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Is The Core Games Industry Shrinking? About Damn Time! And Who's To Blame?

Have you heard about something called a "smartphone"? Yes? What about tablets? You have? How nice! Maybe you even play games on them! You do? Well, congratulations, good sir/madam, you are killing hardcore games, you filthy traitor!

Or are you (killing hardcore games, I mean)? Smartphones and tablets are the new cool kids in the block, and everyone loves them. I've never seen a product so thoroughly capture the imaginations of so many so quickly, at least not in my lifetime, and I don't mean anything snarky by that. Smartphones and tablets didn't resonate with me nearly as much for some reason, but there's something about them that just fires up our brains, sometimes to a fetishistic degree, and maybe one day psychology and neuroscience will explain what.

When people talk about smartphones/tablets, I'm often reminded of "Extraordinary Delusions and the Madness of Crowds", an 1841 book that recounts the tulip bubble in the Netherlands, which reportedly got so crazy people were selling land to buy a goddamn flower. While it's since been claimed and possibly even proven that the author sensationalized his account, the lesson stands.

If you visit game business sites like gamesindustry.biz and gamasutra.com, you will come across the most amazing statements by industry professionals, pundits and market analysts alike. The smartphone is the most important product ever created (not, electricity, the wheel, a way to control fire, the internet, no sir, the smartphone!). Everything in today's market is irrelevant. Touch controls are superior because you touch the screen and interact directly with the game. The tablet is such an incredible invention, it's just you interacting with that beautiful screen and you can touch it all over and use it for anything. That's a fetish if I've ever heard one, and I actually read a quote similar to that on Gamasutra (the exact words escape me). The euphoria is such that successful people routinely compare console sales with the billions-strong smartphone "install base", and they do it with a straight face! Recently, while everyone was gushing about the PS4 launch, IGN helpfully reminded us that "outside of consoles, the comparisons are decidedly less flattering", and pointed out that Apple sold 9 million smartphones "in a weekend a couple months ago". Do you know what else plays games since the 80s and is also owned by billions of people? Personal computers. Do you remember ever hearing anyone comparing console sales to computer sales? I don't.

But it's not just wanton enthusiasm, they have hard data to prove that console games are on the way out. Retail games have declined year after year after the iPhone was introduced, and last I heard the U.S game retail was far from its 2008 peak and back to 2006 levels. Gamers are clearly buying less games, and most publishers have drastically cut down the number of games they release per year. Xbox Live is now more used for Netflix and other media than for games, another sign interest in console games is waning, and Microsoft apparently took this bit of data so seriously, they decided to focus almost entirely on people who don't play games with their next console. Next-Generation consoles won't just compete with one another, they will compete with everything that take player's time, like mobiles, spotify, HBO, etc. New research suggests that core gamers spend more time with their tablets and phones than with their consoles. On top of that, as is often pointed out, there's so much more money to be made on mobile, why would anyone stick to console games? 

All of the above data is seemingly damning, and clearly proves that console games are dying. Or does it?

Interpreting data can be a bit like picking a jury, you can  choose the one that best suits your needs and there's a good deal of confirmation bias involved, and it baffles me that apparently nobody asks some obvious questions. Let's start with the decline of what we now call AAA console games. I've personally never understood how anyone could argue that such games are dying when the blockbusters sell far, far more than they ever did, but overall industry sales are what matter to a market analyst, so let's run with that. It is true that console gamers are buying less games, but is that really because mobile is luring gamers away or because people are losing interest in console gaming? Perhaps it has something to do with online multiplayer and DLC. Before consoles went online, we bought a game, played it until we got tired of it, then bought another. Now, we can spend months or even years playing the same game. Not only that, but publishers do their best to get us to keep spending on DLC for months, money that could have gone to a new game. So while overall sales are lower, that doesn't mean it's because gamers are losing interest.

Xbox Live is now used more for Netflix than for gaming, and I've lost count of how many times that was linked to the death of consoles and the rise of mobile. But is that really all that new, and does it really change things all that much?

Do you remember a time before the Internet, before corporations had the capability to track everything you do with their products (and if Microsoft had their way, everything you do, period)? Odds are you had a TV and a DVD player. Maybe you and your family watched a lot of TV, maybe you rented lots of movies. Maybe you and your family even spent more time watching movies and TV than you alone did gaming! Now, we have Internet, we have Netflix and odds are your house only has one Xbox. Now, instead of renting DVDs and watching whatever crap was on TV because there was no option, your family can enjoy the wonders of Netflix. And maybe, just maybe, your family and youself don't really spend a lot more time with Netflix than you did with DVDs and TV, back when, you know, nobody had any idea how long you spent doing what. Maybe your Xbox is being used for Netflix more than for gaming not because you lost interest in games, but because you're the only gamer in the house but your entire family watches TV shows and movies, and they often use Netflix to do it. 

It is true that we now have more entertainment options and games have to fight harder for our time, but hasn't HBO always existed? Didn't you have a ton of music in your iPod since forever? I don't disagree with the belief that consoles, more than ever, now compete with other entertainment choices and not just competing console, but when I hear HBO thrown into the mix, I can't help but think the herd behavior is getting a little too wild.

