Picking up where left off last week (read this first if you haven’t) it’s time ro.talk about the second reason that the AAA gaming industry is going to crash: money.
I’ve said it before but I want to preface all this by saying that I do not have a problem with businesses making money. I’m a capitalist, I’m in sales myself, and eventually I want this to be a full time gig where I make shit loads of money.
That being said, the way that many of these companies are going is both unsustainable and detrimental to the entire gaming world. Gaming, as a medium, is more popular than ever and this has driven these corporations to get every red cent they can by hook or by crook. They seem to be leaning towards the crook option more and more as the demand to keep increasing the value of stocks for investors. Looking at the price performance over the last 5 years, they have been very successful.
There are two major reasons for this. The first is that gaming, as stated earlier, is more popular than ever. Nor only are adults who play games still playing, more and more people are added to that customer pool every year in a process known as “birthing children”. Obviously, I’m totally fine with that factor.
The one I take issue with is… dirty and manipulative monetization practices!! Yep, we’re back on that subject again. Loot boxes, microtransactions, and more have made a lot of modern games into perpetual revenue streams. Publishers are growing more focused on maximizing the profits of existing products and are doing so in the most damaging ways possible. I’ve covered all that before so let’s skip past what will likely become a lengthy rant.
To my original point, this level of profitability isn’t sustainable. In fact, it’s likely that we are seeing some of the early stages of the inevitable collapse. Games that sell millions of copies are being labeled as “disappointing” or “underperforming” now when they would have been hailed as blockbuster successes five to ten years ago. Even setting aside a games actual profits, the attitude alone is disturbing. Publishers have set the bar so high that it’s nearly impossible to reach. It’s only going to get worse as the market continues to flood with these perpetual world games and the audience is spread thinner. Companies are spending more to make and market games than ever despite the increasing difficulty in making that money back. There is a certain level or risk management that all businesses have to take into account and it’s being completely ignored by out of touch executives who think that they can continue to drag more and more money out of consumers.
That well, however, is drying up. Players are not only being torn between multiple titles which cuts the player base for games that require a lot of active players but they are also growing tired of the tactics publishers are using. The number of people who are refusing to make in game purchases based on principles alone is growing rapidly. The backlash over games like Star Wars Battlefront 2 EA and the contested legality of many games monetization schemes are getting massive mainstream press coverage. The number of scandals feel like they’re hitting back to back at times. Consumer advocacy is on the rise in game journalism. Every time there’s a major scandal the stock price plunges for that company which means the shareholders are paying attention. Countries around the world are considering regulating or banning some of the most profitable scams these companies are running. The entire house is crumbling because the foundation is made of sand.
Now I’m going to put on my Nostradamus hat and lay out what I expect to happen within the next 24 months.
*insert magical sound effects here*
First, several games on the horizon are going to “underperform” despite strong initial sales and will get a lot of negative feedback because of their grindy and unrewarding nature designed to support a microtransaction economy. One of them may well hit levels of backlash equivalent to Fallout 76 or the afore mentioned EA Star Wars title. Anthem, The Division 2, and Devil May Cry 5 are my top suspects for this.
Secondly, several more studios will either pull a Bungie and get out from under their publishers umbrella or the people responsible for the best work are going to leave major projects to work on something else. How fast this happens will depend on the performance of those like Bungie or creators like Hideo Kojima and how much confidence they can inspire in others to take the leap. Another potential catalyst would be Blizzard co-founder Mike Morhaime. After heading the company for almost three decades he left his position as CEO, moving into an advisory role on the board of directors. Since then it has been reported that he will be leaving that role as well and ending his relationship with the studio, at least in a professional capacity.
Next there will be huge turnover at the executive level. Companies, in desperation, will burn through Officer after officer in an attempt to keep things moving upward despite there being no real way to maintain the current profit levels. Technically this isn’t completely a prediction as it’s already happening. What weve seen so far is just the tip of the iceberg.
After that the amount of scandal and turnover will continue to make investors uneasy which will stall and eventually cause the drop in share values. This of course creates a feedback loop of more and more investors moving their money to less risky companies.
The biggest nails in the coffin will come with the outlawing loot boxes and other gambling based practices. Belgium has already made them illegal and several European countries are poised to follow suit. Federal and state governments in the U.S. are already looking into the matter as well. Once the government gets involved it will only be a matter of time before they expand the regulations on monetization to broader areas.
Once these unethical practices are made illegal and companies like EA or Ubisoft can no longer count on those recurring revenues the financial stability of these companies will fall apart. Games will be canceled, studios will be closed or sold off, and the ability for publishers to maintain these live service games will be hamstrung.
As much as I will hate to see the form of entertainment I love take such a beating, it will be for the best. Just like a forest fire renewing land for new growth, this will act as sort of a reset button for the industry. It will force publisher to make games focused content and value to create sales. I know that not all of the garbage tactics will stop but it will be greatly reduced. It will make room for games to be what their creators envisioned and not a shell of an experience used to hide manipulative and deceptive ways to bilk people out of money.
As the great Sir Paul McCartney once sang ” Hope for the future, it’s coming soon enough”. Until then, we’ll get some marshmallows and let this mother fucker burn.