Was There/Will there be a videogame bubble?

[leatherrebel5150]

I'm wondering if there has been or will be a big videogame bubble that has/will burst causing prices to just crash. I already know about the crash in the early '80s I thinking more along the lines of what happened to comics and baseball cards in the '90's. Where people saw a profit to be made in the collectors market for these items and bought a bunch of stuff up planning on making bank when they sold it only to have the market fall out and prices plummet.

[Bojay1997]

Prices have been declining for 2600 stuff over the past few years (although admittedly not everything) and rising rapidly on sealed games and NES/SNES/Genesis stuff (again, not everything). The whole VGA thing and the emphasis on buy it now rather than traditional auctions on Ebay has taken games that still sell for fairly reasonable prices in open Ebay auctions when they show up and skyrocketed their sales prices. I suspect in a few years as the market settles back down again, you will see a lot of games that are going for hundreds or even thousands of dollars collapsing back down to a reasonable market level. I would hesitate to call it a bubble though, because the vast majority of collectors I know don't pay the crazy prices right now and could care less about grading or even sealed stuff. As such, the bubble will only burst for a very small group of collectors.

[Orion Pimpdaddy]

Nobody knows, but I sure wouldn't consider used video games an investment.

[xelement5x]

Nobody knows, but I sure wouldn't consider used video games an investment.

Quoted for truth. Plus, I know there are games I want that are going crazy right now, but I'm in no rush to acquire them now since if I wait either my interest in them will wane, or they'll be a much more reasonable price. However, wait to long and the cheap classics you see now could be caught up in the next bubble.

[SpaceFlea]

However, wait to long and the cheap classics you see now could be caught up in the next bubble.

Would that be a bubble... in a bubble. You sir, just blew my mind!

[Icarus Moonsight]

There has to be a boom before there is a bust. I haven't seen anything in video games that follows a boom/bust cycle by the numbers (save prices at retail...). The after market price mobility is totally demand driven. The thing to watch most for is supply disruption (discovered NOS, digital release, bootlegs/repro proliferation, to a lesser extent - flash carts).

[maxlords]

The market goes through demand cycles....10 years ago it was imports and 2600 stuff that was high. I've seen spikes and drops in prices for Saturn, Sega CD, 2600, Sega Master System, and even PS1. It seems like nothing (other than key titles) stays high for longer than 5 -7 years. Some of the really rare stuff even drops in demand here and there and shows price decreases.

The catch is that people that pay say $500 for Earthbound thinking it's an investment will NOT sell it if and when the price bottoms out. Say it goes back down to $200 and you paid $500. Would you sell it? Or hang onto it in the hopes it would go back up again?

You see the same thing in any collectible market. Demand rises and falls. Comics and trading cards are the worst for this...varying by season or movies that come out or a good storyline, then dropping again like crazy. Games do it too...but they do it slower it seems like.

You'll never see a complete market crash like the 2600 did again or even a across the board 'bubble burst' unless the economy crashes completely though...and if that happens...most of us won't really be concerned with buying video games.

[Icarus Moonsight]

Thanks for adding that part, almost forgot about the nostalgia cycles. Those price cycles are reflective of time preference, or "Got to get it all now" goals where more money is valued less than waiting over time to acquire. It's not bubble up, or bust down. It's buyer demand, simple time/money calculations. That's it. It might be volatile, but it's still only flux. The bubble is a lie. Even the crash was simply a sever diminishing of demand. Bubbles are created top down, not bottom up.

[Bojay1997]

Thanks for adding that part, almost forgot about the nostalgia cycles. Those price cycles are reflective of time preference, or "Got to get it all now" goals where more money is valued less than waiting over time to acquire. It's not bubble up, or bust down. It's buyer demand, simple time/money calculations. That's it. It might be volatile, but it's still only flux. The bubble is a lie. Even the crash was simply a sever diminishing of demand. Bubbles are created top down, not bottom up.

I disagree. A bubble can be created at any level whether that's on the supplier side, the demand side or anywhere in between. It's a situation where the actual or perceived demand is stimulated or increased beyond the intrinsic or objective value of the item or collectible. In comics, for example, there was a bubble in the 1990s fueled by the artificial perception in the market that values would continue to increase and that supply was well below demand. It turned out that wasn't the case at all and people were simply stockpiling mass produced comics and paying well beyond the actual or objective value of those comics. When people started trying to sell to get out, the bubble burst and values collapsed. Similarly, I sincerely believe that the whole sealed game/VGA side of video game collecting is one massive bubble right now and at some point, people are going to realize that a mass produced modern consumer item like a game cannot possibly be worth thousands of dollars.

