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Is the next AAA-games crash imminent?

By Cal Jeffrey · 31 replies
Dec 18, 2018
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  1. Creativity is probably the most critical factor when making a game. Players want something they either have never played before or is different enough that it seems new. This selling point is one that companies like EA, and even Bethesda with the garbage that is Fallout 76, seem to have forgotten. Big franchises have become cash cows that studios milk for every dime before coming out with a new iteration that is only incrementally different than the last.

    TheQuartering also points out that companies are using nearly the exact same template in regards to style. He uses Rage 2, Far Cry: New Dawn, and Fallout 76 as examples. All feature a post-apocalyptic world stylized with a sharp, contrasting palette accented with bright neon colors.

    “While yes is the gameplay is different, it’s like they all got the same PDF on how to stylize your game,” he said. “To me, they all bleed together stylistically.”

    The concept reaches beyond these three examples though. Even Fortnite more or less falls into this odd template.

    Player backlog is another thing that is having a drastic effect on game sales. TheQuartering pointed out several games that he has not even opened yet. It caused me to take inventory myself, and I realized I too have an extensive backlog of games that I have either not played yet or not finished. Octopath Traveler, Horizon Zero Dawn, Far Cry 5, and Assassin’s Creed Origins are just a few significant titles on my backlog, which is sadly not even a fraction of the games I own but have set aside.

    So with so many games already sitting on the shelf, gamers are less anxious to shell out for a brand new title at full price, especially when it’s just another stale iteration of the last game in the series. This fact has, in turn, led to early and aggressive discounts on games that were expecting huge pre-order turnouts.

    Dark Souls: Remastered is probably the most notable example of this, although there are others. Before the game was even released, Bandai Namco slashed the price of the game by 50 percent for users who already owned the Dark Souls: Prepare to Die Edition. FromSoftware tried to play it off as giving back to the fans, but more likely it was due to unexpectedly low pre-order sales.

    “If video game companies — I’m talking Triple-A — were doing that great would they be putting Fallout 76 50 percent off? Would they have put Battlefield 5 50 percent off? No. Of course not. If they could get full price, they would do it. You’re not going to convince me, ‘No, everything’s going great. They’re just trying to give back to the community.’ Baloney! They aren’t meeting expectations.”

    Which brings us to what is probably the biggest contribution to the AAA industry’s downfall — expectations. Where do these expectations come from, gamers? No, they come from investors. Moreover, what do investors know about making video games? Aside from a select few, almost all of them know next to nothing.

    The only thing an investor in any video game firm cares about is if the numbers are up. That’s a big problem because no business can go on year after year breaking sales records, yet that’s what investors expect. Every new game, be it a brand new title or an old franchise standard, has to do better than the last or heads will roll.

    Because of this constant pressure to never have a loser, game studios are afraid to take risks. They are scared to put something new out there that has a chance to fail. They would sooner go with the winning brand, even though they don’t have anything new to put into it.

    Just ask yourself, “how many copies of Assassin’s Creed Odyssey sold just because it was an Assassin’s Creed title?” I could not track down pre-order numbers, but I suspect many people bought the game sight unseen. Fortunately, it ended up being a decent game, but you can’t say the same for Fallout 76. Many fans pre-ordered Bethesda’s grand experiment into a multiplayer Fallout only to be utterly disappointed.

    All these factors have led to drastic dips in stock valuation for some of the biggest companies in gaming. Activision Blizzard is down 43 percent since October. Electronic Arts is down 47 percent since its peak of $148 per share last summer. Take-Two, which includes studios like Rockstar and 2K, is down 25 percent since October as well. If it were not for Red Dead Redemption 2, it would probably be in the same boat as the rest.

    While the declines are less dramatic year-over-year, TheQuartering believes a crash is coming and has been for a while. These huge studios will not go out of business — they are simply too big, but layoffs and announcements of restructuring seem imminent. We could start seeing the effects possibly as soon as next year, he predicts.

    I’m not sure that I agree with him on this point. I think the AAA-game industry has not hit the bottom of the barrel just yet. There is still time for studios to recover from a bad showing come next year. However, the problems that led here are systemic, and without a complete overhaul, a crash is indeed unavoidable.

    Permalink to story.

     
    Last edited: Dec 19, 2018
  2. azicat

    azicat TS Enthusiast Posts: 46   +38

    AAA = console/PC platform saturation? Perhaps that's why the megastudios are shifting focus to mobile. VR also needs to mature and reach critical mass before it creates a new mainstream frontier.
     
