Bad Foundations Worse Future

Gaming is big; scratch that, it’s massive as an industry with premium titles selling millions of copies worldwide and dwarfing many other entertainment industries It might seem strange to say it’s on the way day in the coming years. Devastating layoffs, lawsuits due to misconduct and poor working conditions, and games increasing and price yet still asking for more, are all the symptoms of the more significant problem becoming more apparent each year, one of the enormous titans is  unfortunately built upon the weakest of foundations.

Believe it or not, this wouldn’t be the first time this industry would crash as in 1983, the “original” gaming market fell due to correspondent issues. A niche market with too many cooks trying to make a quick buck inflated the market past her possible capacity, causing significant losses and an overall need for more trust in the Burgeoning consumer base. Gaming won’t die with the crash, it’s “too big to fail” in that regard, but what will be left afterward depends on the willingness to change the systems that brought them such success before.

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 a substantial drop in overall share prices occurs within a few days. An industry crash, more likely than not, coincides  with a “customer” crash where the customer(s) no longer have the desire to pay for said product in the same quantity they have wanted in the past. This can be shown in a fad’s massive surge of popularity only for interest to  take a nosedive right after. The video game crash of 1983 displays both the consumers’ lack of interest in the product and the lack of faith in the investors due to the market’s oversaturation.

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. While not as many companies are attempting to get into the gaming scene, the amount of games published today has only increased with the arrival of independent studios and massive conglomerates alike.

Video games, as the name implies, instead of lacquered paper and colorfully reentered cardboard playmats and plastic figures. Video is a digital medium, lines of code packaged through cartridges, discs, or downloaded through storefronts. These games are also interactive mediums managed through a controller and a console. The console and controller are a two-part system, the console being a CPU (central processing unit) reading the code of the game, as well as processing the game’s internal mechanics and interactions. The controller is connected to the interaction part, and the assorted buttons affect 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 correctly, it was a death blow for that company’s success. Creating a “good” (financially and critically successful) game is hard, and creating a good game that is also economically successful is much more complicated. In a paper written by Nikolai Surminski,  The role of video game quality in financial markets 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 overproduction of consoles and game cartridges not being able to make back the production costs. So many companies wanted in on the gaming gold rush without a 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 due to the lack of formal reviews of the newness of the market people were not the wiser when buying, causing an absence of faith in an industry that, from an outsider’s perspective was an 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 make games, it’s the AAA studio that is the backbone of the industry. The landscape of the financial world has changed a lot since then as investors grow hungrier for a favorable return on investment and studios do everything in their power to meet those arguably obtainable expectations, more extreme practices are put into place. the phantom the 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 don’t think anything will rise.

 “Too big to fail” is a phrase reserved for only the largest of industries, something momentous and all-consuming that a “failing” of said industry  merely inconsequential in the wake of its power. It is unlikely that the industry will crash soon, but not as far away as it seems. A thousand cuts, big and small, which weather at the foundation the sector is based on. The many avenues in which the current system fails to provide proper support for the sector only deepen those wounds that are left untreated due to ignorant publishers and uncaring investors.

 To major AAA developers and investors, these cuts seem like a drop in the bucket, and yes, in the grand scheme of things, losing a couple of million dollars by releasing a bad game is fine. Employee turnover? Just get more employees and reviewers not enjoying the game, and then pay them off. Game studios are unable to deliver games that sell unrealistic sales numbers, so they liquidate the company and sell it off for a quick profit. Selling a game at a sixty (now seventy) dollar price tag is not enough anymore, and neither is loading it with microtransactions to make its money back.

What happens when they can’t afford for a game to be a flop, when they have no more employees they can’t exploit, when they have no more studios that make games, when the consumer gets fed up with predatory practices in games they pay for? This shortsightedness leads to an upsetting present and an ominous future.

Game development, like a machine, has many different moving parts to make it work. Every part is essential, and each deserves an equal amount of respect, but sadly, that isn’t always the case. Game developers take many forms and shapes. There are game directors who keep the vision of the game intact while managing all the departments, concept artists who develop the game’s personality through their art, game testers who make sure the game bugs are dealt with before the initial release, and the code monkeys themselves who pound away making lines of code to create a playable experience.