[Oobgarm]

With games, I don't think so. The comic and baseball card market got too bloated with way too much stuff to collect, and their quality got less and less. Not to mention that everyone and their brother jumped on that bandwagon with the thought of buying to resell later...I've not seen this happen with games to the same degree.

While we are starting to see that quality hit in regard to Wii and DS software, I don't think that things will ever bloat to a point of oversaturation in the collecting world. The new game market may crash in the not too distant future, but those of us that collect will be all over it thanks to the low prices.

[Icarus Moonsight]

I disagree. A bubble can be created at any level whether that's on the supplier side, the demand side or anywhere in between.

This is like blaming African infants for creating the conditions of their starvation... O_O

We're going to have to leave it alone there until you figure out the difference between a supply-side bubble rally and a genuine increase in demand. Not to mention we are talking about games that are no longer being produced, as in, no longer have a supply input...

[Bojay1997]

This is like blaming African infants for creating the conditions of their starvation... O_O

We're going to have to leave it alone there until you figure out the difference between a supply-side bubble rally and a genuine increase in demand. Not to mention we are talking about games that are no longer being produced, as in, no longer have a supply input...

Not sure how that reference is relevant at all. I'm always fascinated that you continue to post in these threads and generally everyone ignores you because you are either truly so brilliant that none of us understand your points or so unable to communicate in anything but jargon that you are simply restating the obvious in an unnecessarily complex manner.

The OP was using the more generic form of the concept of a "bubble" as in values and prices or supply rapidly increasing beyond the actual intrinsic demand or value and then just as suddenly collapsing. As I said, that can occur for a variety of reasons and it really doesn't matter what the specific cause is, only the impact on prices and values. Just because something is no longer being produced doesn't mean there could not be a continuing supply input. In fact, over the past decade, there have been multiple occasions where massive restock of long out of print games has popped up, collapsing the actual market value of particular titles. In addition, plenty of people collect games that have just been released and appear to have gone out of print, only to have someone come along and do a reprint. I would agree that there hasn't been anywhere near the boom of the comic, baseball card or even toy markets, but there is a small niche group of collectors of sealed, VGA and numerically rare games that have created the makings of what I believe to be a bubble as that term is used by lay people, not economists.

[portnoyd]

With games, I don't think so. The comic and baseball card market got too bloated with way too much stuff to collect, and their quality got less and less. Not to mention that everyone and their brother jumped on that bandwagon with the thought of buying to resell later...I've not seen this happen with games to the same degree.

Only thing trying to act in this fashion are limited editions, but thankfully they are sparse enough never to the point like special covers were for comics in the early 90s.


Not sure how that reference is relevant at all. I'm always fascinated that you continue to post in these threads and generally everyone ignores you because you are either truly so brilliant that none of us understand your points or so unable to communicate in anything but jargon that you are simply restating the obvious in an unnecessarily complex manner.

Not sure how that reference is relevant at all. I'm always fascinated that you continue to post in these threads and generally everyone ignores you because you are either truly so brilliant that none of us understand your points or so unable to communicate in anything but jargon that you are simply restating the obvious in an unnecessarily complex manner.

[Icarus Moonsight]

Intrinsic value... I don't subscribe to that. It's hokum. There is no 'science' of value in that sense. Conversely, psychological bubbles (what you are describing and wrongly characterizing as a demand bubble) are an effect of speculator mania. A dysfunction, not rational investment. If you want to give irrational action equal treatment as the rational then we might as well call Multi-Level Marketing a Bubble Business Model.

Speculators and fool money chasers will always get wiped out, given time. After they've given their money, of course.

[chrisbid]

the bubble really only exists in the very top end. games like stadium events and nwc have garnered national media attention due to their extremely high prices. that coverage may bring in non-gamers with deep pockets looking to make a few dollars.

games that sell for a few hundred dollars wont qualify

[retrocollectorguy]

The 'bubble' wont burst immediately like it did with the real estate or stock market but rather slowly, even slow enough so that it would take a few years to notice. NES in general might be the next major console to follow Atari.