  3. psycros

    psycros TS Evangelist Posts: 2,578   +2,298

    The cut-and-pasting of style is due more to most games now using off-the-shelf engines and resources than anything else. The real copycatting is with gameplay modes. Every multiplayer AAA title released in the past two years checks at least one of these boxes: battle royale, MOBA or team-based FPS. Most are also pay-to-win. The PC and console have followed mobile gaming down the dark hole of micro-trans. It started with day one DLC, then came season passes, then loot crates and now God only knows what they'll do next - probably charge you a by-the-month subscription like MMOs. As I see it the only real hope is with single player games where design creativity has fewer risks. Here's the thing, though: as long as free-to-play but costly-to-dominate games keep producing more $$$ than the biggest selling SP titles the bulk of developer time will still be spent on the next PUBG clone. There's also the growing rift between the solitary and multiplayer experiences. Try to name three successful, big budget games released over the past year that feature BOTH modes. I can't. On top of that, all the real innovation is being done by the smaller studios and indie teams who have less to lose and everything to gain. However, their multiplayer offerings are almost exclusively sandboxes and arcade-style action. The "co-op renaissance" the industry seemed poised for three years ago never really delivered and is now virtually forgotten.

    With the quality of Internet and sheer power of today's consoles (let alone PCs) the studios could be trying some really interesting stuff. Unfortunately, the writer of this piece is correct: the industry won't try something different until cheap multiplayer arena games start to tank HARD. What amazes me is that Epic chose to devote most of its resources to Fortnite at the expense of a reborn Unreal Tournament which a huge number of players were stoked about. UT and Quake were the OGs of the team-based shooter concept - did Epic really think their wasn't room for Fortnite's granddaddy at the table? A year from now when FN's numbers are in free-fall the bean-counters who were no doubt crying "don't fracture the demo(graphic)" will be clamoring for something new. Maybe then Epic's devs will realize their mistake and blow the dust off that code.
     
  4. George Keech

    George Keech TS Rookie

    I could be wrong but, Take Two don't own Bethesda. Bethesda is owned by Zenimax, that is a separate entity.
     
  5. Leuten

    Leuten TS Rookie

    Before we put the current stock votality solely on the gaming industry, we need to take a broader look.

    The stock market is generally doing less than stellar, so this would likely be the case for gaming companies regardless of the points mentioned in this piece.
     
    Theinsanegamer and Cal Jeffrey like this.
  6. Cal Jeffrey

    Cal Jeffrey TS Evangelist Topic Starter Posts: 1,580   +373

    You are correct sir. I was on a stream of consciousness roll there and totally overlooked that in the edit. Fixed now, and thank you.
    And psycros, I whole-heartedly agree on all points, especially re: UT and Quake. I will be the first to admit that I am not a big MP fan. However, UT or Quake would both be welcomed additions to the fare, particularly when compared to the unimaginative and incredibly predictable MP that studios are currently pumping out, if not solely for the retro vibe which is a serious contender for gamers’ $$$$. Retro gaming and indie studios have a small but significant foothold in gaming and only stand to gain by continuous stagnation in the AAA industry.
     
  7. Cal Jeffrey

    Cal Jeffrey TS Evangelist Topic Starter Posts: 1,580   +373

    Agreed, a valid point. However, I would contend that overall market trends are not necessarily causal to more granular markets. This is also why I mention that I don’t necessarily agree with TheQuartering that effects of a crash are coming next year. I think we don’t have enough data at this point to make that determination especially because of the overall market decline.

    However, that does not negate the notion that the current practices of AAA companies is not contributing to its decline.

    Good comment though. This is exactly the kind of discussion I was hoping to trigger because I’m far from a market expert.
     
  8. Danny101

    Danny101 TS Guru Posts: 642   +241

    Is free roam about to run it's course? What made games interesting to me is the stories behind them. I played Fallout 3 and New Vegas which were my introduction to open world game play. They certainly fun and I enjoyed the freedom. After a while though, it became monotonous. I was just collecting stuff. When I played The Last of Us, I was gripped and into the story and had to follow and investigate to what happened next. Resident Evil also had a good story to pull you in. We need new stories, new gameplay.
     
    Cal Jeffrey likes this.
  9. Fobus

    Fobus TS Addict Posts: 104   +75

    But what has changed in the last 3-6 months? Certainly not how AAA companies operated. Uninspired yearly games are nothing new. Gamers had backlog for years, courtesy of steam sales. That's not the reason why stock price is down.

