Incline The Second Video Game Crash.

[Dexter]

https://outline.com/bG9pq3

The Flops Are Piling Up for Video-Game Titans
Christopher Palmeri February 07, 2019

In recent years, the video-game industry looked like it had found the antidote to the boom-bust cycles that had long plagued the business.

Publishers focused on a few well-known titles and extended their lives through in-game purchases, expansion packs and online tournaments. Electronic Arts Inc., one of the largest players, doubled its market value to almost $45 billion last year as a new era of steady, predictable revenue seemed at hand. Then, like a wrong turn in Pac-Man, it was game over.

The biggest names in games have stumbled this year as marquee titles flopped and online spending came up short. Electronic Arts shares tumbled 13 percent Wednesday after the company confessed that some of its biggest releases disappointed. Take-Two Interactive Software Inc. fell by a similar amount after forecasting sales this quarter that were $100 million below Wall Street forecasts. The results are a reminder that video games are still a hit-driven business, rising and falling based on unpredictable consumers.

“The market is still healthy,” Chief Financial Officer Blake Jorgensen said in an interview. “The bad news, it’s very competitive.”

Electronic Arts’ latest Battlefield game was the biggest disappointment of the year, selling a million fewer copies than hoped, Jorgensen said. The company delayed the release by several weeks to correct some bugs, putting it in the thick of a competitive holiday season. Its core Madden NFL title also fell short, and the FIFA soccer game was flat from a year ago.

Electronic Arts, based in Redwood City, California, is looking to improve sales of Battlefield V by including an every-player-for-himself battle royale mode -- like the hugely popular Fortnite game -- but that won’t come until later in the current quarter, Jorgensen said.

Similar Disappointment
Activision Blizzard Inc., down 48 percent from its October high, had a similar disappointment with Destiny 2 and an expansion of that shooting game. So much so, that the company cut its ties to the developer, Bungie, a move that could cost as much as $400 million in lost sales this year. Santa Monica, California-based Activision reports financial results on Tuesday.

The saga of Take-Two, which had last year’s best-seller in Red Dead Redemption 2, illustrates how hard it can be to predict those recurring revenues the industry has been chasing.

On Wednesday, the New York-based game publisher reported quarterly sales that more than doubled and a fivefold jump in profit after selling 23 million copies of the new Red Dead Redemption game.

But Take-Two also said sales of its key Grand Theft Auto franchise would decline this quarter, both in physical units and online play. An online version of Red Dead, released in November, has been criticized by players for charging too much for in-game items such as decorative guns, raising questions about whether that product will enjoy the same success as the traditional game.

What’s Next
“No one is saying selling 23 million units of Red Dead 2 is bad,” said Matthew Kanterman, an analyst with Bloomberg Intelligence. “The problem is, what’s next?”

Take-Two Chief Executive Officer Strauss Zelnick said there could have been some cannibalization of the Grand Theft Auto business as players shifted to Red Dead. He also acknowledged glitches with Red Dead’s online game, but said the company is learning and fixing what had been a beta launch.

“It’s still the entertainment business and we will all fail or succeed based on the quality of our releases,” he said.

Lurking behind all of their woes is Fortnite, the phenomenally popular free-to-play game from closely held Epic Games Inc. The success of that game is forcing competitors to adopt similar models. Electronic Arts, for example, just released a free-to-play game called Apex Legends, that, like Fortnite, generates revenue from in-game purchases.

In-game spending and free-to-play are still working for social-gaming pioneer Zynga Inc. The company reported better-than-expected fourth-quarter sales and profit Wednesday and its shares rose in extended trading. The company credited franchises such as FarmVille and new titles like Merge Dragons! and Empires & Puzzles.

CEO Frank Gibeau, a former Electronic Arts executive, draws a distinction between his company and those that make games for consoles, such as Sony Corp.’s PlayStation 4 and Microsoft Corp.’s Xbox.

The traditional console-based video-game business, even with its recurring revenue sources, “hasn’t been as resilient as many people hoped.”

 

[a Goat]

They never learn, holy shit.

 

[Young_Hollow]

No crash is going to happen because the cost of putting a game out there for public consumption is much lower than what it was in the 80s. The amount of gullible people new to games being produced every day is high enough and their previous gaming experience is increasingly diluted enough that a free to play or annual cycle of trash can be profitable even if it lacks anything we would call merit. They could release it for free but even then there will be a perpetual line of tweens fresh to the internet and gaming ready to spend money on their trash just because its a popular trending game that's all over zuckerbook and twitler. Games will never stop being made at this point unless a solar flare (mercifully?) hits this gay earth and wipes out the electricity grid.

