The AAA Game Market Crash of 2019

[legendarytoyou]

To be frank I've been expecting this since the advent of triple A games.  I've noticed over the years that certain small time developers have been making quality games (CD Project Red, Rockstar Studios etc.) while large companies have been degrading into nothingness.  Bethesda a prime example of a company that innovated at first then assumed they made a point in the market where they didn't have to put that much effort anymore.  Unfortunately for them its not that easy.  It's kind of like making different flavors of ice-cream; people eventually get tired of the same flavor and SOME companies learn that in order to remain competitive you come up with new flavors.

 

At this point people I'm not putting any faith in the AAA industry.  I would stick to indie games and little unknown developers.  Maybe the occasional, "OH SHIT!  We done fucked up, we better fix it," but right now the market currently is bland and dull.  It wouldn't surprise me in the least if one of the said AAA ended up filing for Chapter 11.  Probably not but I've seen stranger things happen.

 

In a twisted sort of way this actually benefits the smaller indie devs.  This won't be the death of gaming as a whole but we will see innovation coming from different sources other than AAA.

[Miss AshleyJ]

Rockstar is small time? They've only ever existed as a subsidiary of Take Two.

 

As a few people have pointed out, we're in the midst of a bit of a crash here on the overall market. The Dow is currently down another 200 plus points. If this was just the AAA club, then we'd have reason to worry/celebrate.

 

Disney: down $1.75 on the day

 

Apple has lost $75 a share in three months. It was at $225 in September, it's down to $150.

 

 

[Molevalence]

I stated in the past about the video game crash of 1983. Maybe history is repeating itself?

[Corsayr]

One thing I do not see anyone talking about with the AAA game market is the fact that system hardware is not advancing at nearly the pace it was.

 

People who bought the first battlemosters didn't even think about whether or not the 2nd battlemosters* was the same product because the technology had improved so much that the visual difference was night and day. 

 

 

By contrast, the computing power of a 2018 top of the line machine VS a 2014 machine is not that visually different. To tweekers maybe but your majority market isn't going to care that you can now get 20% more whatchamadoodles at 150% more objectomoplasts with AI that works at more than 500% cycles per thingamagiggy!!!

 

Battlemosters 7 looks kind of like battlemosters 6 did and wait isn't the story basically the same?? (see now they noticed nothing really changed) ?

 

 

 

 

*(fictional game used to represent all AAA games to avoid arguments about real games) ?

[joemonco]

On 12/21/2018 at 6:15 PM, Kendo 2 said:

It isn't 'an individual stock', but the the AAA game industry as a whole.  And a drop in one third to a half in value is not even in the same zip code as 'average'.

 

Except you're seeing the drop in EA because of the lawsuits and possible lawsuits in the EU over lootboxes, Activision dropped because the next Diablo is mobile only, and Take 2 had lower than expected earnings which always causes a drop.

 

On 12/21/2018 at 6:41 PM, dagobaking said:

Shareholders insist on putting generic business dev types in decision-making positions at these companies. When the products were more successful under the leadership of devs and other creatives.

 

Pfft - the game industry is basically ran like Hollywood without the unions creating decent work conditions.  The generic business dev types tend to create better work conditions than people like Urquhart and Howard.

[Kamen Rider Kuuga]

On 12/21/2018 at 6:41 PM, KoolHndLuke said:

indie developments

They're in the same place as the AAA market; oversaturation of the same few genres, all playing the safe bet to get their name and game out there to make a buck. The indie market is choked with broken games, broken promises and broken dreams, all the built in defense of "BUT IT'S JUST ONE GUY/SMALL TEAM! YOU CAN'T EXPECT MUCH!"

[dagobaking]

On 12/22/2018 at 9:19 AM, Kendo 2 said:

For those who said I was wrong...

Everyone has to cut down during down-turns. I'm just pointing out that the evidence suggests an over-all market cause for the dip. Not a problem unique to the industry.

7 hours ago, KamenRiderzero1 said:

Disney: down $1.75 on the day

 

Apple has lost $75 a share in three months. It was at $225 in September, it's down to $150.

We are facing an iCrash and MickeyCrash!

4 hours ago, joemonco said:

Pfft - the game industry is basically ran like Hollywood without the unions creating decent work conditions.  The generic business dev types tend to create better work conditions than people like Urquhart and Howard.

