What does a prolonged economic downturn do to this industry?

[jon bones]

I know we all need our hobbies as an escape from reality right now, but I was wondering what people think the forthcoming economic downturn could do to gaming over the next 10 years.

For one, I think we can expect sluggish next gen sales out the gate as discretionary spending goes way down. This feels inevitable.

I also think we should be grateful both of these machines are extremely powerful as we may have them (and only them) for 7-10 years. Looking back at how long the 360 era lasted (in part due to the recession) kind of informs my view on that. People won't really be looking to spend on midcycle upgrades or next-next-gen anytime soon.

I sadly think exciting technologies like VR, AR & cloud streaming will mature slower than we expected / hoped. This one pains me greatly, but I just don't see how growth takes off for a while.

I do think we'll see the opposite of what we saw fears of in years past ("mobilized console gaming" will turn to "consolized mobile games"). As consumer electronics take a hit, people will turn harder to free mobile games. The good news is that with phones as powerful as they are now (and controllers now standardized across consoles/android/ios), you'll see more things like Fortnite/Apex Legends/Roller Champions/etc. "Fair" non-p2w crossplay titles that release on EVERYTHING.

So what do you think? Where do we go from here?

 

[Windu]

People with less money = Less Sales on non-essentials like games.

 

[Bunkles]

People will spend money to keep kids entertained but sacrifice the big luxuries. I see Nintendo doing fine but Sony and MS taking a hit.

 

[nsilvias]

indies get a boost due to low cost, aaa sales get slighty worse

 

[Milennia]

Pretty much an across the board decrease in sales, not necessarily many delays in terms of hardware and software on the console front (definitely on the PC front though) and staggered sales of that hardware despite release

I don't think it's going to be heavily devastating when it's over though, more so a switch to digital may finally overtake a lot of people's interest earlier than expected due to finally having to dip in
Things like GameStop might not make it out though

A lot of people still don't really know that bestbuy acts as a better GameStop due to price matching with amazon, but they may start looking in that direction or just going digital and saying fuck it
Heavy content older games that are cheap now like the Witcher 3 should see a fat digital bump

 

[Soap]

For games out on current gen I can see this boosting sales due to boredom.

For next generation this is going to be a disaster for the first year or so since people won't have money and probably won't want to go to brick and mortar stores to buy goods.

 

[Video Games Are Dumb]

Entertainment certainly isn't an essential good but it's one people are very much will to buy during an economic depression. Films were a popular form of escape in the 30s for this reason.

As for games, well you could certainly argue the jump to HD and the housing crisis killed AA games. Now you're either indie or big league with nothing in between. It's why THQ tried to crawl up to become a AAA dev. So yeah, I'd be worried foe developers, there's only so many jobs.

If you're a player, I'd expect there to be a further push into Free To Play games, which was always going to happen, just look at COD Warzone dropping a few weeks ago. But this will probably because a more crowded market over the next year

There is hope that this artificial and sudden change in the economy might equally bounce back to some sort of stability in a few months. The rich still have all their money and they'll be willing to exploit us again once it's cheap :/

 

[rochellepaws]

It's bad news for the entire sector but I wonder if we'll see general lifestyle changes for years to come which could especially impact mobile and handheld gaming as people adapt to working at home more and travelling in cramped public transport or on international flights less.

Next gen doesn't appear viable for 2020 in my opinion, current gen could wind up like the PS2 in continuing being popular and receiving new releases for several more years.

 

[JeffGubb]

Here are my quick thoughts while looking back to 2008.

• For the next year, while people tend to hunker inside more and look for ways to socialize from a distance, games will do pretty well.
• But in the background, an already risk-adverse industry will become even more fearful and hesitant.
• Expect even fewer huge bets on blockbuster games that can't work as a service or as free-to-play.
• Expect to hear about more layoffs again after projects are closed.
• Those layoffs are going to be especially pronounced in third-party supports studios that have recently begun opening up in places like Mexico.
• Expect free-to-play on consoles and PC to take off even more. I don't think it's coincidence that the first free-to-play boom came in the wake of the 2008 financial crisis. People will be looking for affordable, long-term hobbies, and free-to-play can provide that.