 

[Unkillable Cat]

No crash is going to happen because the cost of putting a game out there for public consumption is much lower than what it was in the 80s.

:citation needed:

The amount of gullible people new to games being produced every day is high enough and their previous gaming experience is increasingly diluted enough that a free to play or annual cycle of trash can be profitable even if it lacks anything we would call merit.

:citation needed:

They could release it for free but even then there will be a perpetual line of tweens fresh to the internet and gaming ready to spend money on their trash just because its a popular trending game that's all over zuckerbook and twitler.

:citation needed:

Games will never stop being made at this point unless a solar flare (mercifully?) hits this gay earth and wipes out the electricity grid.

The first video game crash didn't stop video games being made, you know.

 

[KK1001]

The fuck happened to all the smileys and shit?

Also the real answer is the faceless capitalists and investors and the politicians who abet monopolization of the industry and giant takeovers

 

[Mexi]

You're dreaming if you think there will be a second crash. Fortnite and Apex Legends have an enormous fanbase right now. Gaming is no longer a stigma. The most popular online figures are pretty much gaymers. Hell, even hot chicks are gaymers. I never would've imagined that when I was in high school and middle school, but hell, you see girls playing MGS, Fallout, and shit like that. Anyways, there will be no second video game crash. You'd have to be an idiot to think it'll happen.

 

[KeighnMcDeath]

I had to look up that crap “GAYmer.” Blargfffff.....! Cider also turned up.

 

[Taka-Haradin puolipeikko]

https://www.bloomberg.com/news/arti...-to-plan-job-cuts-as-sales-of-key-games-stall

Activision's Plan to Cut Hundreds of Jobs Caps Tumultuous Week

A painful stretch for the video-game industry isn’t over.

Activision Blizzard Inc. plans to announce job cuts Tuesday in the face of slowing sales, according to people familiar with the matter, bringing fresh upheaval after spotty results roiled stocks this week. The shares dropped as much as 2.5 percent to $42.88 on Friday.

The layoffs, which could number in the hundreds, are part of a restructuring aimed at centralizing functions and boosting profit, said one of the people, who asked not to be identified because the changes haven’t been announced. Activision employed 9,800 people at the end of 2017.

The game maker, one of the largest in the world, acknowledged on a November conference call that some key titles, such as Overwatch and Hearthstone, were seeing flat or declining numbers of users. After disappointing sales of Destiny 2: Forsaken, the company parted ways with its developer, Bungie Inc., a move that could reduce annual revenue by as much as $400 million.

Analysts expect Activision’s sales to decline by about 2 percent this year, to $7.28 billion.

How Video-Game Giants Are Struggling

The company, which has bulked up over the years through acquisitions, including PC-game maker Blizzard Entertainment and mobile-game company King Digital, has historically given its various divisions considerable autonomy under longtime Chief Executive Officer Bobby Kotick.

Executive Departures
Over the past year, a number of executives have left, including Eric Hirshberg, CEO of Activision Publishing, and Mike Morhaime, the longtime head of Blizzard.

On New Year’s Eve, Activision said it was firing Chief Financial Officer Spencer Neumann -- shortly before he took the same position at Netflix Inc. Tim Kilpin, a toy-industry veteran recruited to lead Activision’s consumer-products division two years ago, retired this month.

Activision isn’t alone in stumbling. Electronic Arts shares fell 13 percent Wednesday after the company confessed that some of its biggest releases disappointed. But it rebounded later in the week.

Take-Two Interactive Software Inc. fell by a similar amount Wednesday after forecasting sales this quarter that were $100 million below Wall Street forecasts. The results were a reminder that video games are still a hit-driven business, rising and falling based on unpredictable consumers.

 

[fantadomat]

That is pretty understandable once you take a look at this charts:
https://sullygnome.com/games/30/watched

Overwatch is pretty dead at this point. Also the new apex shit doesn't seems to be doing as well as advertised.

 

[Mexi]

I had to look up that crap “GAYmer.” Blargfffff.....! Cider also turned up.

I didn't know that was actually a thing. FFS, I was just venting at how fucking stupid gaming has become since it's mainstream. The stupid fucking Fortnite dances and shit like that really piss me off.

 

[Curious_Tongue]

You're dreaming if you think there will be a second crash. Fortnite and Apex Legends have an enormous fanbase right now. Gaming is no longer a stigma

Two games can't support an entire industry.

 

[Mexi]

You're dreaming if you think there will be a second crash. Fortnite and Apex Legends have an enormous fanbase right now. Gaming is no longer a stigma

Two games can't support an entire industry.