[wingzrow]

For what it's worth, 90% of the NES library can be bought for $5.00 a piece off eBay.

[NayusDante]

I think that digital distribution is going to lessen the impact, if and when it happens.

Also consider "evergreen" compilations and re-releases... You know how you can go to your local megamart and buy Chicago's Greatest Hits on the end of the checkout aisle, along with Monty Python and the Holy Grail? Games are just starting to get to where music and movies have been for a while. 90% of consumers won't care about owning the original format, so the collector market will probably stabilize for a long time.

[The 1 2 P]

I think that digital distribution is going to lessen the impact, if and when it happens.

I think this has already affected some titles such as Marvel Vs Capcom 2, Castlevania: SOTN, Final Fantasy VII and others. Of course, FF7 should have never been going for such a high secondary market value in the first place considering how many millions of copies are out there. I've never truely understood the part of the video game market where an item that has sold millions can suddenly start selling for more than it did at original retail and then other games that were severely underprinted(less than 50,000) will sell for peanuts, even with substantial demand for it. Like someone else already said, used video games aren't exactly the best investment option.

[Haoie]

Go invest in gold or something if you want profits, not games!

[retrocollectorguy]

Go invest in gold or something if you want profits, not games!

You would have to be a fool to invest in gold right now

[Parodius Duh!]

as long as ePay exists, prices are always going to fluctuate and tend to be on the higher side because of Idiots that dont know how to do research. Example: MC Mario pirate cart last went on ebay for 220.00 bucks!!! I just got my copy off of a forum for 25.00 bucks!!! If I were to put this up on ePay will it go for a ridiculous sum again? Most likely, but maybe not. Will I put it on ePay? NO, cause Im not a dick.

[goatdan]

I disagree. A bubble can be created at any level whether that's on the supplier side, the demand side or anywhere in between. It's a situation where the actual or perceived demand is stimulated or increased beyond the intrinsic or objective value of the item or collectible. In comics, for example, there was a bubble in the 1990s fueled by the artificial perception in the market that values would continue to increase and that supply was well below demand. It turned out that wasn't the case at all and people were simply stockpiling mass produced comics and paying well beyond the actual or objective value of those comics. When people started trying to sell to get out, the bubble burst and values collapsed. Similarly, I sincerely believe that the whole sealed game/VGA side of video game collecting is one massive bubble right now and at some point, people are going to realize that a mass produced modern consumer item like a game cannot possibly be worth thousands of dollars.

The difference though is that the market for both cards and comics that burst in the 90s was driven by collectors buying these items with the hope that they could resell in the future. When people were buying SNES games in the 90s (for instance), the main purpose wasn't to put them on a shelf and then sell them 10 years later for a higher price. Because the main market was to buy and play these, I do not see the market collapsing -- you could argue it already has on most games, as *very few* games are worth more than their initial sale price, even sealed.

I sold a number of NES carts sealed last year, and some of them sold for less than $10. Those same games were probably $50-$60 new when they were released.

[Icarus Moonsight]

You would have to be a fool to invest in gold right now

:above me:

People have been saying this since gold was $300 per troy ounce... Wife said the same thing a few years ago when I wanted to convert our savings over to gold at $700. She gets pissed if I ever bring it up. LOL

[Bojay1997]

The difference though is that the market for both cards and comics that burst in the 90s was driven by collectors buying these items with the hope that they could resell in the future. When people were buying SNES games in the 90s (for instance), the main purpose wasn't to put them on a shelf and then sell them 10 years later for a higher price. Because the main market was to buy and play these, I do not see the market collapsing -- you could argue it already has on most games, as *very few* games are worth more than their initial sale price, even sealed.

I sold a number of NES carts sealed last year, and some of them sold for less than $10. Those same games were probably $50-$60 new when they were released.

