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ECGC 2011: Is the Gaming Market About to Crash?

By - Source: Tom's Hardware US | B 77 comments

During ECGC 2011, famed game developer Mark Cerny indicates that the console slump over the last two years could be just a "hiccup" or the sign on an impending market crash.

Thursday during ECGC 2011, famed game developer Mark Cerny presented the second keynote of the show called "The Long View." He raised an important question given the pattern the industry has taken over the last forty years, and the erosion of console game sales during the last two: is this just a bump in the road, or a prelude to another gaming market crash?

For those unfamiliar with Mark Cerny, he's had a hand on numerous popular franchises like Crash Bandicoot, Spyro the Dragon, Ratchet & Clank, Resistance, Uncharted-- the list is rather lengthy and impressive. He's also noted for designing and programming 1984's Marble Madness for Atari coin-op and overseeing the creation of Sonic the Hedgehog 2 (programming, development support) over at Sega. That said, Cerny brought his extensive experience to the ECGC 2011 platform to prove his case, and indicated that-- in order for the industry to survive-- it needs to shift to monetization and socialization, or cough up another generation of consoles.

He noted an overall pattern the industry has taken in the last forty years, shifting from the arcades to the PC and then to consoles. "The only constant I've seen over the last thirty years is change," he told the audience. "So 1971, Nolan Bushnell creates Computer Space, and for ten, twelve years the arcade was the center of the universe. If you look at the top consumer (Atari 2600, etc) games, those were actually by and large conversions of the arcade games like Pac-Man. By the end of the 80s, computer games were the center of the world."

According to Cerny, by the 1990s, the home and handheld consoles ruled the scene and was expected to be followed up by downloadable "cacheable" games in the next decade. But that didn't happen. Instead, Apple swooped in during the latter half of the 2000's with the iPhone and iPad which changed the roadmap with broader, thinner, cheaper games. Then social networking crashed into the scene. Cerny claims the core consumer games market has now gotten "soft."

"We lost 5 to 10-percent of the marketplace in 2009," he said. "We lost about the same in 2010. And as a guy who has been through some gaming crashes, some upheavals in the industry, I really have to start wondering if this is the end."

After describing a graveyard of console cartridges littering department store discount bins in 1983, he blamed the Arcade Crash of 1982 on manufacturers raising the fee to $0.50+ on some machines (to battle the declining value of the quarter), and creating 2- to 4-player titles and simulators with extensive cabinets, thus starting a "vicious cycle" that has steered the industry on its present course. Eventually players stopped spending the money, thus operators (arcades) stopped buying the machines from distributors who in turn stopped buying them from Atari, Midway and so on. It was a market free-fall that kept going and going. Sega abandoned the business and went back to Japan.

Decades later, publishers are dumping million and millions into one specific title in an industry flooded with a variety of genres and sequels. Development teams have exploded in size and incorporating job descriptions unheard of twenty years ago. Why does game development need to cost $50 million? Because more and more content has been added over as the years roll on, building a larger audience who thus bring in more consumer dollars. It's a "vicious cycle" where player and publisher feed off each other, adding an extra slice onto the plate each time.

But Cerny thinks the industry needs to step back and focus on what should and shouldn't be in games to keep the budgets from spiraling out of control-- maybe even to keep the industry from repeating the same mistakes from the early 80s. Developers also need to go through a phase of "unlearning" and to ditch the idea of knowing the true definition of a consumer game-- meaning not every genre has to use the same template (aka this is the way gameplay is and you suck if you can't figure it out). Is FarmVille a game? It doesn't have a story, it doesn't have a real beginning and there doesn't seem to be an end. Minecraft falls in the same category, yet both are raking in millions.

By the end of the keynote, Cerny said that games will need some type of revenue after the final sale, whether it's in a DLC or virtual items sold within the game. He noted that there will be titles where the monetization model doesn't fit, using virtual currency within Heavy Rain as an example. Although he didn't come right out and say it, monetization will seemingly help bring in extra revenue to offset the outrageous expense of developing and marketing. Games will also need to integrate social features like multiplayer or in-game messages from other players.

