Video Game Crash 2.0 is Officially HERE!

0:00This is Belie, one network, every topic, everywhere. So the video game industry is officially crashing, I guess, now that we have Epic Game CEO Tim Sweeney saying it, I've been talking about this for at least six or eight months now and I said it felt like another crash and people misunderstand what a crash looks like. They think that that means there are no video games available, there are no Hollywood movies available, whatever is crashing, right? It just means that the bubble has burst, things are on a decline overall, there are still going to be video games but we're seeing massive, massive amounts of layoffs and cutbacks and just this morning it was announced that Bungie is going to sublet a studio and that is not a good sign, that tells me that things are not looking good over there, Marathon's not pulling the numbers, they were hoping

1:02it would pull and this is after the shutdown of Destiny 2 and things are tough all over. We have companies being more predatory with monetization which I don't think is going to work out very well for them, I really don't. But they're doing what they can do to survive, and really they have to thrive because that's what the shareholders expect. I was there for the first video game crash in the 1980s, the console crash and I know a lot of people tried to argue with me last video that there was no video game crash because there were computer games, arcade games and all that and it's like yeah but there's still a crash because Atari was the market leader and they imploded and Atari games went from being a must-haves every Christmas to literally a dollar in the bargain bin at a lot of stores, they were selling them in grocery stores, they were selling them, that was little at the time but I remember seeing Atari games sitting collecting dust for years, years after the peak of the 2600 and you know,

2:07ColecoVision, same thing, and television, all that stuff. So the bottom fell out of the home console market. PCs, yeah, they kept on going. Arcades thrived but that market, that home market collapsed and that looks very similar to what is happening now where there was so much just overspending on AAA games that nobody bought that it's not sustainable and this is why everything is collapsing. When you've got Asha Sharma coming out and saying, you know, Microsoft saying that Microsoft, the company is subsidizing Xbox. It means Xbox is not pulling its own weight. This is why they're making these ridiculous decisions because it feels like a Hail Mary pass to try to save what's left of the video game industry, the AAA video game industry before it's too late. Now we've got AI on top of it. So a lot of these people can be replaced and will be replaced to make games cheaper but also anybody can make video games now. So that's going to change things. They're going

3:12to be small teams, you know, two, three, four people, maybe even one person making games as good as it would have taken a whole studio to make just a couple of years ago using AI tools. So things are going to look very different. It's going to be very fragmented. I think it's going to look more like Amazon with Kindle where you're going to have a few breakouts but for the most part, you're going to have a bunch of Kindle authors that make very little money overall because there's so much content out there, right? So it's going to be even more competitive. Basically, it's going to be like steam but everywhere and people are kind of falling out of love with consoles because of how predatory they are and Sony saying the quiet part out loud that they're going to monetize the shit out of you. They're not interested in selling you hardware. They just want to monetize you. And that's what the CEO said. So now we've got another CEO again, Tim Swini from Epic, which would be Fortnite. He's a major player saying the crash is here. So let's talk about it before we get into it. And for the police subscribe for more pop culture

4:15news, views, and rants guys, if you'd like more clownfish TV, go out to clownfishtv.com. Again, we have podcasts and episodes out there you will not find anywhere else. If you'd like to support the channel, you can get access to those for only five bucks a month. So there we go, guys, you can subscribe to clownfishtv. Oh my god, we don't have any video games though. But we do have tabletop games coming. So keep an eye out for that. Again, clownfishtv.com. All right, this is coming from games industry.biz. This is Tim Swini. This is the worst crash we've seen since the 1980s. Industry experts speak to Edge magazine's Alex Spencer about how the industry is facing crash 2.0. And people said there isn't a crash. It's fine here. It's all fine here, guys. Go out to gaminglayoffs.com and you tell me how fine things are. Show games just lay people off. Shells here in Pittsburgh. And they were subsidized by the government. I think they were getting like government money and they just laid a bunch of people off. So yeah, it's not looking good, guys. It's like daily. It is daily. I mean, look at this. 226 layoffs by month July 3.7,000 people

5:23gone. It's crazy because that's mid year. So they're going to look at the numbers and be like, yep, we need to get rid of people. Tim Swini said the industry is going through its biggest crash since the 1980s in the latest issue of Edge magazine, contributing editor Alex Spencer spoke with nine experts in the issue for their views on crash 2.0. Swini noted the industry faces internal dysfunction, such as the high cost of triple-A game development and outside challenges including the ongoing component shortage. It's an unexpected severe disruption. He said in reference to the component crisis, there's an unprecedented wave of investment in building AI systems and data centers based on the belief that they're going to have a really transformational role in the economy and the scale of the economic opportunity there means they can outbid the entire entertainment industry for all the components. That is actually very true. What is going on now is that Nvidia isn't even mentioning video games and its reports now. Like gaming makes up what I

6:24think is like a less than 5% of their revenue. It's a rounding error. It's money you find in the couch cushions. It's sales tax. So that's what it is at this point. So yeah, they're not investing in games. They said we're going to the short end of the stick and the prices of RAM and storage are quadrupling and not necessarily stopping there. We should expect there's just going to be a continual supply of crisis for all gaming relevant hardware for the next three years. The only solution I think is going to be building massive new factories to meet the world's capacity demands and that will happen eventually. Playable World CEO, Raff, Raff, Coster has warned for years about how expensive game development has become. I think the first time I spoke about hey, Coster is going to kill us was back in 2005. Back then he concluded that the cost of game development goes up about 10 times every decade. Yeah, they're spending more money on video games now and they're spending on movies. He repeated his analysis in 2017 using data

