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.┬áStill, 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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