Is Another Video Game Crash Coming?
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Video games were huge in the 70s and 80s. Brands such as Intellivision and Atari ruled the world, and the competition was even more cutthroat than it is today (seriously, they dropped each other’s names in ads). But due to a few key factors, the industry crashed so hard that video games were nearly extinguished. Then, Nintendo showed up and changed everything. Now, video games are bigger than ever before, but the industry has a new set of problems to deal with. But are these problems enough to bring a second crash? Probably not, but there is certainly room for a bump or two on the road.

It seriously cannot be overstated how much money video games are making right now. estimated that the gaming industry generated nearly $135 billion in 2018, and that’s a whopping ten percent higher than 2017. And the ESA announced earlier this year that the United States alone contributed around $43 billion. To compare, various statistics suggest that the global film industry was worth $136 billion in 2018, but that’s the entire global film industry, meaning a combination of the theater and home entertainment businesses. So it’s arguable that in terms of growth or other metrics, video games are toe to toe or even passing over the film industry. That’s wild.

But despite all that revenue, cracks in the armor are slowly beginning to show. It’s no secret that working conditions in the games industry are not great. So many stories have broken in the past year alone of miserable conditions within game development, such as crunch upwards of 100 hours a week, instant studio closures without severance or insurance, and even harassment and abuse. Hollywood isn’t without its problems, but at least there are unions that allow production staff a seat at the table, and certain guarantees.

It’s also clear that despite all that revenue, something isn’t working. Game publishers are pushing harder and harder to make individual games into perpetual money-printing machines, and it isn’t working as often as everyone seems to think it does. Games like Anthem bleed money. For every Fortnite there’s a LawBreakers. One failure or misstep can stop a company in its tracks, and dozens if not hundreds of jobs as a result. In 2018 Activision announced record profits, then laid off several hundred employees on the same day. The executive class and shareholders are profiting, but the people actually making games are being worn down, and quality suffers as a result. Remember Mass Effect Andromeda?

Despite all those problems, I seriously doubt the bubble will burst hard enough to wipe out video games as a medium. Games are too prevalent now, too important to human culture. Grand Theft Auto V is the most profitable piece of entertainment of all time. The demand for games and digital play continues to grow, as the market becomes more accessible and mobile games become indistinguishable from console games. And, the indie scene continues to flourish, although now it’s so crowded discoverability is an issue.

One of the biggest factors that caused the crash back in the 80s was quality control. Atari got too big, and stopped caring about software quality. Just about anyone could get a game publish, and the market was flooded with junk titles. While companies like Activision quickly earned a reputation for thoughtful, deeply fun games, other publishers were more interested in just dumping product out to the ostensibly hungry audience. This backfired severely, and led to things like Nintendo of America’s strict licensing policies. Although plenty of bad games still slipped through the cracks.

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Today’s gaming community doesn’t have this issue. Even when stinkers come out and fail, when development teams are disbanded or relocated, and entire studios shut down, the overall quality of games is still extremely high. AAA titles have inflated budgets that power ever-growing fidelity and spectacle, and smaller games are fueled by thousands of talented developers who know how to make fun games are care deeply about that. Games are good for the most part, and the bad stuff is simply ignored (or made fun of on YouTube) in favor the good stuff, which continues to sell more and more.

Even if tentpole-style, AAA corporation-driven games end up backing themselves into a corner, I doubt the video game industry is going anywhere. There are too many people who love games, love to make games, and love to buy games. Regardless of what happens to the titans, the medium will endure, and the landscape will adjust to any major shifts. Even the AAA companies may eventually realize how inefficiently they run, and find new ways to sustain themselves. Hopefully ethically. Either way, the extinction event-like video game crash was a historical landmark, but I doubt we’ll see this history repeat itself anytime soon.

Lucas White
Lucas White

Writing Team Lead
Date: 07/26/2019

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