So is this the end of an era? Is the gaming industry getting ready to crash? Cerny said he's looking forward to the monetization and socialization "revolution," indicating that perhaps the industry is shifting into its fourth phase. Apple has already proven that bigger isn't always necessarily better, and that monetization and socialization can be two key factors for an extremely lucrative title. So far we've seen these two factors thrive on iOS, Android and the PC. The digital distribution aspect has also resurrected the indie developer, indicating that perhaps we won't see a market crash at all... at least, not on the PC and mobile front.
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  • 2 Hide
    jarraramjad , April 15, 2011 6:40 PM
    this guy is coo koo! i think he is mad pc market can never die cuz size matters
  • 0 Hide
    pelov , April 15, 2011 6:43 PM
    Is he trying to say we're all sick of the space marine? Nowai... RLY?
  • -3 Hide
    kcorp2003 , April 15, 2011 6:47 PM
    shifting from the arcades to the PC and then to consoles...

    Eventually players stopped spending the money

    yep thats me. Next gen 2.0 will be my prefer choice of gaming. My 2011 PC build will be my last gaming PC build.
  • 6 Hide
    scook9 , April 15, 2011 6:48 PM
    If consoles all died I would not mind.....
  • 5 Hide
    proxy711 , April 15, 2011 6:55 PM
    The only reason the gaming market might "crash" is because of shitty ports and 10-15 hour games with little or no creativity. If anything devs need to start thinking about what to add to the game not subtract from it.

    if a game has "RPG elements" it better be 40+ hours long. honestly i have a hard time buying a game that doesn't seem like it will have 50+ hours of gameplay, thru whatever means, like multiple play throughs or just one run.

    Remember Borderlands? a far from perfect game. I spent over 250 hours playing it(both single and multiplayer) that is what I'm talking about.
  • 6 Hide
    seller417 , April 15, 2011 6:57 PM
    I agree with you scook9, i rarley play game consoles, the PC is just...better
  • 2 Hide
    captaincharisma , April 15, 2011 7:01 PM
    from how the console age is today with DLC expansions, game patches, buyijg cheap games online sound like the console market will merge into the PC gaming at some point
  • 3 Hide
    memadmax , April 15, 2011 7:04 PM
    I blame Sony on making the PS3 a lame duck with a harder to program SDK, one core cut out, and giving themselves a bad name by suing people that decide that they want to jailbreak the thing...

    Nintendo could do more with the wii if they put DVD playback on the thing as well...

    Oh, and PC rules, consoles drool...
  • 2 Hide
    Anomalyx , April 15, 2011 7:09 PM
    jarraramjadthis guy is coo koo! i think he is mad pc market can never die cuz size matters

    Oops! Somebody forgot to read the article before commenting!
  • 1 Hide
    kastraelie , April 15, 2011 7:11 PM
    Five people who commented actually read the whole article.
  • -2 Hide
    sevir , April 15, 2011 7:12 PM
    console gaming is in a slump because all the systems are 6 years old. That means 6 year old graphics technology. Get off your butts Sony/Microsoft and Nintendo and come out with new systems.
  • 2 Hide
    doyletdude , April 15, 2011 7:13 PM
    scook9If consoles all died I would not mind.....

    I wouldn't mind much either but it would probably have a negative impact on the PC gaming market none the less. It's not as if as a reponse to the dieing console market, every average joe is gonna go by a gaming PC. Major companies like Bethesda and Bioware couldn't afford to make BIG budget titles we enjoy if their revenue is cut by like 75%. As long as the consoles keep feeding developers enough money to make bigger games, than maybe someday we can hope to getpast the crappy console port. But getting rid of consoles is not the solution to that problem.
  • 0 Hide
    sevir , April 15, 2011 7:14 PM
    sevirconsole gaming is in a slump because all the systems are 6 years old. That means 6 year old graphics technology. Get off your butts Sony/Microsoft and Nintendo and come out with new systems.