I generally agree with your points which is why I have been focusing my analysis on just that part of the market that has been collecting "valuable" sealed and VGA games. Paying hundreds or even thousands of dollars for mass produced games from the 80s through today and then flipping them on Ebay for absurd BIN prices all in the naive hope that demand from other collectors and prices will continue to grow is where I think you will see a bubble burst. For most collectors, including sealed collectors who refuse to pay these insane prices, there will never be a bubble to burst because frankly, it's not about money to them/us anyway, it's about building a collection for our personal enjoyment and if someone discovers a massive warehouse of sealed or rare games, it doesn't have any impact on the value we place on our personal collections. People who are paying $500 to $1000 for copies of Mario games or black box NES games and expect that they will be able to sell at a profit down the road when they stop collecting are the ones who are at risk from the bubble, not people who are just collecting what they like and have no expectation of ever making a profit or even breaking even on their collection.

[goatdan]

I generally agree with your points which is why I have been focusing my analysis on just that part of the market that has been collecting "valuable" sealed and VGA games. Paying hundreds or even thousands of dollars for mass produced games from the 80s through today and then flipping them on Ebay for absurd BIN prices all in the naive hope that demand from other collectors and prices will continue to grow is where I think you will see a bubble burst. For most collectors, including sealed collectors who refuse to pay these insane prices, there will never be a bubble to burst because frankly, it's not about money to them/us anyway, it's about building a collection for our personal enjoyment and if someone discovers a massive warehouse of sealed or rare games, it doesn't have any impact on the value we place on our personal collections. People who are paying $500 to $1000 for copies of Mario games or black box NES games and expect that they will be able to sell at a profit down the road when they stop collecting are the ones who are at risk from the bubble, not people who are just collecting what they like and have no expectation of ever making a profit or even breaking even on their collection.

Okay, gotcha -- I wasn't sure exactly what you were looking at there, but that makes more sense.

Having said that, to be fair, the point I made still sort of applies -- sealed / graded games are in some ways like graded comics that are found. You could grade your 90s comic collection all day, and it wouldn't really be worth anything. I could grade my To The Earth NES game that I kept because I loved the game as a kid and love the art -- I had it on eBay with a $10 reserve and it didn't make it. But, that doesn't mean that those are going to suddenly be worth a bunch.

For a black label NES title, people didn't buy them to keep them unopened, and even if there is a huge warehouse find of them, it isn't going to impact them all. I personally don't think that too many people are buying these right now to flip them and sell them in a year for a big profit, I see people buying them as a centerpiece to their collection -- collect Final Fantasy games and have everything? A graded Final Fantasy would be a hell of a centerpiece, so why not? Based on that, you do still have a number of games in people's collection that could be graded and increase the quantity in the market, but one of the things that I like about gaming as a hobby is that most people collect games so that they can play games, they don't collect games so that they can stare at them. Because of that, the market for sealed / graded games I think is kept lower just because of that -- I have a pretty huge collection, and I have ZERO interest in getting sealed games. In fact, I kind of dislike it, because then I rarely open the stuff and the point of me amassing it is to *play* it.

But anyway, with the combination of limited market, limited availability, and the original purchase intent not being to resell them, and I think that we have a very good shot at not seeing a huge bubble deflate in the future. Graded games will continue to be those games that are in high demand, and those that no one remembers will continue to just sort of exist. I don't foresee Mario, Zelda, Final Fantasy, or various other RPGs suddenly now becoming way less popular.

[Baloo]

There are a few main things that keep video games from ever causing a burst in the market a la comic books and baseball cards in the 90s.

First, the going price for games first and foremost is driven not by rarity, but by playability. People will pay $200 for Panzer Dragoon Saga any day of the week, but good luck finding someone who will pay that for equally as rare games that play like shit. Who's ever going to pay that for Noah's 3D Ark? There's not enough demand.

Two, as someone already said, there's relatively few variants in video games compared to baseball cards and comic books, and even the games that do have variants (Working Designs games for example) don't really have one variant go for considerably more than another. And video games aren't, and have never been cheap enough to make it so that people can afford to buy 3 and 4 versions of the same game. Hell, you probably won't even find someone who's going to buy both the original version of the game and the collector's edition. Once you have the edition with more goodies, the original becomes worth even less. And I haven't really heard of a game that has been printed in such low quantities to drive up demand.

And three, the video game market will never have most of the buying being done by collectors looking to resell down the line. Very few video games become worth even equal to their original retail value, let alone more than what the went for when they first came out. Most video games usually plunge into the $5-10 range within 5 or 10 years of being released, which means your chances of buying in hopes that the game itself will actually be worth something is very slim. Collectors aren't going to dive into a market that has been shown to have it's product become worth 10% of what it originally went for new, that'd be similar to simply throwing your money into a pit.

