Crash Down

In the late 1900s a new form of entertainment was born, the video game. This digital alternative for entertainment had been steadily growing in popularity seen as a novelty more than anything, a nice change of pace from playing a board game or seeing a film in a theatre. It was a niche market being a expensive investment for the majority of households at the time, the cost to start the gaming hobby was eye wateringly expensive   still the industry slowly but surely grew. As the growth of any industry forms titans of said industry rise in its wake one such company was Atari a California based game company formed in 1972 and for a while it was the company to beat some tried but couldn’t escape its shadow. In the end it was Atari that not only destroyed itself but the games industry as in 1983 the video game market crashed. It wasn’t a fast descent as many mistakes were made adding more and more straw to the proverbial back of consumers until something needed to give and something did. Since then, the games industry has been resurrected spared the fate of being a bad fad now growing into a gigantic market; New titans of industry formed from the ashes of the old era standing taller than ever before but within these new titans the phantom pain of past mistakes still lingers becoming cracks in this new beast. Old mistakes become new and new mistakes form from the success of the industry with the writing on the wall in the coming years without significant change is done video games will suffer the same fate as in 1983.

Usually when talking about an industry crash, we think in terms of stocks  according to business insider writer Robin Kavanagh’s What is a stock market crash? Understanding the causes and consequences can help investors prepare The stock market crashes when there’s a  substantial drop in overall share prices within a couple days. There are numerous reasons why a market would crash be investor speculation, natural disasters or simply someone adding or subtracting a zero for a specific stock. A industry crash more likely than not coincides with a “customer” customer crash where in the customer(s) no longer desire said product in the same quantity they have wanted in the past this can be shown in the massive surge of popularity of a fad only for interest to take a nose dive right after. The video game crash of 1983 displays both, The lack of interest in the product by the consumers and the lack of faith with the investors due to the oversaturation of the market. With many entities fighting to get into this emerging market the number of games being published inflated to a point where consumers couldn’t handle the sheer volume of games coming out; the overall quality of said games suffered as well due to this.

Video games as the name entails instead of lacquered paper and colorfully reentered carboard playmats and plastic figures Video games is a digital medium, lines of code packaged through cartridges, discs or downloading it through storefronts. These games are an interactive medium as well as the game is managed through a controller and a console. The console and controller is a two part system the console being a CPU (central processing unit) reading the code the  game is as well as processing the games internal mechanics and interactions; The controller is connected to the interaction part having the assorted buttons have a effect on the game state. This careful balance between these three core aspects of games makes the groundwork for the majority of games and even if one of these aspects wasn’t done properly it was a death blow for that company’s success. Creating a “good” (finically and critically successful) game is hard and creating a good game that also is financially successful is much harder. In a paper by Nikolai Surminski The role of video game quality in financial markets it is stated that “while the correlation between product quality, profitability and financial growth is impacting a company’s stock price through different steps, there also exists a direct link between quality and the performance in the financial markets”. In short, though not always the case, good games should and can produce profitable results.

The fall of gaming wasn’t the result of the good games not being successful enough, it was due to a two-part punch of a flood of low quality games and over production of consoles and game cartridges not being able to make back its production costs. So many companies wanted in on the gaming gold rush without proper understanding of the trinity; Lackluster games, barely functioning controllers and unimpressive consoles came into the market oversaturating a market with simply not enough people to buy them. These products were bought and sold for the same price as good products (a range of 30 to 125$) and because of the lack of formal reviews because of the newness of the market people non the wiser when buying causing a lack of faith in a industry that from a outsiders perspective was a expensive roll of the dice to see if you get something worthwhile.

Today gaming is dominated by AAA developers’ massive studios with budgets ranging from millions to hundreds of millions of dollars to produce a shippable product and while smaller studios still produce games it’s the AAA studio that is the backbone of the industry. The landscape of the finical world has changed a lot since then as investors grow hungrier for a favorable return on investment and studios doing everything in their power to meet those arguably obtainable expectations more extreme practices are put into place. the phantom pain of old mistakes evolves becoming a dark parody of hopefully learned failings, those failings pressure that will collapse on the titans once again only this time around I’m not sure anything will rise at all.

References

Josephson, K. (2023, August 5). The 1983 video game crash and a history lesson for Lina Khan: Kimberlee Josephson. FEE Freeman Article. https://fee.org/articles/the-1983-video-game-crash-and-a-history-lesson-for-lina-khan/

Kavanagh, R. (2020, December 24). What is a stock market crash? understanding the causes and consequences can help investors prepare. Business Insider. https://www.businessinsider.com/personal-finance/what-is-a-stock-market-crash

Surminski, N. (2023, June 3). The role of video game quality in financial markets. . https://www.diva-portal.org/smash/get/diva2:1773250/FULLTEXT01.pdf