The human element of games should always be a priority, but what happens when that human element is used and abused to the point of breaking? Crunch is a common practice used in the game industry where employees spend inhumane overtime hours in their office (usually without overtime pay), slaving away at their desks trying to get as much work done as possible in the hope that the game ends up worth the sacrifice. The sad part about this is that the crunch in the gaming industry is often self-inflicted due to the culture surrounding the industry and the expectations from peers; this is called “good crunch.” In the paper  Game Industry Discourses Perpetuate Unsustainable Labor Practices by Amanda C. Cote and Brandon C. Harris say

In the case of crunch and labor practices, this research considers “good crunch,” the self-imposed or scheduled crunch that developers endure to make the best games possible, as a form of cruel optimism. Since developers set good crunch up in opposition to (indeed, as a solution to) problems of bad crunch or extended overtime imposed on developers by publishers or technology.

Crunch, whether it be  self-inflicted or mandated by upper management, is inherently toxic to the industry; as crunch has become a commonplace practice instead of a last resort, the sector becomes reliant on a procedure that destroys employees. 

Game reviews are intrinsically linked to the games industry and thus connected to the game development process. Industry leaders expect that a major release will not only be profitable but also be reviewed well, hoping to  increase profits further due to good press. In Nikolai Surminskis’s Financial Markets Journal he states, “Data on the financial success of a game is only available weeks or months after the game’s launch. This means that during the release, game quality measured through reviews constitutes the only new information released to the market.”

Making a good game is the hard part and is in the hands of the developers; the same developers that are being crunched to complete said game good will eventually lead to burnout. When developers burn out, mistakes get made, people quit, and holes in development start to show. These holes cause games to get worse in the process, meaning that the same practice the industry uses to make their games is the same process, making the game review worse. 

The game industry chases trends in an attempt to keep up with evolving markets via a “sure thing.” When “World of Warcraft” came out and made an absurd amount of money, everyone wanted to make an MMO, as did Call of Duty and Fortnite. Now, game companies are not just chasing genre but copying a popular marketing strategy called ( GAAS) or games as a service. This strategy is used to make a single game last as long and be as profitable as possible, usually by the implementation of content packs before and after the initial release and  microtransactions.

GAAS is greatly inspired by the mobile game market, which profits nearly double the console market, as seen in the J Clements Market revenue chart done in 2022. The problem with GAAS is that it’s a mobile game system with a premium price tag being used on games. The difference between being subjected to microtransactions in a free-to-download game that we play for an hour max on your phone versus a premium 70$ product that you need to pay hundreds of  dollars for a console to have an opportunity to play and still needing to sell more money to get all of the content it has to offer. It puts pressure on consumers to pay more for less and effectively lowers engagement instead of retaining it. 

All of this is because of shortsightedness. Wicked poison to just about every industry, social, and political structure known to man, and the gaming industry is no different. Whether it be Congress enacting spotty laws to find a quick solution to a complex issue, a student waiting till the last minute to start studying for exams, or a game company deciding it needs another revenue stream so more microtransactions are added.

The source of the shortsightedness varies through industry, but a similar thought process is transparent throughout these situations “If it’s working right now, why should I stop?”. “it’s not sustainable” is the answer, and that’s something that is an arduous process, especially when it’s working so well and making them so much money and getting the company awards for how successful it becomes.

The fact of the matter is that games will never die, even if the industry crumbles. The games industry right now is growing. Yes, the big-budget titles are being reviewed well and selling well, but none of that is indefinite, not with shaky foundations and brittle pillars made from shortsightedness. Building upon such foundations leads to an inevitable fall no matter how well the industry and its supporters think it’s doing; it will be slow and dreadful, but it will fall, nonetheless. Pillars will crumble, and foundations will shift under the weight of the need for industry to reach for bigger and better things, and it will be over.

On October 20th, 2023, Spider-man 2 by Insomniac Games was released for the PlayStation Five, the latest console by Sony Games, and broke the record for the fastest-selling PlayStation exclusive title with its The previous holder is the Last of Us Part 2. According to Stephen Tolio of Gaming  “The development and marketing budget for Spider-Man 2 isn’t public, but if its first 2.5 million copies sold for at least $70 each that’d be a $175 million first-day hauls.”. It certainly is an impressive number in a vacuum, and it broke a record on its first day and has no doubt made much more since its release. This should prove that gaming isn’t in trouble, but that’s not the case.