7:28from 250 releases over 30 years and found the same result. After adjusting for inflation, triple-A game development for consoles or PC cost about a million dollars in the mid 1990s, 10 million in 2005 and 100 million in 2015. I remember when fall fantasy 7 came out and they spent like 30 or 40 million dollars on it, I think at the time. It was one of, if not the most expensive game at the time, but the reason it costs so much is square had to go out and buy all the graphics workstations to do 3D graphics. They were going to do a bunch of games with those, which they did. And they did several PS1 error games, PS2 error games with them. But that was unheard of. Like they're like they're spending as much money on a video game as they're spending on a movie and now that's the norm. It's crazy. Sweeney pointed out that budgets now reach between $250 and $400 million for one game. Former PlayStation boss Sean Layden said if developers keep budgets

8:34and costs low, they can support games with a lower probability of financial success. By which I mean, it's only going to make $50 million. Well, okay, let's find a model we're making $50 million is a good thing, not a bad thing. I think that's where the future is going to come from. People moving into that space. Yeah, and they're going to do it with smaller teams and they're going to need fewer people. And they're not going to need these big studios anymore. And that's why they're laying people off. He also described financial resources as the great constraint that never gets expanded. That is every business, dude. Do you need to model an entire world that takes 45 minutes to walk across if there's not a reason for that. If it's not pushing the experience or story forward, it's just a party trick. You spend a bunch of time, which means money on something that doesn't mean anything. A costor believes the only way out of Crash 2.0 is a complete reset. Our industry cycles. Unless we hit singularity, a platform will come along that changes things. AI is not a platform reset where costs get lower. AI is just a computer getting bigger.

9:36So the gas will keep filling it. It actually is incredibly expensive in the end. So most of the benefit flows upwards. AI is changing things rapidly. And it also doesn't matter. This is actually true. I think people think AI is magic. And it's really not. To me, AI is it's no different. People being like, I'm not going to use anything with generative AI. That's like saying, I'm not going to play any games that were developed on a Pentium computer. Any other computer is fine. But not a Pentium computer because I don't like the word Pentium. It reminds me of Pentagram, which is Satanic. And I'm a good boy. You know what I'm saying? It's just so weird. Former Tencent Business Development Director Amir sat that, also talked about how AI is affecting team size. Games has been made by one or two people. That's great. He noted by more interested in what would have been a 50 to 60 person team becoming a 20 person team and a 400 person team becoming a 100 person team as people are trying to find more efficient ways to do things. If you're, this is interesting. This is way say, say, if you're a game developer based

10:41in North America or Western Europe in a traditional AAA studio, that is ground zero for destruction. Ground zero for destruction. Wow. I've seen firms that made staff reductions because they thought they could do to AI. They're now realizing they cut too many people. Yeah, you still need people. I think this is as bad as the 83 crash if you're a game developer based in North America. That's ground zero. That is insane. Well, let's talk about Bungie because it's, you know, not looking too good for them. Bungie studios up for sublies after heavy destiny to layoffs, which don't bow well. Bungie's exploring options to sub lease its Bellevue headquarters. Yeah, Marathon's not going to save them guys. Destiny to a marathon maker, Bungie formerly Halo studio Bungie, one of the most profitable and well respected studios in all of gaming has completely effed up to the point where they have to sublet their space. They're exploring options to lease out

11:43most of its Bellevue Washington studio following heavy layoffs and shifts to digital first employment. Bungie confirmed that it's looking to sublet its campus in a statement to the game post, which spotted a listing for a 210,000 square foot studio. The offer runs through 2035. So, almost a decade. You should not read this news as a sign that Bungie is immediately closing its doors. In many ways, it's no surprise that more accurately reflects the physical and financial needs of the studio's dramatically smaller team, but certainly is bad news. The studio transitioned to a digital first model several years ago, and this move reflects the teams evolving workspace needs. There are fewer people employed at the studio and more of the people are remote. They don't need as much space. It saves money saves money. Marathon's failing and destiny to failed. Bungie expanded into this building years ago as part of a Pete Parsons back plan to become a multi-franchised studio. Well, look how that worked out. Pete Parsons and friends. In the year since, Parsons has left,

12:46as replacement has left multiple incubation projects have been called. Destiny 2 has been cancelled. Marathon, the only other game Bungie has made and released in a decade, has struggled to maintain an audience. Womp, womp. Yeah, it's not looking good for that. It really isn't. Counting Marathon and Destiny 2, Bungie reportedly had five or six games in development at one point, apparently including a gension impact like fantasy game. Interesting. These projects seemingly evaporated not long after Sony bought Bungie for $3.6 billion, and studio execs have been criticized for allegedly juicing incubation to pump up the companies perceived value. Interesting. But yeah, it's not looking good, guys. Just all over the place, especially triple-way gaming. It's ground zero for destruction. It is game over for a lot of these companies, and I agree. I think we need a reset of a lot of entertainment businesses right now because everything has gotten just absolutely ridiculous, and you get to a place where it doesn't

13:49even make sense to try to renovate the property. You just have to raise it and start over. Gonna wrap it up. Please subscribe. We'll talk later.