Core gamers are spending as much time with their tablets/smartphones according to some survey, which proves there's no way $60 dollar AAA games can compete with free mobile games...right? Maybe. Or maybe it's just because people don't usually spend most of the day at home. They spend the day at work or at school. But they aren't busy every minute of the day. They commute, they have lunch break, class breaks, etc. 10 minutes here, 20 minutes there. Maybe you have an hour-long commute. Those minutes add up. And what do you do to pass that time? Maybe you take out your tablet and play games on it! And since you're a responsible grown-up (you ARE a responsible grown-up, right?) that takes care of your responsibilities, that doesn't leave a whole lot of time for long game sessions during the week. Such was the case before smartphones, and after smartphones... that's still the case, only now you have a device with you at all times that you can play games on. But who knows, maybe it's not because you lost interest in console games or decided not to spend money on them since your smartphone has free games. Maybe, just maybe, you sometimes daydream of getting out of the office as soon as possible, not because you can't wait to play Angry Birds uninterrupted, but because you're dying to know what happens next in the new Mass Effect.

Finally, my favorite: "why would anyone make console games if mobile is where the money is"? When I hear an analyst say that, I silently give him/her (come to think of it, it's always a he) credit for choosing the right profession. Being paid to advise clueless people about business is harmless (to the businesses they talk about, not so much for the clueless people they advise), but god forbid they actually had to make business decisions and live with the consequences.

Why would anyone make console games, then? Well, say you have to choose between two markets. The mobile market is worth $100 billion, and console market a paltry $5 billion. Unfortunately, there are hundreds of thousands of companies spilling blood for a sliver of those billions, almost none of which will ever make serious money, because most of it goes to a couple of big, entrenched players who dominate most of the market and make things very difficult for new comers. But wait, it turns out everyone serving that $5 billion market suddenly left for the greener (or so they hope) pastures of the $100 billion market, and now there are $5 billion dying to be spent on something, if only SOMEONE would give them something to be spent on. Mobile may be where the money is, but are you sure it's where YOUR money is? 

The numbers above are completely made up to make a point, and the example is obviously an exaggerated caricature, but you get the point.

So did I just prove I'm right, everyone's wrong and nothing's really changed? Hardly. As an enthusiastic core gamer who doesn't get anything out of mobile games and is uncomfortable with the creeping of F2P mechanics into $60 gamers, among other things, I have my own confirmation bias. And I am absolutely not suggesting times have not changed, or that mobile doesn't affect consoles and handhelds. Times have changed, and mobile can't be ignored. Sticking your head in the sand and pretending it's still 1999 is as dangerous as blindly following the herd, if not more so. And my interpretation of the data is likely not terribly accurate either. As in most cases, the truth is probably somewhere in between. Maybe some console owners did lose interest on new consoles following mobile, maybe some former core game cash is now going to social games, but at the same time, maybe not every gamer spending more time with tablets than consoles is doing so because they prefer tablet games. Maybe someone who was never an enthusiastic gamer was talked by his friends into buying a Playstation, but won't buy a new one because he's now perfectly happy playing Minecraft. Maybe mobile and free games are challenging but not killing consoles and traditional games. Maybe Xbox Live being used for Netflix more often than games doesn't mean people are losing interest in console games. I know this may sound crazy, but maybe, just maybe it doesn't even mean people want to rush out and buy a $500 Netflix player! Wouldn't it be nice if at least someone was asking these questions?

So if mobile isn't killing it, why is the industry shrinking, and why do we hear about layoffs so often now? Like I said before, mobiles, F2P, etc are indeed a factor, but I believe the main reason the industry is struggling is much more basic: it got too damn big, and inevitably the market needs to adjust. It's as if the wild success of the likes of the Wii, DS, Angry birds, Call of Duty and social Games made everyone lose perspective and the industry got carried away in its own hype.

"Everyone is a gamer" is something we hear all the time now, and its ubiquity is only matched by its pointlessness. Everyone is not a gamer, and will never be. The Wii and DS first took games to the masses, and then the iPhone sealed the deal, and then somehow industry people got into their heads that people playing Angry Birds and Metal Gear Solid are one happy family of gamers! Where the hell did that come from?

As I've argued before, core games are niche, and will always be. Every single one, even behemoths life GTA and Call of Duty. Sure, GTA is a sizable niche, and core games have become big enough that arrow-in-the-knee jokes traveled all the way to an NCIS episode, but the numbers of people who actually play or even know of them? A tiny portion of the population. TV, music, movies? Now, those are really mainstream. Smartphones are getting there, but their market penetration is still very limited outside the rich world. But, say, TV? Notwithstanding people in places like Somalia, which makes a poor Brazilian neighborhood look like a five star hotel, and perhaps those living under Orwellian dictatorships like North Corea, I'd wager almost one 100% of people watch TV in one form or another, most own or have access to one, and all of them definitely know what a TV is. Drive through a Brazilian favela, and will notice people may lack food, or basic sanitation, but they don't lack TVs and cellphones. Years ago, when working in my father's restaurant, I remember talking to an excited minimum-wage employee who had just bought a new $100 cellphone that he was paying in ten installments. 