    It has everything to do with broader market. Apple has lost 200B$ over few months, and it has nothing to with games. Google, Microsoft, etc. And not just technology companies. Stock market has been doing really well in 2016, 2017 and first half of 2018. So either it's temporary adjustment over years of inflated growth, or a beginning of new crisis, because heaven knows stock markets don't crash...
     
  10. ET3D

    ET3D TechSpot Paladin Posts: 1,643   +304

    I think it's just one of those doom and gloom predictions that we see all the time. Saying things like 'creativity stagnation' is silly. AAA has always been akin to blockbuster movies: it's not about creativity, it's about making visually exciting action. Sure, not every blockbuster movie or AAA movie makes it big, but enough sell well.

    Same goes for backlog. I'd need real stats to believe it's a problem. I mean, sure, I believe in the existence of backlogs, but I'm not convinced it's a problem that "real gamers" (I.e., those who actually play their games) have, and I also don't think it prevents people who have large backlogs from buying more games. I doubt that many people actually look at their backlog and think: "okay, when I finish this game, I'll play that game, and then that one, and when I finish my backlog I'll buy new games". It's more like: "oh, I don't know what to play; maybe if I buy something new that'd be fun."

    We just recently had a report of huge spending on gaming this year, and now we have speculation of gaming death? Sure, there are always interesting angles to raise, and doom and gloom always brings in an audience, but really, we've had lots of predictions of PC death, console death, gaming death, and though I know it's obligatory to raise these topics, it kind of gets boring.
     
  11. BSim500

    BSim500 TS Evangelist Posts: 586   +1,155

    Not really:-

    - Anno (1998), Assassins Creed (2007), Battlefield (2002), Call of Duty (2003), Civilization (1991), Doom (1993), Dragon Quest (1986), Fallout (1997), FIFA (1993), Far Cry (2004), Final Fantasy (1987), Gears of War (2006), Grand Theft Auto (1997), Hitman (2000), Just Cause (2006), Madden (1988), NBA (1989), Need For Speed (1994), NHL (1991), Star Wars: Battlefront (2004), The Sims (2000), Tom Clancy's Ghost Recon (2001), Tom Clancy's Rainbow Six (1998), Tom Clancy's Splinter Cell (2002), Tomb Raider (1996), Tropico (2001), Wolfenstein (1981), WWE (2000), X-COM (1994), etc...

    If you sent modern AAA publishers who treat any new idea on par with Leprosy and the Bubonic Plague, all frantically clinging to 1989-2006 era IP back to the 1990's, then Doom, Quake, Unreal, Baldur's Gate, Age of Empires, Deus Ex, System Shock, Grim Fandango, Monkey Island, Thief, Fallout, Elder Scrolls, Diablo, etc, would never have been created. They'd still be stuck making Rise of the Pac-Man 87, Digger 49: Remastered VR Edition, Call of Zork 235, Paperboy 76, Boulder Dash: Creed Odyssey and Shadow of Tetris 41...

    Seriously, it's not just "the same way it's always been". This past decade has been absolutely abysmal - literally objectively measurably the worst for creativity in the entire history of video gaming going all the way back to 1970's Pong.

    - "Shadow of the Tomb Raider hasn't been the major hit that Square Enix was hoping for..."
    - "Deus Ex series on hold after Mankind Divided's underwhelming sales..."
    - "Battlefield V sales are down..."

    Huge spending on gaming and yet stock prices and sales are falling and premium IP being shelved. I think the guy in the article's point is, a healthy industry is where money gets spent well, not just spent in the sense of buying what you've already played for the 12th time running or watching grown men spend more money / time dressing up their digital dolls (in-game cosmetics) than actually buying and playing new games...
     
  12. captaincranky

    captaincranky TechSpot Addict Posts: 14,588   +3,758

    When stock market drop hysteria hits the TV, losses in actual percentage are in the neighborhood of 5% , give or take.

    Your stock price graphs are showing in some cases, drops in excess of 40%, far surpassing, "the worst day in recent memory", tabloid hyperbole.
     
    Last edited: Dec 19, 2018
    ShObiT and Theinsanegamer like this.
  13. Humza

    Humza TechSpot Staff Posts: 178   +136

    Gamer backlog seems like the strongest reason. The clock won't go above 24hr/day for all these games to be crammed into, never mind the increasingly slimming actual time for gaming, politics in games, monetary policies (pay to win, not play to win), remasters and rehashes of classics (Creativity, as this article mentions it).

    I think innovation and creativity can either come from an indie studio (they give the best surprises) or give AAA studios a minimum of 5 years to really work on something that's polished and refreshing or at least worth looking out for, may it be a sequel or a new game. (God of War, Metro Exodus, Red Dead Redemption 2, TLOU 2, Cyberpunk 2077).
     