You really want to ruin games? Introduce unions to the equation. (See Detroit).

 

Would end up destroying the small companies that are really our best hope.

[GrimReaper]

52 minutes ago, dagobaking said:

Everyone has to cut down during down-turns. I'm just pointing out that the evidence suggests an over-all market cause for the dip. Not a problem unique to the industry.

We are facing an iCrash and MickeyCrash!

You really want to ruin games? Introduce unions to the equation. (See Detroit).

 

Would end up destroying the small companies that are really our best hope.

Imo, the gaming industry is in the unique position that they've been too successful and can't keep up with their own growth. Games selling millions of copies are performing 'below expectations' simply because just selling a game can't generate the same money as selling a game + milking the consumers with microtransactions, which in turn can't keep up with selling a game + milking customers with lootboxes. Now that lootboxes face some serious backlash and might potentially be treated as gambling, they have some serious problems. Not to mention that no market can generate infinite money, but the gaming industry doesn't care. 'Games as a service' might work, but they simply shit out another game every year and expect the customer to invest all that money again in the new title.

 

Capitalism is a good serf but a bad master.

[Corsayr]

1 hour ago, dagobaking said:

You really want to ruin games? Introduce unions to the equation. (See Detroit).

Can you elaborate on this without violating the forum rules on political debate? You see I think you're wrong about unions but I can't elaborate on that opinion without treading into waters not allowed in these forums, which suggests maybe you shouldn't have made that assertion for the same reason.  ?

 

I think there is a legitimate argument to be made that AAA game companies have stifled creativity by overly draconian employment practices. Creating a general brain drain from the industry. Which they can get away with because of a lack of worker organization.  

[dagobaking]

7 hours ago, Alkpaz said:

I thought the same, but if I look at the media, no warnings of another recession, at least for 2019. Maybe the poorer than expected Xmas sales will tell the tale: 

An economic downturn becomes a recession when it lasts x amount of time (definitions vary). So, they are just saying that the current economy-wide dip (US only?) will not continue for long.

6 hours ago, GrimReaper said:

Imo, the gaming industry is in the unique position that they've been too successful and can't keep up with their own growth. Games selling millions of copies are performing 'below expectations' simply because just selling a game can't generate the same money as selling a game + milking the consumers with microtransactions, which in turn can't keep up with selling a game + milking customers with lootboxes. Now that lootboxes face some serious backlash and might potentially be treated as gambling, they have some serious problems. Not to mention that no market can generate infinite money, but the gaming industry doesn't care. 'Games as a service' might work, but they simply shit out another game every year and expect the customer to invest all that money again in the new title.

 

Capitalism is a good serf but a bad master.

Interesting points. But, these companies did better than most just a few months ago. They are not in trouble because they see a dip at the same time as others due to fed rate changes and trade wars.

 

Lootboxes may be going away in some countries. But, I am seeing them included in nearly every game even after the bad press about them. So, they seem to be getting away with it just fine, unfortunately.

 

Whenever you get the kinds of dollars AAA games generate, you are going to attract people that have no connection to games at all. Generic business dev types, marketers, etc. And they tend to be personality types that are better at advocating for their advancement than developers and creatives. So, the companies get fat, attract sharks and the sharks take over and make bad decisions for product quality. Then, the companies can't adjust because nobody there wants to be let go or take a pay cut. So, they crash and burn. This has happened over and over to once-successful game companies for 30 years.

5 hours ago, Corsayr said:

Can you elaborate on this without violating the forum rules on political debate? You see I think you're wrong about unions but I can't elaborate on that opinion without treading into waters not allowed in these forums, which suggests maybe you shouldn't have made that assertion for the same reason.  ?

The damage that unions have done should not be a partisan issue (if you are referring to politics?). I wouldn't make it one. It's technically observable in Detroit for example.

 

Unions were started for good reasons (companies had a monopoly on available jobs). But, technology and the expansion of our economy has eliminated the need for them. If conditions or pay are unfair at one company, the employee now has the means to more easily find a new job. And market forces create an incentive to give fair pay and good conditions to employees (or their competitors will instead and get the best talent).

 

Now, unions are used to benefit a small class of people at the expense of everyone else and to the downfall of entire industries and product quality.

5 hours ago, Corsayr said:

I think there is a legitimate argument to be made that AAA game companies have stifled creativity by overly draconian employment practices. Creating a general brain drain from the industry. Which they can get away with because of a lack of worker organization.  