I may return to this as other things occur to me.

 

[Hilarious_Bearious]

Entertainment certainly isn't an essential good but it's one people are very much will to buy during an economic depression. Films were a popular form of escape in the 30s for this reason.

As for games, well you could certainly argue the jump to HD and the housing crisis killed AA games. Now you're either indie or big league with nothing in between. It's why THQ tried to crawl up to become a AAA dev. So yeah, I'd be worried foe developers, there's only so many jobs.

Click to shrink...

I was going to post the same thing about movies being popular during the great depression. People need an escape.

I don't think I'd agree that AA is dead though; unless it means something different to my understanding? Wouldn't the likes of Super Lucky's Tale, Hellblade or Concrete Genie be AA? Or games from the likes of Paradox or Calypso? They're all very polished games made by medium-ish teams, but without the massive scope and budget of AAA games

Edit:

Here are my quick thoughts while looking back to 2008.

• For the next year, while people tend to hunker inside more and look for ways to socialize from a distance, games will do pretty well.
• But in the background, an already risk-adverse industry will become even more fearful and hesitant.
• Expect even fewer huge bets on blockbuster games that can't work as a service or as free-to-play.
• Expect to hear about more layoffs again after projects are closed.
• Those layoffs are going to be especially pronounced in third-party supports studios that have recently begun opening up in places like Mexico.
• Expect free-to-play on consoles and PC to take off even more. I don't think it's coincidence that the first free-to-play boom came in the wake of the 2008 financial crisis. People will be looking for affordable, long-term hobbies, and free-to-play can provide that.

I may return to this as other things occur to me.

Click to shrink...

Aren't free-to-play games a symptom of meat-grinder capitalism though? Where people have more money than free time, so are willing to invest in speeding up the reward process from their games. I think a less-employed fandom could demand more engagement and depth for their gaming dollar, rather than a grind they can no longer afford to skip.

 

[FeD]

Depending on how big the economic blowback is going to be. What's happening now is almost unprecedented with entire industries halting from one day to the next. The pessimist in me sees the situation only getting better the moment there's a vaccine and that's at least a year away. I think we're heading to one of the biggest recessions ever. But again that is the pessimist in me.

Next gen couldn't have come at a worse time.

 

[Starlatine]

VR and AR might suffer but i dont think cloud streaming will be affected, if anything it could thrive as a more affordable option

 

[JeffGubb]

I was going to post the same thing about movies being popular during the great depression. People need an escape.

I don't think I'd agree that AA is dead though; unless it means something different to my understanding? Wouldn't the likes of Super Lucky's Tale, Hellblade or Concrete Genie be AA? Or games from the likes of Paradox or Calypso? They're all very polished games made by medium-ish teams, but without the massive scope and budget of AAA games

Edit:

Aren't free-to-play games a symptom of meat-grinder capitalism though? Where people have more money than free time, so are willing to invest in speeding up the reward process from their games. I think a less-employed fandom could demand more engagement and depth for their gaming dollar, rather than a grind they can no longer afford to skip.

Click to shrink...

I mean, it's hard to untangle meat-grinder capitalism from all of it. But I just think that League of Legends comes out in 2009 because people have hardware they need for school/work but can't afford a $60-per-game habit.

 

[Video Games Are Dumb]

Wouldn't the likes of Super Lucky's Tale, Hellblade or Concrete Genie be AA?

Click to shrink...

Well, the original version of Lucky's tale was funded by Oculus, and then the Super version was published by Microsoft. Concrete Genie was Sony. Pretty big companies, you know?

Hellblade is a good example, I think. But even Ninja Theory joked it's an indie AAA. So...dunno!

 

[jon bones]

Aren't free-to-play games a symptom of meat-grinder capitalism though? Where people have more money than free time, so are willing to invest in speeding up the reward process from their games. I think a less-employed fandom could demand more engagement and depth for their gaming dollar, rather than a grind they can no longer afford to skip.

Click to shrink...

