Console Video Game Market Has Tanked

Not Even November Can Save U.S. Game Retail Now

Back in 2008, video games and consoles were "all the rage". People were buying systems and games like never before, spending so much money that the entire industry was outstripping music and even hollywood COMBINED! Gaming on the TV with your old Playstation 2, your new Nintendo Wii, your new Microsoft XBox 360 or your even newer (by a year) Sony Playstation 3, was popular like never before. The Nintendo handheld DS was screaming up the charts just like the console Wii system as well. People were lapping up systems and games like there was no tomorrow. The industry had never been bigger and more mainstream... Then it died.

Actually, the console game industry didn't really die, but since 2008 has contracted (shrunk) so substantially that these days (2012), the whole thing combined makes about the same as it did before the Wii, the XBox 360, and Playstation 3 ever hit store shelves. That's right, the industry is making about as much money now as it did back almost 10 years ago during the original XBox, Playstation 2 and Gamecube era. The massive explosion in popularity for game consoles and their games has all but vanished.

What the heck happened!? A lot!


1) The Economy Crashed

At the end of 2008, the world economy crashed. It's known as the financial armageddon that almost rivals The Great Depression of the 1930s. Tons of people all over the world lost their savings, their jobs, their cars and their homes. It was happening throughout 2008, but when the stock market and banks crashed near the end of 2008, that put a gigantic dent in the whole world economy. Since then, in most places, business has been at a crawl, jobs have been rare to come by, and money is extremely tight. All in all, there's just very little breathing room when it comes to personal budgets. The movie industry has been hit hard too. People are pinching their pennies, only buying the games they REALLY can't live without, and ignoring the rest. There's too many other important things monopolizing what little money people have, like food, shelter, transportation, healthcare, etc.


2) Apple's Handheld Products

Mobile gaming on cell phones, especially anything with an Apple brand attached to it, has exploded in popularity. It was going big back in 2008 too, but it's gone insane since then. The complicating factor in all this is that there's a LOT of cheap gaming content out there online and on cell phones, mp3 players and iPads that are sucking people away from high priced games on console systems. Why pay $60 for 10 hours of game play where you're stuck in front of your television when you can spend $5 and enjoy just as many (or more) hours of entertainment anywhere you want to go? Casual gaming is perfect for handhelds and Apple's products and App Store have grabbed onto that market in a huge and effective way.




3) Perceived Value

If people considered console gaming to be a big important part of their lives, they'd spend money on it. I think one of the biggest shifts in the market is that the perception of value just isn't there. Back in the boom years, people were loving their games like never before. The market had expanded by leaps and bounds as new gamers were diving into a world they'd barely ever experienced or even considered. Game consoles and the games available for them were hot commodities, they were greatly desired. Now, except for the rare few big name titles, the vast majority of people couldn't care less about what games are coming out. It's all gotten very apathetic. Call of Duty? Woohoo! Halo? Woohoo! Mario? Woohoo!... Does anything else exist? It used to, but not so much anymore.

I think a big part of the blame lies with the game industry itself. It got blinded by all these brand new "casual gamers" and the huge money hauls that were coming in off the biggest titles around. All these companies were trying to grab a piece of that pie and so they all started piling on, mimicking the big winners and scrapping everything else. First person shooters are a dime a dozen and only a few of them (the big name titles) do very well. The rest usually don't get touched much. On top of this, tons of game companies tried to latch onto the "casual" gamers with all kinds of really pathetic garbage. The Wii is overloaded with shovel-wear, stuff that no one in their right mind would even look at. Nintendo's games are, as always, epic and hugely popular, but most other companies found that their own titles were getting completely ignored. On the more hardcore systems like the Xbox 360 and the Playstation 3, game companies did the First Person Shooter dance and over saturated the market the same way they did with Guitar Hero (which was huge, and then absolutely tanked). The companies also were doing all kinds of things to try and grab casual gamers by making the games easier, or simpler, or more ADHD friendly with quick mini spurts of intense fun that last for a couple hours then are completely void of any value retention.

Games became short (6 to 10 hours maximum play time), and they became hyper-focused so that there's little in the way of extras or longevity to keep you coming back. You play the game through once, and you've played it. There's nothing else to see or try. It's simple, it's easy, it's quick, and the perceived value by customers has evaporated.

But what about the big long titles or the games with awesome multiplayer? Well, the good ones are hugely popular. Skyrim has 100+ hours of game play in it. Call of Duty has almost no single player game any more, but if you like competitive online multi-player you can play forever. But people have gotten choosey. If your game doesn't meet their expectations or doesn't entice them, they're not going to bother touching it anymore. Not when there are much safer bets to be found elsewhere.