The problem with this is that AAA game companies are in fierce competition with each other. If one company is causing a brain drain due to draconian measures, that would leave the door open for the other companies to take advantage of them.

 

So, in order for this to be an industry problem, all of the AAA companies would need to be making the same mistake at the same level for years. Meanwhile someone could come in and have their teams work half-days and blow those companies out of the water.

 

What we are seeing is the opposite. The company that is accused of draconian measures recently (Rockstar) has released a high quality title Red Dead Redemption 2 that is likely taking away from other AAA sales this holiday season.

 

Responding to Rockstars high quality game production with unions will simply make the barrier of entry for smaller companies higher as they can't afford to give higher than market wages and health care packages that allow you to have your dog screened for cancer twice a week.

[dagobaking]

10 minutes ago, Alkpaz said:

I get that, but usually poor holiday sales equal poor year ahead, ergo recession. If people are not going out and buying "stuff" companies will not hire as many holiday workers next year creating a spiral effect, they are correct that we may not see that in 2019, since the effect is noticeable the year after a sale, but it doesn't negate the fact that it "looms in the horizon", and if things keep going the way they have, it will be sooner than expected. 

Yeah. Everyone seems to be in agreement that a recession is on the way. Just maybe in 2020 instead of 2019.

[Corsayr]

32 minutes ago, dagobaking said:

It's technically observable in Detroit for example.

But it isn't, Detroit's downfall came from corruption and an industry's unwillingness to make the needed changes to compete. Foreign car manufacturers using streamlined manufacturing processes brought to them by Deming (who attempted to convince US manufacturers to do it first but they laughed at him) started taking the US market share. 

 

By the time they wised up, it was too late. The general opinion was American cars were substandard quality to imports, even after that wasn't true anymore. 

 

As far as the corruption well that was political

 

neither of those had anything to do with Unions

 

 

In contrast, while unions were strong they created the largest middle-class growth in any country at any time, ever. As they have lost power over the last few decades the middle class has dissolved and wage inequality has gone bonkers. 

 

 

The draconian employment practices are fairly universal in the game developing industry and it drives talented programmers to other industries like social media, and internet marketing. I work in the ERP systems industry and many of the programmers I work with started in games but couldn't make a living due to poor pay and couldn't shop around for better pay due to non-compete contracts. 

[dagobaking]

1 minute ago, Corsayr said:

But it isn't, Detroit's downfall came from corruption and an industry's unwillingness to make the needed changes to compete.

Unwillingness by who?

 

It was the unwillingness of unions to allow the companies to make their cost of labor competitive with foreign production. So, quality was cut instead. And predictably, the market figured it out and stopped paying for union salaries, early retirements and gold plated health care packages.

1 minute ago, Corsayr said:

Foreign car manufacturers using streamlined manufacturing processes brought to them by Deming (who attempted to convince US manufacturers to do it first but they laughed at him) started taking the US market share. 

 

By the time they wised up, it was too late. The general opinion was American cars were substandard quality to imports, even after that wasn't true anymore. 

They became substandard because the cost of labor per vehicle in union shops was several times higher than the competition. This was an observable fact that was called to attention over 40 years.

 

Union advocates would like for you to believe that it all came down to politicians and some idea that nobody listened to. The reality is a lot more boring and obvious. Unions got what they wanted: higher pay, less working and better health care. The result was that cars could not be made by them at the same cost and quality. So quality was cut.

1 minute ago, Corsayr said:

In contrast, while unions were strong they created the largest middle-class growth in any country at any time, ever. As they have lost power over the last few decades the middle class has dissolved and wage inequality has gone bonkers. 

Correlation does not imply causation. The growth of the middle class can't be objectively connected to anything about unions. Unions claim credit for all kinds of things that they don't deserve, including weekends! lol

 

Wage inequality is a false problem. If you have a booming economy where people are spending on successful innovation, wage inequality is a feature, not a flaw. That is because taking risks (starting new companies, inventing products) has high rewards. And that benefits society at large. Someone becoming a millionaire for inventing the Atari 2600 did not come at the expense of a union worker putting tires on a car.