League of Legends, Minecraft, GTA: V, CS:GO, and PUBG. I'm sure there are more than two games that still have a license to print money, but no, the industry is heading for a crash soon. I just ignore the facts because of my feelings.

 

[Curious_Tongue]

I'm sure there are more than two games that still have a license to print money

I don't think having an industry that banks entirely on mega-hits is a healthy one.

It's like a fishing industry that has given up on catching fish and only wants to hunt whales.

 

[Spectacle]

There's not going to be a crash, but there may be some high-profile bankruptcies.

 

[Unkillable Cat]

Two games can't support an entire industry.

Yes they can... just not for very long. Months, maybe a year. And they burn the rope they're hanging on as they go. More on that below.

I don't think having an industry that banks entirely on mega-hits is a healthy one.

It's like a fishing industry that has given up on catching fish and only wants to hunt whales.

And once the whales are all gone, the fishermen will have temporary amnesia related to how to hunt regular fish, but eventually it'll come back to them and things will return to normal.

I think many posting here claiming that there won't be a video game crash have the wrong idea about what a video game crash will entail. It won't be an apocalyptic event that'll create a digital post-apocalyptic gaming landscape, but it will change it.

Back in '83 there were only three markets to speak of: Japan, the U.S. and Europe. When the crash happened the console side of the U.S. market got almost wiped out, but the microcomputer side survived despite taking heavy blows. Meanwhile Japan didn't feel a thing and the mostly-microcomputer European market rode out the wave without worry. Microcomputers ruled the roost for the next four years in the U.S. and Europe, while consoles grew stronger in Japan and eventually invaded the other two markets and achieved permament positions there at the cost of microcomputers. By 1991 all three markets were thriving again with plenty of consoles.

What we're seeing now and speaking of as a crash is primarily going to affect two markets: The AAA market and the Indie market, though ripples and aftershocks will probably be felt elsewhere. And yet, the threats facing these two markets are different.

The AAA market is going to implode because it has burnt its rope, and the only ways forward are either being rejected by governments, or rejected by the gamers. For the past 25 years the AAA industry has been so focused on reducing costs and increasing profits for games, that they completely forgot what a game actually is. In the 1980s almost every game released could fill a niche somewhere and make some sales, but as early as 1990 we were seeing games getting rejected because they represented a 'financial risk'... not because they were doomed to fail, but because no one could predict whether it would sell or not. No one was willing to stick their neck out. And once the business suits with the big bucks stepped in after Doom's success, this got even worse. "Appeal to the lowest common denominator" quickly became the industry standard, which is why so many FPS games have been released from 1994 onwards. As soon as 2002 people were noticing that the big AAA titles all looked and played the same, and it's only gotten worse since. That's a business model that can't sustain itself, which is why AAA titles have constantly been adopting newer and bolder schemes to make people fork over money. Some years ago we got games that had online-stores in them. Now we have online-stores that have a vague outline of a game tacked on to it. And now the end looms near.

So what will happen to the AAA market? One of the big companies will crash and burn (pleaseletitbeEA pleaseletitbeEA) but odds are decent the others will survive, but they will do in a vastly reduced state. They may recover, but it'll take them years to do so.

But what about the Indie market? The problem there is oversaturation: There are too many titles available, and not enough coverage of them. What people failed to notice when digital distributors came about is that they have infinite shelf space, and when someone is presented with an overbearing choice like an infinite shelf in a game store he'll default back to what he knows... or what is considered the best by peer opinion. Hence, the 'Best of'-shelf at the front gets all the views, while those infinite shelves beyond gather infinite amounts of dust. This applies both to gamers and game reviewers. The Indie market favors those who made it there first (so does the AAA market, but the effect is much more noticable for Indies). Because of the sheer amount of titles available, people aren't bothering with new titles at all. The old Indie titles would need to go away for new Indie titles to stand a chance... and that just ain't happening unless Steam goes under for some reason. What brought about the rise of the Indie market back in 2008 (digital distributors) is now choking the life out of it. But it won't die, it'll just shrink and submerge again and go back to catering to niche gamers.

Notice how I didn't mention any other markets. For example I think the mobile market is barely gonna feel the effects of the above scenarios, even if they both came about at once. And in the unlikely event they do, life still goes on. Games will continue to be made and released.