Since we don’t know how much it took to make the game, we can only make an estimate based on a range of fifty to a hundred fifty million dollars as provided by the CMA (competition and markets authority), this is the general range of a cost of triple a title made in the past five years so we can use this a basis to make an educated guess with the information that the fist spider-man from Insomniac costs a hundred million dollars. We can say that spider-man Two costs were in the upper echelon of triple a game cost, but why does this matter? 

While games are growing, their cost is growing faster, according to Ray Ampoloqiuo from x.fire.com uses an anonymous tip to show how much a game would cost this year. “An unnamed large studio reported to the CMA that major franchises can cost 660 million to develop and around 550 million to market.” While games are growing, that doesn’t automatically mean that growth is going to be enough to make up the cost, and with these titles taking years to make, it’s a gamble for investors to put so much into something they must wait so long to see the results they’re hoping for hopefully, and what happens if they do not? They stop investing and look for a  safer thing to put their money into, and investor money is now intertwined with the industry.

Companies need to make sure their games make bank. In a perfect  world, the relationship between the games industry, employees, and customer base should be a harmonious one where everyone benefits from each other’s growth, but in the cold reality, that’s not the case. Game companies care more about making the bottom line than they do their employees and customer base, and it should make sense. A successful game should be enough to continue development, but it isn’t. Microtransactions, battle passes, and DLC (downloadable content) are a symptom of this need to be successful in the eyes of the investors.

Oliva Lowden claims that the increased improvement in technology and the arrival of a newer, more technology-connected generation will help gaming continue to grow. “Over the next few years, video gaming hardware will experience major updates, allowing for more creative game design,  immersive graphics, and an enhanced overall experience. As technology improves, gamers will continue to invest in new games and consoles – and new gamers will also enter the mixer.” While I agree that the arrival of new and improved hardware will allow for unique innovation and better graphics to tantalize players, it will only perpetuate the same problems the game industry has been facing.

Crunch destroys people and careers, and it is not exactly a secret that the games industry is host to some of the worst crunch out of any industry. In an article by the Post, the statement is made  that over 40 percent of full-time game developers and 63 percent of freelancers crunch on top of their regular work schedule, and the most egregious crunch stories come from triple developers who would have access to the improved technology first. Continuing to implement those innovations and fine-tuning the graphics takes a significant amount of staffing. These companies are bleeding dry either due to layoffs or crunch. As the demand for bigger and better continues, so too does the budget and the pressure on employees to deliver on those more extensive, better things. The industry cannibalizes itself, finally falling from the tower they’ve built.

The current generation is gaming, and future generations are sure to follow. I’m confident it will grow the industry, but it doesn’t change the fact that the industry would require more from them in terms of payment and whether they can afford it at the mercy of the industry’s control. The fact of the matter is the games sector right now is at the mercy of the current economic climate and that’s not changing.

The industry needs to change, and it can’t afford to at this rate. This digital arms race where AAA publishers put their creatives through to make investors happy is bleeding them dry. Unethical business practices slithering into our games in a vain attempt to squeeze as many pennies from our pockets as they can get their hands on are unstainable due to increased living expenses. Every industry changes for better or worse; it’s part of life to grow and evolve to change into something new. Just as the games industry is one of the fastest modern industries formed from the corpse of its early days, it needs to change just as fast, but it’s still to be seen whether it realizes that until it’s too late.

References

Clement, J. (2023, August 29). Global gaming revenue by segment 2022. Statista.
https://www.statista.com/statistics/292751/mobile-gaming-revenue-worldwide-device/

Cote, A. C., & Harris, B. C. (2021). The cruel optimism of “good crunch”: How game industry discourses perpetuate unsustainable labor practices. New Media & Society, 25(3), 609–627.
https://doi.org/10.1177/14614448211014213

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

Ampoloquio , R. (2023, October 23). AAA games can reportedly cost over a billion to make in 2023. Xfire. https://www.xfire.com/aaa-games-cost-over-billion/

Lowden, O. (2023, November 15). The video games industry is still growing – but why?
https://blog.bccresearch.com/video-games-industry-is-still-growing-but-why

Totillo , S. (2023). Marvel’s Spider-Man 2 is Sony’s “Fastest-selling” PlayStation game – axios. Axios Gaming . https://www.axios.com/2023/10/23/marvels-spiderman-2-playstation-sales

WP Company. (2021, March 24). Why is the games industry so burdened with crunch? it starts with labor laws. The Washington Post. <a href=”https://www.washingtonpost.com/video-games/2021/03/24/crunch-laws/&#8221;

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).  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