 

1 minute ago, Corsayr said:

The draconian employment practices are fairly universal in the game developing industry and it drives talented programmers to other industries like social media, and internet marketing. I work in the ERP systems industry and many of the programmers I work with started in games but couldn't make a living due to poor pay and couldn't shop around for better pay due to non-compete contracts. 

A non-compete can't legally prevent you from shopping around completely. Stealing technology would be a problem with maybe a short list of competitors. But, there is legal precedent for shooting down non-competes when the person is just trying to make a living.

 

The reason for the low pay is not draconian measures. It is high demand for those jobs. Everyone wants to be a game developer. So, the market rate for that work is lower. Where as you have to pay people more to take on the less sexy job of making business software.

[winny257]

5 hours ago, dagobaking said:

Union advocates would like for you to believe that it all came down to politicians and some idea that nobody listened to. The reality is a lot more boring and obvious. Unions got what they wanted: higher pay, less working and better health care. The result was that cars could not be made by them at the same cost and quality. So quality was cut.

absolute nonsense, in Germany, the labor union already exists after the 2. World War and that in all medium-sized and larger companies.
Germany produces high-quality cars and Exported Worldwide! 

cough, Germany is with VW world market leader! ? and in the VW plants is the labor union especially present! 

 

https://www.gevestor.de/details/die-top-10-der-autohersteller-deutsche-konzerne-auf-dem-vormarsch-712706.html

[Corsayr]

6 hours ago, dagobaking said:

A non-compete can't legally prevent you from shopping around completely. Stealing technology would be a problem with maybe a short list of competitors. But, there is legal precedent for shooting down non-competes when the person is just trying to make a living.

Sure if you can afford a lawyer that can stand up in court against the gaming industries legal team. Good luck with that. Just suggesting litigation will get you blackballed from the industry.

 

 

[Deso561PL]

Good! Finally people start realize what damage was casued to gaming industry... My question is only, if it is not late?

[Ernest Lemmingway]

Blizztard is remaking Warcraft III and planning to introduce Classic WoW legacy servers in summer, Bugthesda is giving people who bought [censored] (I don't want to get a warning for saying the name of the-game-that-must-not-be-discussed) free copies of FO1, 2, and Tactics, it seems like the current tactic among desperate game companies is to go back to what worked. As both compensation for their ineptitude or a way of staying afloat.

 

Will it work? Maybe for Blizz, not likely for Beth. Classic WoW no one can play because it's an MMO and effectively doesn't exist outside of private servers (which I would love to find) so they have a decent chance of attracting old customers back. But the prior Fallout titles are offline games and there are still plenty of copies floating around. Plus the current FO fan base, used to the FPS version, isn't likely to enjoy the originals. They're graphically dated (which seems to be what kids today care about more than story), tricky to get working on Windows, and very different games from everything BGS ever did with the IP.

[winny257]

2 hours ago, Ernest Lemmingway said:

Blizztard is remaking Warcraft III and planning to introduce Classic WoW legacy servers in summer, Bugthesda is giving people who bought [censored] (I don't want to get a warning for saying the name of the-game-that-must-not-be-discussed) free copies of FO1, 2, and Tactics, it seems like the current tactic among desperate game companies is to go back to what worked. As both compensation for their ineptitude or a way of staying afloat.

 

Will it work? Maybe for Blizz, not likely for Beth. Classic WoW no one can play because it's an MMO and effectively doesn't exist outside of private servers (which I would love to find) so they have a decent chance of attracting old customers back. But the prior Fallout titles are offline games and there are still plenty of copies floating around. Plus the current FO fan base, used to the FPS version, isn't likely to enjoy the originals. They're graphically dated (which seems to be what kids today care about more than story), tricky to get working on Windows, and very different games from everything BGS ever did with the IP.

I only say that much, I prefer my old games and that has different reasons.
shit on high quality graphic and everything else!
1. old games, no loot boxes, no microtransactions!
2. every new game need an internet games platform (Steam, GOG-Galaxy, Orion, etc), each of these platforms documented Your gaming behavior, even here, as in online MMO, total surveillance!
3. and the most important of all, in these old games is that heart blood, the game developer.

[dagobaking]

9 hours ago, winny257 said:

absolute nonsense, in Germany, the labor union already exists after the 2. World War and that in all medium-sized and larger companies.
Germany produces high-quality cars and Exported Worldwide! 

cough, Germany is with VW world market leader! ? and in the VW plants is the labor union especially present! 