I don't think a less-employed fandom has gaming dollars to spend where we're going. With lower income, how can people justify $60 on a 20-hour solo experience on brand new hardware when they can download Destiny 2 and play 50 hours for free on their old console? Or Apex Legends on the phone they already own?

I mean, it's hard to untangle meat-grinder capitalism from all of it. But I just think that League of Legends comes out in 2009 because people have hardware they need for school/work but can't afford a $60-per-game habit.

Click to shrink...

I never put 2 and 2 together with the recession and League release, but that actually makes a ton of sense.

 

[tightinthejorts]

So many people are losing their jobs which means people with less money. I wouldn't be surprised if games started getting delays or didn't get release dates until there's an upturn of fortunes.

 

[Deleted member 51848]

Many game developers can no longer afford to be game developers, less risky projects get greenlit and everyone has to get very creative in how they approach the customer.

 

[Hilarious_Bearious]

I mean, it's hard to untangle meat-grinder capitalism from all of it. But I just think that League of Legends comes out in 2009 because people have hardware they need for school/work but can't afford a $60-per-game habit.

Click to shrink...

These games trick people who have money but don't want to spend it in one go. If this is the only way people can afford to game at all in the mid-future, it very well could be what awaits us (yuck). On the other hand, if people don't even have the money to be tricked out of it, or are too wary to be tricked into becoming whales, the business model could struggle.

I love big shiny blockbusters and well-made Indies... I hope the industry doesn't fall into F2P hell 😆

 

[Deleted member 16908]

Remind you how good Halo 5 feels.

 

[JeffGubb]

These games trick people who have money but don't want to spend it in one go. If this is the only way people can afford to game at all in the mid-future, it very well could be what awaits us (yuck). On the other hand, if people don't even have the money to be tricked out of it, or are too wary to be tricked into becoming whales, the business model could struggle.

I love big shiny blockbusters and well-made Indies... I hope the industry doesn't fall into F2P hell 😆

Click to shrink...

Free-to-play is not really about whales anymore. It's about lifetime values of $20 and then spending less than $20 to acquire those users. Expect the next wave of free-to-play to look like Warframe and Fortnite and not just gachapon and lootboxes.

 

[Pheace]

Slowdowns, delays. I don't think there's that many franchises that would be too shocked with a voice actor change but it could happen that we lose some well known VA's to corona, not that losing anyone else in the industry isn't equally distressing, the impact just wouldn't be as obvious.

 

[Radium217]

Honestly? Gaming casually and streaming are fairly cheap forms of entertainment. I don't foresee the industry as it stands struggling significantly. Especially with so many indie studios and consoles doing as well as they have. Sure they will take a knock but recently with the virus I've seen so many people wanting to get into it and start buying consoles and enjoy the comfort it provides in being solitary. I think it may even become more popular during the recession. Maybe not in total spend but in how it is viewed as a pastime.

 

[Deleted member 13645]

I wouldn't be surprised if it leads to higher sales of Switch Lite or the theoretical cheaper Xbox. Less money to spend will make the cheaper options more attractive.

 

[Golvellius]

Low-cost subscription services like Game Pass might see an MAU boost.

 

[djplaeskool]

We're going to see an even more pronounced shift to digital distribution.
Boosts in subscription service engagement.
Companies that have even moderate stakes in physical sales will feel the strain.

 

[Wireframe]

Entertainment is one of the few sectors that will probably thrive tbh.

 

[Hilarious_Bearious]

Well, the original version of Lucky's tale was funded by Oculus, and then the Super version was published by Microsoft. Concrete Genie was Sony. Pretty big companies, you know?

Hellblade is a good example, I think. But even Ninja Theory joked it's an indie AAA. So...dunno!

Click to shrink...

MS, Sony, Ubisoft and EA all pickup and publish games that get called "AA". It's also kiiiiind of a vague term. Like if a game loosely meets certain budgetary ranges, is of a certain quality and/or is made by a relatively small team, it can qualify.

Free-to-play is not really about whales anymore. It's about lifetime values of $20 and then spending less than $20 to acquire those users. Expect the next wave of free-to-play to look like Warframe and Fortnite and not just gachapon and lootboxes.

