Email: Recession and Games

Hello Malstrom,

I liked your article post discussing the macros and layoffs in the game industry, but I wanted to bring up something you said

“People used to say that recession was good for video games as video games were cheap entertainment for the masses”

I’ve heard you mention it before, and I get the logic, but I wonder is this really true. Before the 2008 recession, there were 5 separate consoles on the market, and all of them ended up selling over 80 million units. That generation (7) was amazing for Nintendo (selling 250 million units) and was the only time Microsoft was successful. But consider what happened after that. Sony shuttered their handhald division. Nintendo shuttered their home console division. XBox is selling worse and worse. The market now can’t even support 3 systems (more like 2 and Sony is just devouring Microsoft). 

Hell, even with Switch being their most successful system, this was also one of Nintendo’s longest generations ever and the Switch benefited from great macro environment. 2017 was a good year for the economy. COVID gave everyone a stimulus check and told to stay indoors. Switch would have never come close to the DS without those factors. 

It seems more that gaming may be very economically dependent. Even though gaming is “relatively cheap”, games still cost $60, now $70. Consoles cost $500 and PCs can be over $1,000. It’s only cheap if you pay a lot of games because you get a lot of value out of them. And you only have to look at McDonald’s and Starbuck’s most recent earnings (something video game analyst wont do because they are stupid). Revenue is down because no one can afford overpriced coffee or eating out. If they can’t afford those things, how can they afford games?

On Nintendo at least, I agree with you that Switch 2 will sell worse. It doesn’t have the favorable winds of the Trump economy or COVID and stimulus checks. Now everyone is struggling to get by. And even if Switcharoo sells well in Japan, then Yen is getting killed so they’ll make significantly less money. It could be a bad generation for Nintendo. Last time Nintendo had a dire generation, investors demanded they make mobile games, and Iwata did just that. What happened when Investors say “You aren’t making enough money. Why don’t you do what Sony and Microsoft are doing! Put your games on PC NOW!”? Nintendo was able to resist mobile since no one at the company wanted to do it, but that may be a different story for PC ports. Anouma would jump at the opportunity to “expand” the number of people who could buy Puzzelslop. 

Anyway, I’d love to hear what you think Malstrom. Is this recession going to be bad for games? Is the end time coming? Also, I did hear about your condition and wanted to say thanks for all the great articles over the years. Before you shove off to the afterlife, make sure you finish your game! 

Until then, thanks for the insightful articles!!

I think the saying “Video games are recession proof” came from an era where recessions were declared but were not truly recessions. Was anything in the 1990s a real recession? Outside the early 1980s, nothing was truly that bad.

I agree with you, emailer, that the economic depression will hurt the games industry. But from what I see on the developer side, I can conclude it is the games industry that is hurting the games industry. They’re so stupid.

The TOOLS for making games is getting better and better. GenAI is one of the new tools. Look at the tools Shigeru Miyamoto and 1980s Nintendo had to use. And they had like a dozen people for a game. Today, a single person can produce such games. The tools have really grown and made game development very easy.

I’d like to go on as to why so many games suck today, but a big part of it is the developers. Early developers didn’t have lives that revolved around video games and the Internet. They went OUTSIDE. So they had REAL EXPERIENCES like exploring a cave. Show me a video game developer that has ever had a real adventure. Hell, show me a video game developer that has ever had a REAL JOB. Did you know that most of every game developer I’ve talked to work at jobs like call centers? (“What are you implying by this?” I’ll tell you in another post.)

De-population is going to hit gaming hard. To those who poo poo this idea, realize that de-population was THE REASON why the DS and WII were made. Nintendo’s answer to de-population was to EXPAND THE MARKET.

I think PC Gaming will be the big winner in the recession. Young people will stay on their gaming PCs and avoid consoles altogether.