    Cal Jeffrey and Theinsanegamer like this.
  14. Carrandas

    Carrandas TS Rookie

    AAA games have also gotten significantly longer.

    Where do I find the time to play >30 hour games like Far Cry 5, Assassin's Creed Odyssey, Red Dead Redemption 2, God of War and Shadow of the Tomb Raider? Let alone all the lovely indie games that came out this year. That's enough to keep me busy for an entire year.
     
  15. redgarl

    redgarl TS Enthusiast Posts: 48   +42

    Wannabe economic analyst should drop demagogic behaviour. Fact is nobody knows and even many analyst were not predicting the tech stock to lose nearly 40-50% of their value since november.

    You cannot have a crash after an healthy correction like that. A crash is sudden over a short period. It is been a gradual decline over the course of two months with the stock market in GENERAL.

    It is not because of the AAA studios going through a crisis, in fact, they never made as much money as of now, Capcom is a good example. On the contrary, it is because investor are panicking over Trump behaviour and China resilience to make a trade deal... THAT'S IT!
     
  16. redgarl

    redgarl TS Enthusiast Posts: 48   +42

    Finally someone rational... there is no magic there, the stock market, especially the tech stock, like game studios, are having a healthy correction because investors are are losing their mind right now for irrational trade wars fears.

    The Huawei scandals is taking epic proportions. China will need to move on and change their ethical behaviours when it come to industrial espionage, or they are going to get corner. Huawei is already banned in some countries and it will only get worst if China refuse to become a good corporate citizen.
     
  17. Forebode

    Forebode TS Booster Posts: 191   +44

    Suggest normalizing the AAA industry. Charge what it costs to make the game instead of a gateway to microtransactions to make your money back. If the game should be sold for $120, fine. Would also decrease backlog as many might not be able to afford the price hike right away. Remove all the special edition nonsense. Remove the embargos placed on reviews done before release. Release games that wont need a patch that essentially reinstall the game at a newer version in the first few days. Somehow, add something new that requires the developer to only be allowed to sell a finished game (I understand it's subjective.. but it doesn't have to be checked at release, it could be found out later after it's release and have a class action). Don't build games around microtransactions.. so no time savers, no pay to win, no meh-level in-game drops with only premium stuff in the store.

    If they come back and say, well.. the game will have to cost closer to 200 or 250.. then maybe it's time to rethink things internally to game development. Just because someone sold a game for 60$ doesn't mean you have to, same at $120.

    There needs to be some inherent rule/law that states unless it specifically states AT THE FRONT OF THE BOX, that it has a subscription or some other pay model that could be construed as pay to win (like released/unfixed shadow of mordor, sure you could pay and *finish eventually.. but it'd take a long time). Perhaps add an estimation of additional cost to the purchaser to finish the game or play for 6 months. (so subs would monthly rate *6, mtx $50, etc).

    Want to feel less under the gun to get a game done? stop hinting/hyping the game before it's nearing the end of beta. Doesn't anyone want to be surprised anymore? Gaming is a part of many peoples lives now, it's not some odd taboo it was when I was younger. Stop dropping a lot of the money to promote the thing and sink it into development. If the game is fun/entertaining.. it'll do well. Advertising will only really bloat initial numbers.

    Sequels are not a problem, it's a type of free advertisement if the last one was good. Did Nintendo really have to advertise Super Smash Brothers for the switch? reallly? did it really?

    As far as stocks go.. Gaming companies should be treated more as a commodity and less like a tech stock. due to a set amount of time in a day and the saturation of the market.. releasing a brand new orange that is like the old orange but a little different, isn't going to spike stock for oranges.. Games in general are the commodity and not each individual. Release 1-4 good games a year only, support games for 1-2 years after the initial release, and keep the stock relatively static.
     
    Last edited: Dec 20, 2018
    Cal Jeffrey and BSim500 like this.
  18. OcelotRex

    OcelotRex TS Guru Posts: 538   +294

    I am nearing 150 hours alone on RDR2 and I still have yet to complete all the story missions. It's a massive game that demands you take it slow.

    I have to skip games to be able to play/finish others. Of your list I only have played FC5 and RDR2, which is basically my whole year with Rocket League thrown in middle.
     