 

https://www.gevestor.de/details/die-top-10-der-autohersteller-deutsche-konzerne-auf-dem-vormarsch-712706.html

lol

 

Toyota outsells VW with nearly half the number of employees. And the quality of VW vehicles is terrible. I've seen bumpers fall off of brand new VW cars when barely scraping a curb.

 

[ And on top of it all, Germany has to give them massive subsidies to keep this model afloat: https://www.motoring.com.au/secret-german-auto-subsidies-exposed-107275/ ]

 

You have demonstrated my point.

8 hours ago, Corsayr said:

Sure if you can afford a lawyer that can stand up in court against the gaming industries legal team. Good luck with that. Just suggesting litigation will get you blackballed from the industry.

It would cost you maybe $800.

 

None of those companies would push the issue to litigation knowing they would lose and get a rash of bad press over it.

[Corsayr]

24 minutes ago, dagobaking said:

Toyota outsells VW with nearly half the number of employees.

Japanese Auto manufacturers use unions. 

 

29 minutes ago, dagobaking said:

It would cost you maybe $800.

Nope.

[Ernest Lemmingway]

22 minutes ago, dagobaking said:

None of those companies would push the issue to litigation knowing they would lose and get a rash of bad press over it.

Two did. Only now neither is saying anything publicly they don't absolutely have to. I'm pretty sure it cost their litigators more than $800 but their silence seems to say it will cost the companies themselves a lot more.  No reason to release bad news during the holiday shopping season, after all. Especially if they still hope to recoup their losses after everything is tallied.

[Darkening Demise]

A crash is too good of a thing to actually occur. But then again sometimes reality does believe in miracles. But maybe such a sexy thing is unlikely.

[nobis]

It's not that complicated you know ppl...

 

 ,, 99% of data is not neccessery"

                  - W.B

 

What happened during this yr on weekly charts :

 

* in januar, market gets rejected at 2900

* in march finds support at 2600

* 2800 rejected again

* 2900 - fakeout

* 2800 x 3 PIG traps 

* - breaks 2600 support 

 

& now we are in the down thrend...

 

Go short on equities.

 

All this bla bla bla about fundamentals.

 

Edit :

 

IF you own stocks right now & you don't know what to do, drop me a pm, and we will see, what is best thing for you to do, right now, based on your current situation,absolutely for free.

 

Yes , damn Christmas, is it not

 

 

[landess]

I'm no financial genius, but I see one word: Over-saturation.

 

This leads to buyer fatigue, or disappointment when new options fail to meet expectations.

 

The Gold Rush of '49 is just a simple example of participation in an activity which made so many rich that others jumped on board with high hopes, only to be let down in the end.

 

I often refer to Skyrim as the golden age of modding. Now we see the amount of quality mods has decreased, almost in direct proportion to the efforts of AAA games desire to control this practice they see as a lucrative opportunity.

 

People aren't as stupid as they'd like us to be, and it's really starting to show.

[dagobaking]

7 hours ago, Corsayr said:

Japanese Auto manufacturers use unions. 

Apples and oranges: https://interculturalmeanderings.wordpress.com/tag/how-american-and-japanese-labor-unions-differ/

 

If you think that unionized game development would end up looking like Japanese company organizations I have a bridge to sell you in Brooklyn.

7 hours ago, Corsayr said:

Nope.

Upon further reflection, you're right. It most likely would cost you nothing. Since it would be the other company that would have to find out and choose to sue the person. Unless there were actual damages (stealing IP for example) there would be no good reason for them to even write a lawyer letter.

7 hours ago, Ernest Lemmingway said:

Two did. Only now neither is saying anything publicly they don't absolutely have to. I'm pretty sure it cost their litigators more than $800 but their silence seems to say it will cost the companies themselves a lot more.  No reason to release bad news during the holiday shopping season, after all. Especially if they still hope to recoup their losses after everything is tallied.

There are some cases where there is incentive for the company to sue over this type of term. If the person had high level access to unique IP and there is reason to believe they utilized it. If they poach other workers. If they were in high level positions where their inside knowledge would give another company a competitive advantage. Etc.

 

These are rare circumstances that affect a handful of people. Suing Joe-Developer for working at another game company would likely lose. And if they won, it would be like a cease and desist since there are no identifiable damages caused. And they wouldn't get the dev back. It wouldn't make any business sense for them to pursue it.