 

[Urthor]

The idea the AAA market is going to implode is silly. By no measure has the financial size of the AAA market contracted, what has happened is that EA and Activision *didn't make as much money as before because they released shit games*

Meanwhile, actually successful titles like God of War, Spiderman, Call of Duty, Monster Hunter, are tearing it up. It's just the only one of those that the big 2 made was Call of Duty, and Call of Duty is utterly predictable and was part of the forecasts. Other than COD not much else of note turned up from Activision.

 

[Bio Force Ape]

The so-called crash of 1983 lasted, what, a year or two? By 1986 Nintendo was going strong with Metroid, Legend of Zelda, et. al. Remember Zelda? Yeah, what a flop! OMG how will the industry ever recover?!

People like to create compelling stories out of history. They love the E.T. thing. The landfill full of cartridges, etc. but it just wasn't that big of a deal at the time and the industry just kept rolling along.

 

[Zed Duke of Banville]

The so-called crash of 1983 lasted, what, a year or two? By 1986 Nintendo was going strong with Metroid, Legend of Zelda, et. al. Remember Zelda? Yeah, what a flop! OMG how will the industry ever recover?!

People like to create compelling stories out of history. They love the E.T. thing. The landfill full of cartridges, etc. but it just wasn't that big of a deal at the time and the industry just kept rolling along.

The Videogame Crash of 1983 in the United States caused the demise of the original Atari and its many imitators in the console business. The parent company of Atari spun it off in 1984 as a microcomputer manufacturer under the leadership of Jack Tramiel, the founder of Commodore who had been forced out of his position as CEO at the beginning of the year. Amiga had been founded at the end of 1982 and had planned to fund development of its computer by producing joysticks and other peripherals targeted to consoles; it consequently found itself in dire financial straits by early 1984 before being rescued by Commodore, which purchased Amiga on generous terms. Although thriving in Japan, where Nintendo released the Famicom in 1983, the console industry was nearly dead in the United States for three years until Nintendo brought the Famicom to the United States in late-1986 under the name Nintendo Entertainment System or NES for short (there had been a limited late-1985 release in a few cities). However, the Videogame Crash didn't have much of an effect on the market for home personal computers microcomputers, which had no relation to consoles, and where the Commodore 64, which had been released in 1982, managed to rack up impressive sales.

 

[Mexi]

I'm sure there are more than two games that still have a license to print money

I don't think having an industry that banks entirely on mega-hits is a healthy one.

It's like a fishing industry that has given up on catching fish and only wants to hunt whales.

Not just that you also have triple AAA publishers doing extremely well outside of mega hits: RDR: 2, Smash Bros, Monster Hunter, and a lot more. I guess the industry should bank on failures so you can get that video game crash. It'll never happen.

 

[Curious_Tongue]

Not just that you also have triple AAA publishers doing extremely well outside of mega hits: RDR: 2, Smash Bros, Monster Hunter

Those are mega hits.

 

[The Anti-Santa]

This obsession with Second Crashing of the Video Games Market which is just around the corner is some weird Millenarianism shit. The world will come to and end and all the sinners will be cast down into hell. People have been speculating about this for nearly 20 years. Pure hyperbole.
Put it with Peak Oil, The Singularity, and Trump Getting Impeached in the 'Things that are never going to happen' file.

 

[Curious_Tongue]

I can't imagine a true codexer who wouldn't pray daily for a crash.

A games industry with no small to medium sized publishers or independent studios cannot produce the types of quality games we deserve.

It makes too much sense business wise for a large publisher to shut down a small studio making quality games for a niche audience and have the developers work on the next massive mega hit game tailored for the lowest common denominator.

 

[Young_Hollow]

No crash is going to happen because the cost of putting a game out there for public consumption is much lower than what it was in the 80s.

The 80s didn't have premade assets in a userfriendly engine, a $100 cost of publishing, need to code for only one platform (x86) or the ability to sell at high discounts or via bundles.

The amount of gullible people new to games being produced every day is high enough and their previous gaming experience is increasingly diluted enough that a free to play or annual cycle of trash can be profitable even if it lacks anything we would call merit. They could release it for free but even then there will be a perpetual line of tweens fresh to the internet and gaming ready to spend money on their trash just because its a popular trending game that's all over zuckerbook and twitler.

I'll just say that I'm from a nondescript Asian country and have seen this happen before my very eyes.

The first video game crash didn't stop video games being made, you know.

That'd be true. But if the crash is going to come like you said to certain big publishers, then it might as well be called nature running its course because different companies will reach the straw that breaks them when their clueless investors push out games that don't profit in every department. And we can rule out EA because they can probably stay afloat only through their sports games. As to the indie crash, I don't know. Its been prophesied ever since steam opened its gates but no indie game ever occupies the scene permanently or even for more than a few months. It seems a removal of the current popular game isn't necessary as you said, and many indies co-exist.