    And ill reply to myself, i dont with consoles anyway. PC is the only way to go.
  • 7 Hide
    molo9000 , April 15, 2011 7:23 PM
    The problem is that customers are growing weary of buying the same overly hyped games every year.
    95% of big budget titles are either sequels or copies of popular games. Consumers are beginning to learn that buying a new Modern Warfare clone every year is a waste of money.
  • 3 Hide
    Anonymous , April 15, 2011 7:25 PM
    I, for one, wouldn't want to trade epic adventures and interesting storylines that I could be playing for weeks, if not months to come, to quick-to-play Cell-phone games.

    A more varied market is a good thing, but to think that maybe in, let's say 10 years, there won't be more Bioshocks, Metal Gears, TES, GTAs, Uncharted and so on it's.....scary. And depressing.

    That's not evolution, imo. It would be like taking a step backwards to the 70s.
  • -1 Hide
    ram1009 , April 15, 2011 7:28 PM
    Consoles are crap.
  • 8 Hide
    davewolfgang , April 15, 2011 7:31 PM
    Same reason the Music Industry is crashing - HORRIBLE products (mostly) and they charge too much for those horrible products.

    And people are starting to actually LOOK at what they buy, because dollars everywhere are getting in more short supply - and they aren't just wasting them on crap anymore. Instead of buying that crappy game that will keep them busy for a week or three - they MUST put gas in their car.
  • 2 Hide
    edlarkin , April 15, 2011 7:32 PM
    Games are dying because we have seen it all, and done it all. If it was not a game it was a movie. The attraction to the arcade back in the day was stuff we had never seen before, a different social environment. the came the first consoles (mine was the Atari) great concept now I don't have to go pay to play video games. Arcade then dies. early console gave way tot he comodore 64 and amiga systems, now you can play and hack you games, atari and activision go in the trash and we bust out 5 1/4 inch floppy, jumping from 8 bit to CGA graphics was huge, now we have modems at 1200 baud!

    you see where I am going with this, the market is flooded with stuff we have all seen or done, so we need someone to come out with something ultra creative to move into the next realm.
  • 2 Hide
    hoofhearted , April 15, 2011 7:35 PM
    His opinion isn't really relevant as he couldn't make it in the PC market so he jumped into the console bandwagon. He only has himself to blame. If these devs wouldn't have dilluted the gaming market buy feeding the console fire, the gaming industry would be stronger and more unified on the PC like it should be. His title list speaks for itself. Not quite shovelware, but doesn't include any "real" games either. If we could get back to where we were a few years ago, where games created memorable experiences, that would get the industry back on track, not the tripe he is spewing: monetization - (just what we whan, more MMORPG with monthly notes, DLC or InApp purchase mechanisms) and socialization (farmville - lol, facebook games, i just want to kill my opponents, not chat with them), or cough up another generation of consoles (yeah, like spending $400+ on the next slew of red ring death or the "not much games" Wii). I've tried consoles and I always end up back at the PC. If the gaming indusrty starts trying to ride on these one hit wonders like farmville, angry birds and crap like that, then the real gamers will get bored and move onto something else.
  • 0 Hide
    NuclearShadow , April 15, 2011 7:38 PM
    sevirconsole gaming is in a slump because all the systems are 6 years old. That means 6 year old graphics technology. Get off your butts Sony/Microsoft and Nintendo and come out with new systems.

    You are assuming that the average household at this time can afford a brand new console. If lets say any of the big three today released their console today realistically its going to retail for $300 or more.
    Then there are other costs to consider as well, the games and accessories. So even if accessories were skipped and the average household purchased four games this would be $540 or more. Waiting to release or even come up with final specs at this point is safer and I can't say I blame them for doing so.

    I truly hope he is incorrect about the possible future of even more money milking from the consumer after the games initial sale. I for one cannot stand DLC even more so when its DLC released at the same time as the game meaning the work was already completed and is a simple ploy to get money for what should be the complete game. I'll buy a true expansion pack anyday, but to charge me $5 for a extra gun, I think I will pass.

    I do foresee times getting even harder for game devs and publishers,
    there are already so many fish in a small tank and many of them are quite large the few sprinkles of food isn't going to feed everyone and surprisingly at this time its the smallest of fish doing overall better.
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