And the prices in the video game market fluctuate even more now, due to factors like re-releases, popularity due to sequels and reboots, and the new age of Virtual Console and Xbox Live Arcade where you can get a game that goes for $30+ for $5-8 on average. And you even cut out the $25-50 for the system needed to play it as well!

Long story short, it won't happen.

[calthaer]

Nobody knows, but I sure wouldn't consider used video games an investment.

Seriously...focus primarily on the diversification and makeup of your 401k or IRA, not the prices of games for various systems. It'll be better for you in the long run.

[Bojay1997]

Okay, gotcha -- I wasn't sure exactly what you were looking at there, but that makes more sense.

Having said that, to be fair, the point I made still sort of applies -- sealed / graded games are in some ways like graded comics that are found. You could grade your 90s comic collection all day, and it wouldn't really be worth anything. I could grade my To The Earth NES game that I kept because I loved the game as a kid and love the art -- I had it on eBay with a $10 reserve and it didn't make it. But, that doesn't mean that those are going to suddenly be worth a bunch.

For a black label NES title, people didn't buy them to keep them unopened, and even if there is a huge warehouse find of them, it isn't going to impact them all. I personally don't think that too many people are buying these right now to flip them and sell them in a year for a big profit, I see people buying them as a centerpiece to their collection -- collect Final Fantasy games and have everything? A graded Final Fantasy would be a hell of a centerpiece, so why not? Based on that, you do still have a number of games in people's collection that could be graded and increase the quantity in the market, but one of the things that I like about gaming as a hobby is that most people collect games so that they can play games, they don't collect games so that they can stare at them. Because of that, the market for sealed / graded games I think is kept lower just because of that -- I have a pretty huge collection, and I have ZERO interest in getting sealed games. In fact, I kind of dislike it, because then I rarely open the stuff and the point of me amassing it is to *play* it.

But anyway, with the combination of limited market, limited availability, and the original purchase intent not being to resell them, and I think that we have a very good shot at not seeing a huge bubble deflate in the future. Graded games will continue to be those games that are in high demand, and those that no one remembers will continue to just sort of exist. I don't foresee Mario, Zelda, Final Fantasy, or various other RPGs suddenly now becoming way less popular.

Sure, I see your points, but when VGA graded copies of Playstation games which were pressed in the millions like FFVII are going for hundreds of dollars each, there is clearly a price point being set which is out of all proportion to actual supply. There are also people paying $150-$200 for graded copies of games still available at Best Buy on the Wii. Similarly, there have been hundreds of documented sales of NES graded games that are hitting hundreds of dollars all the way up to $1200. I find it hard to believe that people are paying that kind of money without believing on some level that they will be able to resell their graded games for at least that much if not more down the road. Heck, there are hundreds of VGA graded games on Ebay for sale at any given moment, so obviously some significant percentage of people having games graded is involved in flipping and trying to generate a profit.

[j_factor]

Sure, I see your points, but when VGA graded copies of Playstation games which were pressed in the millions like FFVII are going for hundreds of dollars each, there is clearly a price point being set which is out of all proportion to actual supply. There are also people paying $150-$200 for graded copies of games still available at Best Buy on the Wii. Similarly, there have been hundreds of documented sales of NES graded games that are hitting hundreds of dollars all the way up to $1200.

A fool and his money are soon parted. :)

[Icarus Moonsight]

I would have to think that anyone that buys a graded game is in it for pure collecting and display aesthetics, or is looking at it as an investment. One is paying a lot of money for non-functional shelf ornaments and the other is bat-shit nuts.

[goatdan]

Sure, I see your points, but when VGA graded copies of Playstation games which were pressed in the millions like FFVII are going for hundreds of dollars each, there is clearly a price point being set which is out of all proportion to actual supply.

But, the question really comes down to even though millions of Final Fantasy VIIs were pressed, how many of those that were not pressed are still unopened? I would guess not nearly that many. And, you could argue how many of those didn't get any shelf wear from stickers on the games, little tears from moving them back and forth and so on? I have a box of stuff that was sent to me directly from a game company, and a significant portion of that stuff had slight damage to the cases and whatnot.