The cost of making games on the XBox 360 and the Playstation 3 have a ballooned exorbitantly this latest generation of game consoles. We're talking tens of millions of dollars, even hundreds of millions of dollars, to create a lot of these games, and there's just not enough interest. The industry has become a gigantic money vacuum and little else within its own business community as well as among the customer base. The love is gone, lost in a mountain of failure and debt. Actually, it sounds an awful lot like the global economy on the whole, doesn't it? Game studios are closing left and right because they spent all this money to make a game and no one bought it. Because the costs of making so many of these games are so high, you have to sell a LOT of copies to just break even. This kind of huge risk and expense did not exist in the previous generation of game consoles. You used to be able to put together a good sized game with a dozen or a few dozen talented people. Now you have teams of literally hundreds of people. You have voice acting, graphics, 3D modeling, motion capture, and on and on the list of high quality media content with a hefty price tag just keeps adding up.


4) Unmet Expectations

Let's face it. Gamers have gotten spoiled. When a game is done right, it's astounding how well it all works and comes together. You're in awe as you play it, enraptured by the wondrous spectacle. The vast majority of games, however, cannot hit that same high quality note. It's like we've all gotten spoiled with the very best of the best, and now everything else just doesn't compare. So we're disappointed again and again because our expectations of brilliance have grown so insurmountably high.



5) Risk vs Reward

One kind of amazing thing over the past few years is that what's known as "New IPs", or new titles that aren't directly connected to an established series (ie. not a sequel) are almost all dead in the water. Everyone complains that there's nothing new under the sun. But then when something kind of new comes out, they won't touch it because it's not from one of their much loved series.

This same sort of risk and death factor exists in the movie industry these days too. It's pretty hard to jump start a brand new unknown series or franchise. If it's new, an unknown, chances are good it's going to tank. That's why you see a billion sequels now. Studios stick with what they've already got because it's almost a "sure thing". It's safe.

The movie industry has got "indie films" to make up for this mega blockbuster black hole. They're low budget films done for the love of movies or story or acting or with meaning. Sometimes they hit it big. But they don't HAVE to hit it big to make a profit. They just have to do ok.

For games, however, "Indie" is still a very unsettled area. Very few small budget game titles manage to catch ANY audience at all. The successes, like Angry Birds and Minecraft, are extremely rare. So right now, when it comes to gaming, there is very little success on the low end, almost NO success at all in the middle range for games, and no chance at all of huge success on big budget triple A (AAA) games unless it says "Halo", "Call of Duty" or "Mario" in the title. Mid-tier studios have been closing their doors all over the place the past two years. It's a real shame, but it's because the game they're making just aren't making the kind of profit they need to be.


Can This Be Fixed?

In all honesty, it can't. Not really. Games, like movies, are often a fad, or like a video that's gone viral on the internet. Sometimes they explode in popularity as something new and fresh grabs everyone's attention, and then everyone reaps the rewards. But to have ever expected the market to sustain the kinds of numbers it was back in 2008 is a ridiculous pipe dream. Audiences and customers are very fickle. Their attention shifts like the wind. Games just don't have the broad "everybody" social appeal that so many other products have. A lot of the people that were buying games in 2008 are not the kind of people that will buy games often. They saw a few things they liked, they bought them, and that was the end of their gaming run. Then Angry Birds caught their attention, and off they flew.

The gaming industry CAN recover and CAN fix a lot of the apethy that has built up. However much of this will depend on the overall economy improving too. Until the economy improves, buying lots of games at $60 a pop is going to be a very tough sell. Especially if customers just don't see enough value in them anymore. Up the value content, or drop the price. Is that even possible with how expensive it is to make games these days? Who knows. I guess we'll find out.

What does this say for the near future of console gaming? Unfortunately, it doesn't look very good. The huge gains the industry made during the economic boom years have evaporated. An improved economy would help, but there are a lot of factors involved all across the board. Overall, however, it comes down to value, and people just aren't seeing it in console games anymore. The big titles are as big as ever (bigger even), but they're very few and far between, and everything else is getting completely forgotten. That's a TERRIBLE business model to run on and if it doesn't improve, it could very well mean that the next generation of game consoles could be very bad indeed. You can't run a game console business with just a couple game successes amidst such a huge list of total failures, unless you're going to start calling your system the "Halo Box" or "Call of Playstation".