    Humza and Cal Jeffrey like this.
  19. Theinsanegamer

    Theinsanegamer TS Evangelist Posts: 1,479   +1,670

    I think creative bankruptcy is spreading across multiple industries, not just gaming. FFS in 2016 we had a Jurassic park, star wars, and ghost-buster movie. We have seen the same kind of games control the market as companies go with lowest common denominator marketing and development trying to wring out as much money as possible.

    A video game "crash" like 1983 is unlikely. Instead, I feel gaming is going to split into two parts, the studios that rake in money with LCD garbage, and the studios that actually keep the hobby alive. Once there is an actual recession, casual income will drop dramatically, and the big studios will be forced to downsize, and eventually the newer studios will replace them, much like how so many big name IPs in hollywood are beginning to lose their appeal and staying power.
     
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  20. kira setsu

    kira setsu TS Enthusiast Posts: 83   +58

    The issue isnt tired ideas or backlogs, I'm really hyped for rage 2 and doom and enjoy a good open world jaunt, cant stand battle royals though, most multiplayer in general.

    The issue imo is companies nickel and diming gamers for everything in the game, it's starts from pre-orders all the way through to the gameplay itself and it's sickening.

    from ps1 era to ps3 I was a massive game buyer, mainly because all games were complete, they had to be and that made them fun because you knew what you were getting into and now thats all changed. why buy a game on day 1 now? its either a bug ridden mess or waiting on a years worth of dlc to make it a complete package, and if it isnt doing that then its constantly nagging you for some special currency or other bs item to snatch more cash.

    I get it that games cost top dollar but its getting out of hand and theres only 2 ways to calm this crap down.

    1. cut back on production cost, quit making photorealistic worlds and using hollywood actors for simple voice acting, remove some of the fluff basically, but gamers wont go for that.

    2. sadly this is what I would recommend, RAISE PRICES, its time, games went from 40 to 50 to 60 dollars over the console gens and its obvious a price jump is needed, if spending 70 or 80 dollars on a game from the likes of naughty dog, rockstar and other top tier devs means I never have to hear dlc or microtransaction or premium currency again then I'd gladly pay the price, it pretty much happens anyway when you buy a season pass or whatever else so why not just make it the norm?

    but a price jump would never work, why? because gamers aren't that bright and wouldn't see it that way, all they would see is higher prices. these are the same people that griped on the price of the ps3, pretty much a perfect console then paid for the ps4 twice! and wonder why sony wont give them a bone?
     
  21. TomSEA

    TomSEA TechSpot Chancellor Posts: 3,057   +1,491

    Good article with a lot of valid points, but I think saturation is also a huge issue. Go to the Metacritics website and click on game release dates. There are ONE HUNDRED AND EIGHT-EIGHT games listed on the first page alone. Guess how many pages of games are listed total? Try 186 pages. Simple math and that comes out to 34,968 games scheduled to be released. And that is for PC games only!

    I think the industry is definitely due for a shake-out. But just like when it happened in the 70's, the strong will survive, innovation will return and we'll still get to spend countless hours on our favorite recreational activity.
     
    Cal Jeffrey likes this.
  22. poohbear

    poohbear TS Maniac Posts: 255   +159

    There is nothing new in anything he said. We knew this and have been complaining about it for years. It's a vicious cycle between stock market expectations and stale reiterations of games that have reached their peak. The real question is: WHAT'S THE SOLUTION? Nobody is talking about a solution, which is the real rub.
     
  23. poohbear

    poohbear TS Maniac Posts: 255   +159

    If there's already a backlog of games for gamers and companies are cutting prices RIGHT after a game is released, how on earth is raising prices gonna solve the problem? Did you actually think your recommendation through?
     
  24. 144hzGamer

    144hzGamer TS Booster Posts: 124   +76

    Sony, naughty dog, santa monica and insomniac are laughing.
     
  25. kira setsu

    kira setsu TS Enthusiast Posts: 83   +58

    yeah, I did.

    there will always be a backlog of games, no one can possibly play all of them, you're just chasing the dragon if gaming is your hobby

    and as for price cutting as soon as a game comes out, thats on the dev for releasing an unwanted product, I've seen those games like the crew 2 and fallout 76, destiny 2 and the like, obviously flawed games that no one liked, in their cases a price drop is just there to salvage what cash the company can for a bum product.

    my target for high priced games would be future titles like tlou2, gta6(one day) the big games that can demand that premium, at that point devs would have 2 options, either make a game that has the content to be worthy of that price or release it at a lower one.

    And hopefully a higher price would wake gamers up to hold the publishers and devs accountable, were not just at this junction because of shifty companies its also because of an audience that goes along and pays for whatever crumbs are fed to them.
     
    poohbear likes this.

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