So anyway, the point is that maybe you've got a few of these, but you've also got millions of fans of the games who bought it, and if even .1% of the people who loved it originally are interested in getting a perfect copy of it again, demand does far outweigh supply.

Having said all that, I personally do not understand how / why the perfection of a game's shrinkwrap can have such a bearing on price -- Now, I *hate* going to GameStop and buying anything that comes opened, but if I get a sealed copy and it has a slight issue with the packaging, it isn't like I get all worried about it. But then again, I'm definitely not the target market of this, as for the most part, the games that I want to have I want to be able to play. And, in the few cases where I don't care as much about playing them, I still like to be able to look at them.


There are also people paying $150-$200 for graded copies of games still available at Best Buy on the Wii. Similarly, there have been hundreds of documented sales of NES graded games that are hitting hundreds of dollars all the way up to $1200. I find it hard to believe that people are paying that kind of money without believing on some level that they will be able to resell their graded games for at least that much if not more down the road.

Well, yeah -- I give you that -- but that is much the same as with anything that is a collectible, you buy it with the impression that it will be worth at least as much down the road, or will lose little value. Graded video games are something some people like to have for that exact reason. I really doubt though the market will become huge for them, although I don't think it will fall off.


Heck, there are hundreds of VGA graded games on Ebay for sale at any given moment, so obviously some significant percentage of people having games graded is involved in flipping and trying to generate a profit.

Is that flipping, or is that the people buying sealed games and having them graded specifically to increase their value? I think it's more of the latter. Flipping, yeah -- but not buying a graded game to flip as another graded game.

[retrocollectorguy]

:above me:

People have been saying this since gold was $300 per troy ounce... Wife said the same thing a few years ago when I wanted to convert our savings over to gold at $700. She gets pissed if I ever bring it up. LOL

Not to start a gold debate here but who in their right mind said that at $300? The same people who said its not wise buying real estate last year?

Its the bandwagon jumpers who are saying buy gold right now. The market has all the signs of an upcoming bubble, its just been delayed by a few years.

[kool kitty89]

I'm wondering if there has been or will be a big videogame bubble that has/will burst causing prices to just crash. I already know about the crash in the early '80s I thinking more along the lines of what happened to comics and baseball cards in the '90's. Where people saw a profit to be made in the collectors market for these items and bought a bunch of stuff up planning on making bank when they sold it only to have the market fall out and prices plummet.
I doubt we'll ever have another crash like North America saw in the mid 80s, but there have been several major slumps and market upsets since then, and there almost certainly will be more. (one of the most notable is the early 90s slump -limited mainly to North America- that started in mid 1993 and didn't fully recover until late 1996 or -arguably- 1997 -the market was still very active, but overall market share/activity/cash flow dropped dramatically following a peak in 1992, at least from several accounts and documents I've seen -a mix of magazine articles, formal editorials, and business studies on the market -granted, some of the thing "market experts" were saying were the same as they had back in 1990 -market saturation, inevitable decline, criticism of companies "milking" their hardware too long, etc -the latter is utter BS since all successful companies need that late-gen "milking" for sustained profits, after all it IS the most profitable period of any game console's life: after a couple years of initial losses or very moderate profits -especially taking R&D and advertising costs into account- you start to pull real profits and then -if you're really successful- you can pull into that really sweet spot on the late-generation market with very high profits on software -a lot of re-releases at that- with hardware selling at a significant profit -when it was near or below cost before- and eventually transitioning into the full-on budget market niche for a few more years -the latter usually happens around the time the next-gen consoles hit mainstream and take the majority market share away from the old systems, like the NES around 1992 in the US, or the Genesis/SNES around 1996, PSX around 2001/2002, PS2 around 2007, etc, etc)




Back on the issue of why the 80s crash won't happen again:
There's several key factors that led to that crash:
major competition limited to a single region (North America -mainly the continental US),

the market was relatively new and still evolving, you had some major management problems in several companies that led to instability on the market (most significantly, Atari Inc's own management problems, especially the faulty distribution system than led to oversaturation of the market and substantial losses when excessive supply led to massive price drops and heavy returns from retail to distributors/parent companies -one of the major problems was that retail WASN'T stuck with those products, they could return them to Atari/Coleco/etc and those companies would then bleed tons more cache than if retailers had actually been burdened with more responsibility -which is one major indication of how the "retailer were burned by video games" was a bit blown out of proportion).