 

[Unkillable Cat]

For those confused, Young_Hollow is responding to his former claims which I tagged as

a few posts ago. I'd like to begin by thanking him for responding, as I was curious to know more.

No crash is going to happen because the cost of putting a game out there for public consumption is much lower than what it was in the 80s.

The 80s didn't have premade assets in a userfriendly engine, a $100 cost of publishing, need to code for only one platform (x86) or the ability to sell at high discounts or via bundles.

What you're mostly describing is the 'barrier of entry' for developers to get their game published. That most certainly has lowered, it's much easier to develop and release a game now than then. Game design kits ('dev kits') and game engines with user editors have existed since at least the mid-1980s, but they were almost exclusively kept in-house, and some were made commercially available once their lifespans had ended.

But you specifically mentioned the cost, and that's where things get murkier. High-profile games with large development and marketing costs were a thing in the 1980s (both before and after the crash) but even then the numbers were all much lower than we've come to expect today. Adjusting for inflation (something I'm not very good at) could probably give us a greater insight into this, but then we'd need to find a game from back then where all the dollar figures are available for number crunching. But the thing is, low-cost studios offering 'budget publishing deals' also existed. Firebird Software in Britain is a terrific example of this, their motto was simply "Submit a game to us, and if we can get it running we'll sign you up and publish the game!" Firebird released a lot of garbage-tier shovelware titles (at one point they even released a 'worst-of' compilation called Don't Buy This) but they also released the occasional gem and/or smash hit (Olli & Lissa, Booty and The Sentinel for example) so they certainly weren't a failed venture.

And that's before we get to the so-called 'bedroom coders' who spent long nights beavering away at their homes and sold games personally to game stores or at conventions. They pocketed almost all of the money for each copy sold, but in order to sell their game they had to get out there and do all the promotional work themsleves. In the U.S. this happened pre-video game crash, but in Britain it lived on for a few years more.

Which adds one point of note: Almost everything I've described here applies to things that came after the video game crash, and in some cases just weeks later. That may also have a say in things.

The bottom line on this claim is that while I can't say that your words are outright false, I can say that they're not as crystal-clear as you'd like them to be.

The amount of gullible people new to games being produced every day is high enough and their previous gaming experience is increasingly diluted enough that a free to play or annual cycle of trash can be profitable even if it lacks anything we would call merit. They could release it for free but even then there will be a perpetual line of tweens fresh to the internet and gaming ready to spend money on their trash just because its a popular trending game that's all over zuckerbook and twitler.

I'll just say that I'm from a nondescript Asian country and have seen this happen before my very eyes.

Anecdotal evidence is not always acceptable evidence. That said, "There's a sucker born every minute" is a quote that's been going around for 150+ years, and for good reason, so there'll always be a steady supply of gullible people that have latched on to a gaming platform or series and won't see reason. (Though in today's modern ultra-fast society, that quote should be updated to say that there's a sucker born every second.)

To get the best answer here we'd have to compare game markets based on nationality and/or world region. Consumer habits tend to be different between those lines, especially if games don't get localized much.

But again, I can't say that your statement is false, but I can poke holes into it so it doesn't seem so solid.

The first video game crash didn't stop video games being made, you know.

That'd be true. But if the crash is going to come like you said to certain big publishers, then it might as well be called nature running its course because different companies will reach the straw that breaks them when their clueless investors push out games that don't profit in every department. And we can rule out EA because they can probably stay afloat only through their sports games. As to the indie crash, I don't know. Its been prophesied ever since steam opened its gates but no indie game ever occupies the scene permanently or even for more than a few months. It seems a removal of the current popular game isn't necessary as you said, and many indies co-exist.

Fair enough. All I know for certain is that 'nature running its course' will involve one of the big publishers biting the dust, and whatever will happen to the Indie scene will be different from that. Most of the rest is just me putting for theories and possible predictions. It's just amazing to see so many Indie devs struggling to make their game, get it released on Steam... and no one shows any interest in the game at all. They appear and disappear without us even noticing.

 

[J1M]

There used to be a lot of doom and gloom regarding the spiraling costs of game development. That has mostly been solved.

There wasn't any one thing that did it, but several factors have driven down costs:
-Outsourcing labor to other parts of the world
-The rise of studios that specialize in a narrow part of the development process (concept art, high definition textures of real-world objects, speed tree, 3D assets, etc.)
-Engine consolidation
-Engine competition driving down prices
-Digital distribution