Click to shrink...

Some companies definitely are finding a decent balance of providing a quality free experience while offering worthwhile content to purchase. It's still not something I am interested in, but if it's the only way the industry could survive, it can survive without me.

 

[Madao]

F-Zero is truly dead now.

with the economy slowing down, Nintendo will probably need to scale back on some productions and that means even less chances to bring back dead series.

there'll be other companies suffering because non-essential items will be the first to go once people run out of savings and only have money for the really important stuff.

 

[Vormund]

I think this will affect next gen consoles the most. People might scrape some money for the occasional game but to get a new console might be a bit much in the current economic climate.

 

[Weltall Zero]

 

[Euler007]

Honestly I think in a recession environment people will still spend on video games. For the cost of knocking back a few beers at the local watering hole you can entertain yourself for an entire week by buying a game on sale on steam/PS store.

 

[Dee Dee]

This industry currently is actually profiting from the situation, or at least being a lot more stable than other sectors.
I work in translation, and almost all other departments (i.e. Tourism, Aircrafts ...) are struggling while the gaming department is trucking on with somewhat stable work count.

If you look at how the crisis affected the industry in China, and what we can probably expect to happen here soon, here's a twitter thread by Daniel Ahmad (Analyst from Niko Partners):


Please note that he is an analyst and provides links to articles and more details, so don't misquote his summary without checking his other stuff (I've seen him sigh at people taking his tweets out of context before).

People also need to realize that we will be in lockdown probably a lot longer than China was due to the lockdown being less strict. Speaking from a European perspective here, but the infection rate seems to keep growing or at least not slowing down as much as it was in the affected Asian regions.

 

[GungHo]

I think it will really hinge on young people getting their jobs back quickly.

 

[Serpens007]

This industry currently is actually profiting from the situation, or at least being a lot more stable than other sectors.
I work in translation, and almost all other departments (i.e. Tourism, Aircrafts ...) are struggling while the gaming department is trucking on with somewhat stable work count.

If you look at how the crisis affected the industry in China, and what we can probably expect to happen here soon, here's a twitter thread by Daniel Ahmad (Analyst from Niko Partners):


Please note that he is an analyst and provides links to articles and more details, so don't misquote his summary without checking his other stuff (I've seen him sigh at people taking his tweets out of context before).

People also need to realize that we will be in lockdown probably a lot longer than China was due to the lockdown being less strict. Speaking from a European perspective here, but the infection rate seems to keep growing or at least not slowing down as much as it was in the affected Asian regions.

Click to shrink...

US Industry may be hit harder due to the economic crash, but it may take longer for the VG industry to catch on the crisis. Probably hardware sales will not improve in a while, software may stay strong

 

[Dever]

Hard to say. People will have less disposable income. But on the other hand, when people do have disposable income they're more likely to spend it on indoor activities like games.

 

[MrHedin]

Part of me thinks its not going to really hurt game sales that much. Yes people are going to be hurting for money in the very near future and will have to start making budget decisions, of which video games are probably going to be low on their priority lists. But on the other hand, for some people games are going to be the only outlet for them to spend their "fun" money on as they can't go to the movies, restaurants/bars, shows, or anything else they would normally spend their entertainment money on. Where the balance between those two paths fall its probably too early to know right now but I think of anything it might be a slight positive for sales, at least based on current Steam active users.

Where I think things will get affected are in hardware and new game development. With the hardware, for new and existing lineups, its just going to be a matter of when production is going to be able to get back up to full speed and then deal with the backlog. I doubt right now that the launches of the two new consoles will get delayed but I bet they would be more supply constrained than usual. And then with game development, I have seen a lot of companies are working remotely now so all progress hasn't been stopped but my guess is that developmental progress might go a little more slowly right now and release dates (announced or unannounced) will likely start slipping a bit.

 

[Calabi]

Click to shrink...

You get more toads?

 

[ShinUltramanJ]

I don't expect the new consoles and high end GPUs to be flying off store shelves.

More and more people are out of work, and the bills aren't going to just vanish.