Then you had the overreaction of many video game companies that led to collapse rather than "riding out the storm" so to speak (Mattel and Coleco definitely could have pulled through profitably . . . coleco's botched Adam computer -not to mention Mattels various computer problems- probably hurt them a lot more than the video game crash -albeit, the Adam in particular, if done right might have bridged the CV through the crash more successfully)

And then you had the home computer wars really driving the crash. Hell, it might have been more like the 1977 crash or mid 90s slump without the home computer wars. (imagine what would have happened in 1993-95 if high-quality gaming class PCs suddenly dropped to prices on par with -or only slightly more expensive than- contemporary game consoles -say $300-500- with games being significantly cheaper still; that's just what happened with the VIC/TI99/C64/A8-bit/CoCo/etc in 1983 in the US -in the C64's case, it was nominally about $200 not including peripherals like a disk drive, but with the trade-in of ANY game console or computer you'd get a $99 rebate for summer through winter of 1983 -the deal ended in 1984)

So you can see there was some major fallout from the home computer wars in the US, that made a massive mess out of an aready substantial problem in the console market. (actually, it trashed the computer market as well, ruining -or nearly ruining- many smaller players or those with some management problems -possibly being corrected; but, then again, that's the business world for you ;) . . . and some companies were so screwed up with their market models -like TI- that they really screwed themselves anyway, some others like Atari or Tandy were hurt more unfairly -then again, Tandy managed to become one of the most successful PC clone manufacturers in the mid/late 80s following that and Atari -if you consider Atari Corp "atari"- managed to bring out the dominant late 80s 16-bit computing platform in Europe -which started declining around 1988/89 when the Amiga matched them in price and then actually gained the upper had -in market share- in the early 90s before collapsing under their own weight -a few years before Atari Corp was liquidated interestingly, and actually for a substantial profit rather than ending in bankruptcy like CBM -albeit, I'm not sure that there wasn't any profits for shareholders/CEO/etc after CBM's liquidation, so that's not necessarily a fair comparison . . . still, Atari Corp was shut down under its own management power and never did go bankrupt for what that's worth -actually, no company bearing the Atari name ever went bankrupt, they went into debt in many cases, possibly deeper in debt than their net assets in some cases, but they managed to avoid bankruptcy)







International success has largely stabilized the market, that and some massive corporations with other divisions and assets to take up the slack when going gets tough (plus Nintendo's own cash reserves and maultiple markets -namely monopoly of the handheld scene as well as a strong stake in the console market).
That was one of Sega's weaker points too (not to get into the myriad of internal and external problems they faced in the mid/late 90s), not having a strong/established Japanese market significantly limited them stability when the going got tough in their major markets (especially with the slump in the US following some massive investment spending) . . . but that ended up getting a whole lot worse when they sacrificed too much (at the wrong time) to try to cut into the JP market. (lack of the sustained multi-generational market success than Nintendo had seen was also a problem . . . what happened with the Saturn led to a flash in the pan for Japan, but in the end they were even worse off in that market than when they started -and if you look at things, they HAD been making huge strides with each generation from the piddly Mk.I/II market share to not quite as bad Mk.III/SMS to the actually notable MD marketshare -which actually was about as good as the Saturn in the long run -ie comparing MDvsPCEvsSFC to Saturn/PSX/N64 sales over the entire generations, not to mention actual profitability -though that's purely speculative as there's really no data to back that up either way, even the sales figures are a bit weak though since Sega never released totally complete sales figures as such)


I digress again, though.
To say it a bit more simply: the market today is simply too big and too diverse to see anything remotely close to the crash in the 80s, but maybe something a bit like the 90s slump (probably limited regionally too).

The very fact that the 80s crash (in North America) was founded (in large part) by "perfect storm" circumstances that are virtually impossible to happen again says a lot about this issue. (again, do you see gaming class, complete/out of the box PCs going for $400-500 within the next couple years? -the very fact that consoles have become somewhat PC-like and HDTVs facilitate direct use as primary PC monitors again could facilitate that, but I really don't see any sort of computer war that could drive near-cost prices like that, especially given the inherent overhead of the operating system -unless you had some unholy alliance of AMD and Microsoft for some consolidated home computer system with a highly standardized embedded chipset on a consolidated single-board design produced at extremely high volumes . . . but MS's presence in the VG market sort of prevents that too ;) -unless you go for some crazy scenario with Linux going mainstream or, even crazier, Apple pushing a Mac OS based platform at extremely high volumes -with tight/embedded hardware- and very low profit margins :lol:)

[Icarus Moonsight]

Its the bandwagon jumpers who are saying buy gold right now. The market has all the signs of an upcoming bubble, its just been delayed by a few years.

