Between 1983 and 1985, the games industry experienced an unprecedented worldwide crash that analysts still study to this day. Titans of the time plunged into bankruptcy and obscurity, and very few of them remain in operation today. Those that do, do so in a different form, mostly under new ownership.
In short, it changed the landscape of the industry irrevocably. We still see effects from it today in how game developers and publishers do business. We’ve ignored the lessons we should have learned in 1983. I can see us steering ever closer to a new, even bigger crash in the market.
Let’s take a quick look at what caused the crash of 1983, and how we can compare it to today.
What Caused the Crash?
The crash had three main causes:
- A market flooded with low-quality games
- The introduction of 3rd party developers, creating an investor market
- Competition from home computers
Spurred by Atari’s success with their VCS (2600) console, others quickly threw their hat in the ring. They created their own game systems, with distinct game libraries. By the time of the crash, we had the Odyssey², Intellivision, ColecoVision, Atari 5200, and Vectrex.
While searching for games to sell, manufacturers pushed out clones of their most successful games. Devs stifled innovation in favour of making sure they included the cool mechanic of the week, boring their customers until they moved on. We also saw the rise of low-effort licensed games. Atari released the infamous ET game, so hated that it often gets blamed for the crash entirely.
The market grew at an unprecedented pace. There were more people playing video games than ever before. However, manufacturers overestimated the growth and overproduced as a result, thus ending up with millions of dollars in unsold inventory of both consoles and cartridges. This took up space in warehouses and on store shelves. The result of this was retailers having to heavily discount titles to move stock.
Third-party Developers
Several Atari staff members left the company to create Activision in 1979, inventing the concept of a 3rd-party developer for consoles. Generally considered a net positive for the industry, it eventually created healthier competition in the market and drove up the quality of releases. The short-term effects were less positive. Investors with no experience in the industry, seeing the success of Activision, entered the market with their 3rd-party studios. Often no more than a few very green students, these studios churned out low-budget, low-quality titles with the expectation of high returns. As you might guess, many of these studios perished in the crash.
To compound these issues, consoles were steadily losing gamers to the advancing home computer market. Competition between Texas Instruments and Commodore, home PCs, had driven down prices to nearly the level of consoles, making them a viable alternative for budget gamers for the first time. However, as home computers aren’t limited to just games and usually have more power than current consoles, gamers naturally made the switch.
How Does This Relate To Today?
Frankly, you’d have to have lived under a rock to not notice the similarities between the state of the games industry as it is today and how it was just before the crash of 1983.
Investor profit alone drives the games industry today. Studios suffocate their creative staff, often forcing changes and inserting predatory mechanics designed to pump money from the consumer. Microtransactions are rife, and every other game is a “live service” game. Publishers squeeze any creativity out of projects, lest the game not make its margin.
While you’re here, check out some of our team’s opinions on microtransactions.
Many modern attempts at franchises died off in their infancy when their first title failed to meet minimum profit margins set out by investor-minded publishers. Even profitable games get canned for not reaching arbitrary margins.
This out-of-touch, business-first approach is unsustainable. It stifles innovation, encourages reliance on sequels and remasters, and causes every new release to feel the same.
A Flooded Situation
The market is more saturated now than it was even back then, despite there being fewer consoles on the market and the exponential increase in people gaming. We now have multiple live shows a year from publishers. These live shows announce new, big-budget releases of questionable quality every few weeks. The speed of releases has vastly outpaced gamers’ time to play, resulting in people having massive backlogs of games they haven’t touched. Realistically, the customer base isn’t large enough to sustain this and still be profitable.
Check out Azza’s article here, and Riley’s method here if you’re interested in ways some of our members tackle their backlogs.
The threat from home computers has never been more apparent. With advances in tech over the years and the switchover to more PC-like architecture in the most recent generations of consoles, many are questioning: Why have a console at all when a decent PC can play nearly all the same games? Indeed, it’s only the arbitrary console exclusivity of certain titles and the way manufacturers tend to sell consoles at less than cost that has kept consoles alive as long as they have been. When the price of entry is taken out of the equation, I’m afraid PC wins every time.
How Should the Games Industry Be?
The industry, as it is right now, cannot be corrected gently. Investors will continue to expect unsustainably high profits from every new release. Genuine creativity will continue to be sidelined. We need a harsh resetting of expectations to free developers to experiment once again. Stardew Valley can be held here as a prime example of what developers could achieve when not beholden to shareholders.
ConcernedApe, a solo developer, created Stardew Valley over several years with no expectation of success… Just a love for the art. It met with meteoric success upon release and has seen update after update because the game doesn’t have an impossible target margin to meet. To make this release even better, each update is free, as ConcernedApe doesn’t want to charge beyond the original price of the game. The developer, having complete control and freedom, has created an instant classic. At the time of writing, Stardew Valley is currently the most highly rated indie game on Steam.
How Would a Crash Benefit Us?
The crash of 1983 may have killed off many of the original icons within the industry, but it also gave rise to many of our most beloved game companies. Nintendo built its modern brand on the core values of quality and fun. This is an ethos they adopted during their time as a toy manufacturer. Seeming like an almost direct response to the causes of the 1983 crash, their early dedication to making genuinely enjoyable and high-quality games built them up to be one of the most successful media companies of all time. It’s not an exaggeration to say that they almost single-handedly rebuilt consumers’ confidence in the idea of video games.
If a similar crash happened today, we would likely see the closing of many beloved studios. Many more would likely be merged by their parent companies in an attempt to save costs. However, more importantly, the concept of the massively over-funded AAA game that needs to make back several times its budget to be seen as worthwhile might finally die. Examples of these types of games are Concord and Anthem.
By taking the investors out of the equation and not requiring every release to meet a capricious profit margin, we can perhaps see the variety and pure fun again. An ideal that has for many years taken refuge in the indie scene. With expectations reset, we may see a return to treating games as the art form they are.
Where Are We At Right Now?
With studio after studio being shut down and projects being cancelled left, right, and centre, it’s clear that the industry is haemorrhaging money at an alarming rate. Rushed to market, botched releases have hurt consumer trust beyond repair. Because of this, every new release is received with scepticism. Economic issues mean gamers often aren’t able to buy more than one or two games a year, shrinking the market.
All these things together make the teetering tower that is the games industry feel like it’s one strong wind from collapsing entirely. As I’ve outlined above, I don’t think that would be a bad thing anymore.
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You'll see me everywhere here. Technically I own the place but I don't treat it like that. Mostly I stream and fix things when they break. You might find me writing an odd article or two too. Hope you enjoy the site!