Next to truly mainstream entertainment options like TV, movies, music (you know, these other entertainment options new console will suddenly compete against but somehow current and previous consoles never did) or even a mobile mega-hit like Angry Birds, GTA V looks like a tiny niche. And the vast majority of core games, even successful games, have only a small fraction of GTA's popularity.

But now that "everyone is a gamer", that distinction seems to be lost on too many industry types. Not only sales expectations are totally out of whack, but even though major publishers significantly scaled back the number of games they publish to focus on a few core franchises, we're still swamped by a flood of games every month. Add to that the proliferation of digital and indie games, Humble Bundles (which even includes huge AAA games now from time to time), Steam, etc, etc, etc, and we there are simply too many games. Something's gotta give, especially when you're selling a $50 million production that must sell 5 million in two weeks but your audience is distracted by hundreds of other games yelling for attention.

Take me for instance. I'm as enthusiastic as they come, and while RPGs are my favorite genre, I like damn near everything besides sports games, racing games and puzzle stuff like Tetris. Take a look at my backlog, listed to the right. There are over 30 names. Since there are now so many games that interest me, I've started to write them down to keep track of them. That list has 181 titles in it, and I haven't updated it in months. It also doesn't include the PS2 and Gamecube games I intend to emulate eventually (some of which I already did ) or the many DS games in my R4 card (a remnant of my days as a gamer in Brazil, please don't hate me).

Because of that, and because of the industry's now all but standard practices of drastically discounting prices shortly after release, I bought a grand total of one new release this year, unless you count the games I bought alongside my Wii U, and even those were several months old by the time I got them. That new release was New Super Luigi U, and if Nintendo wasn't notorious for keeping the standard MSRP for years, I'd probably wouldn't have bought it. It's not that I'm struggling to restrain myself while I wait for a good deal for that new game I'm excited about, but there are simply many other older games that excite me just as much, many of which I already own, so waiting until I cam get Bioshock Infinite for $10 is hardly a sacrifice. I'm not even sure "waiting" is a proper term in this case. How can the industry not shrink if supply far outstrips demand?

That's a far cry from the 90s and early 2000s. Back then, even though my tastes were just as broad, relatively few games cough my attention, I could actually get even less, and I'd often spend months with the same game. The market was definitely not saturated.

Of course, some caveats apply. I'm not equally interested in all those games and I surely won't play them all. Some I'm just mildly curious and mean to maybe check out someday. I'm also probably not representative of the average market, but even if you're not as into gaming as I am and have much more specific tastes, odds are you're still swamped by options. Everyone has a backlog now. 

Pundits and analysts often make a big deal that the industry has fallen far from its 2008 heights, and often tie it to mobile or whatever horse the writer has a stake in, while I see it as an inevitable, and welcome, market correction. If people weren't so enthralled by the "everybody is a gamer" mindset, perhaps they wouldn't be freaking out and shouting DOOOMED so much.

All that said, there is no doubt the past years did bring many changes, and change is scary. Even though mobile fanatics and cynical developers resort to that when they can't answer our questions, it doesn't make it any less true. I'll be the first to admit I'm uncomfortable with some trends, but at the end of the day, I believe the market will sort itself out. The mobile market maybe be hundreds of times bigger and sexier, but as long as there's a market for the niche games we like, someone will make them.

Yes, change is scary. But if that's the best you can do when someone questions those changes, they are probably not very good.

Edit: holy shit, this ended up much bigger than I expected!
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About CaimDarkone of us since 11:02 AM on 08.19.2011

I am a Brazilian student in Norway. I also happen to really, really like games! I'm a huge RPG fan, especially JRPGs and party-based WRPGs, but I also enjoy nearly every genre, from Mario Kart to Limbo to Bulletstorm.


Fatal Frame 2
Dungeons And Dragons Chronicles of Mystara
Silent Hill Downpour
Anarchy Reigns
Metal Gear Solid HD Collection
Crysis 3
X-com Bureau Declassified
Dust Elysian Tail
Tokyo Jungle
Plants vs Zombies
Dante's Inferno
Retro City Rampage
Batman Arkham Origins
Rayman Legends
Splinter Cell Blacklist
X-Com Enemy Unknown
Castlevania Lords of Shadow Trilogy
Deus EX The Fall
The Saboteur
X-Com Enemy Within
Crimson Gem Saga
Riviera The Promised Land
Knights in the Nightmare
Hexyz force
Growlanser Wayfarer of Time
Class of Heroes
Battlefield 3
Heroes VI
Metal Gear Revengeance
Sniper Elite V2
Pikmin 3
Velvet Assassin

Currently playing (as of 12/06/2014): Metal Gear Solid HD Collection, Mario Kart 8, Chronicles of Mystara

My 3DS code: 3995-6846-8256. For some reason it doesn't appear in the player profile.
PSN ID:CaimDark
Steam ID:CaimDark
3DS Code:3995 - 6846 - 8256


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