Well, I'll hold and continue to acquire. Do what you're gonna do. I'd love it if gold dropped to 40 and silver to 2... I'd be buying up all I could. C'mon bubble! Burst damn you! LOL

[tom]

it's gonna be
Bubble Trouble
http://i357.photobucket.com/albums/oo12/Alison123456789/IMG_0001.jpg

[jonebone]

Short answer:

Quite possibly yes, but no time soon. SNES CIB prices are insane right now, going through the exact same growth as the NES scene 3-4 years back.

[Darko]

I don't believe that comparing the used video game industry to say...the housing bubble holds water. The underlying reason for the housing bubble had more to do with bad/unethical lending practices (giving individuals the ability to "afford" something they could not) than supply/demand. The prices were artificially inflated because they could be (with the assistance of consumer lending practices), not because they needed to be (due to a shortage of supply). Pretty much the definition of a bubble but not the same circumstances as the video game market.

I can almost see the argument of using a stock market bubble as an indicator of the future of video game prices. Emotional and cognitive biases (nostalgia and the buy buy buy rational on an upswing in prices) are obviously present in the gaming market. However, without a mechanism to calculate the true value of a video game, one could argue that video games are nothing like stocks. The true value of a stock can be calculated using a mathematical formula. Without knowing exactly how many units of a video game are still available, an actual true value of say, Super C on the NES is relatively impossible. There are also multiple and varied market places to purchase video games (eBay, forums, brick and mortar, etc). Each of these potentially have very different prices on the same item regardless of condition. So which price is correct? You could average the sales of a specific title, but you'd have to take into consideration a ton of variables. The seasonality of the video game market, each item's condition upon sale, and shipping charges (eBay) are just a few that come to mind. Without a central marketplace for a product (much like the stock market) it becomes extremely difficult to justify a true price for anything worthy of being called an investment.

Used video games are prices are 100% determined by what the next guy is willing to shell out (or not shell out). Unless we're talking about something extremely rare AND sought-after, I don't really see the possibility of a true bubble. Prices will go up and prices will go down for various reasons per title/console, but there will never be a true burst across the entire used game market unless every collector out there wakes up one morning and puts his/her collection on the street corner with a big FREE TO GOOD HOME sign and the world stops playing video games. Maybe a bit extreme but I think you should get my point. A perfect storm scenario is always possible, but it's also completely unpredictable. Taking that into real consideration is ridiculous.

If you consider video games as an "investment" because you spend a lot of your hard earned dollars on them then that's fine. If you consider them an investment because you expect to become a billionaire someday from your collection you are better off opening up an online trading account. I can personally recommend Scottrade.

[kool kitty89]

Short answer:

Quite possibly yes, but no time soon. SNES CIB prices are insane right now, going through the exact same growth as the NES scene 3-4 years back.
Oh, that's a different topic (used sales/demands for collectibles), the mass market (which I construed as the main topic) is another. ;)

The retro market might "burst" at some point, but I'm really not sure how that might work. (you'd need people to lose interest or find alternate outlets . . . things like most Nintendo stuff would take a lot to shift due to the high volume market -save for some particularly rare/niche items, but some others are far more sensitive -look how rapidly and extremely Jaguar prices have gone up, and even 32x starting to do that now)




I don't believe that comparing the used video game industry to say...the housing bubble holds water. The underlying reason for the housing bubble had more to do with bad/unethical lending practices (giving individuals the ability to "afford" something they could not) than supply/demand. The prices were artificially inflated because they could be (with the assistance of consumer lending practices), not because they needed to be (due to a shortage of supply). Pretty much the definition of a bubble but not the same circumstances as the video game market.


The housing market bubble is actually more comparable to what happened in the early/mid 80s (bad management, flawed/inflated market becoming unstable, etc), though that's obviously a vague comparison too. (especially with mitigating factors like the home computer wars driving the crash)