a look at the number one selling game the past five years it may surprise you. It’s not any Halo game, or even a Call of Duty game, but it’s the simple $1 or often free game Angry Birds. Angry Birds has been downloaded more than 1 billion times, and has spun off to include merchandise and even some theme parks around the world. Does this mean that gamers are more opt to purchase less expensive and simple games? Well yes and no. iOS and Android games have certainly opened the door to many people who may not be that “hardcore gamer”. The Ouya is a new system coming out in 2013 that is an open based platform that runs off of the Andriod 4.0 Ice Cream Sandwich operating system. The developer Boxer8 sees an opportunity to capture many of these casual gamers.
On one end we have publishers putting millions of dollars into these blockbuster game titles, and on the other, there are these cheaper iOS and Android Market games that many gamers play. The video game industry is being stretched on both extreme ends which will only eventually lead into a tear somewhere in the industry.
Who is the average gamer today? According to the Entertainment Software Association (ESA). These finding may surprise you.
- The average U.S. household owns at least one dedicated game console, PC or smartphone.
- 49% of U.S. households own a dedicated game console, and those that do own an average of 2.
- The average gamer age is 30.
- 53% of game players are male and 47% are female.
- Women 18 or older represent a significantly greater portion of the game-playing population (30%) than boys age 17 or younger (18%).
- The average age of the most frequent video game purchaser is 35.
- Of the most frequent game purchasers, 52% are male and 48% are female.
- 42% of game players believe that computer and video games give them the most value for their money, compared with DVDs, music or going out to the movies.
- 46% of gamers have purchased or plan to purchase one or more games in 2012.
- Some of the top reasons gamers say they purchase a computer or video game: quality of game graphics, an interesting storyline, a sequel to a favorite game, word of mouth.
In addition according to the ESA this is how we play video games:
- 15% of most frequent game players pay to play online games.
- Types of Online Games Played Most Often: Gamers play on-the-go: 33% play games on their smart-phones, and 25% play games on their handheld device.
- 42% – Puzzle, Board Game, Game Show, Trivia, Card Games.
- 25% – Action, Sports, Strategy, Role-Playing.
- 13% – Downloadable Games.
- 11% – Persistent Multi-Player Universe.
- 9% – Other.
- Types of Mobile Games Played Most Often:
- 47% – Puzzle, Board Game, Game Show, Trivia, Card Games.
- 27% – Downloadable Games.
- 14% – Other.
- 12% – Action, Sports, Strategy, Role-Playing.
- 4% – Persistent Multi-Player Universe.
- Gamers who are playing more video games than they did three years ago are spending less time:
- 59% – Playing board games.
- 50% – Going to the movies.
- 47% – Watching TV.
- 47% – Watching movies at home.
- Gamers who own dedicated game consoles use them for other entertainment media, in addition to playing games:62% of gamers play games with others, either in-person or online.
- 40% – Use their console to watch movies.
- 20% – Use their console to listen to music.
- 17% – Use their console to watch TV shows.
- 78% of gamers who play with others do so at least one hour per week.
- 33% of gamers play social games.
- A majority of gamers play games with their friends and family members:12 is the average number of years gamers have been playing video games.
- 16% play with parents.
- 34% play with other family members.
- 40% play with friends.
- 17% play with their spouse or significant others.
- Adult gamers have been playing for an average of 14 years; males average 16 years of game play, females average 12 years.
According to the ESA in 2012 only 13% of gamers are playing downloadable games, and only 15% pay to play online. Does this mean that the industry isn’t ready for a 100% digital gaming platform?
To go back to my original question. Is the video game industry going to experience another video game crash soon? If these blockbuster budgets continue to increase, and the expectations for these publishers continue to rise, more and more developers will be unfortunately laid off. If the gaming industry also goes 100% digital too soon, then we may see a video game crash. Will gamers want to hold on to their tangible copies of games and not want to transition to digital games, or will we look back on the gaming industry twenty years from now and see digital gaming as a logical next step today as we did with CD’s? The choice is yours.
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