I think the video game industry is in real trouble. Dare I say a collapse. Hey everyone, welcome back to the channel. Today we're going to deep dive something that most gamers and I think the media aren't really even talking about at all, but they should be. And I think the video game industry is facing this collapse for a variety of reasons, some of which I don't think are getting enough attention. So today, we're going to explore why I believe the video game industry in general is heading towards what I think is a major collapse. Not a minor dip, not a post-pandemic correction. I'm talking about a seismic shift, one that could fundamentally change how games are made, how they're sold, how we play them. And and by the way, I'm not excited about this. And this isn't clickbait, by the way. We're going to walk through some hard economic numbers that just came out this week. We're going to also look at some of the changing habits of consumers overall. Just some and also some anecdotal evidence that I'm seeing among young people, the brutal layoffs right now that we're seeing over the just over the past week inside of some of these major studios. and the elephant in the room which is mobile and short form content which is eating traditional gaming alive. Something I'm I'm pissed about. I'm not happy about this. And no, this isn't just some doom and gloom because there is a path forward. I think I was thinking a lot about this. I I don't want to just be doom and gloom. I was like what is the path forward? So at the end we're going to talk about where I think there's a silver lining in all of this and maybe maybe just maybe we needed to kind of burn it to the ground a little bit to kind of get back to what we love with this hobby. But it starts with kind of recognizing where we actually are right now and why there I see warning signs flashing all over the place. So let's start with what the Fed did this week. The Federal Reserve, which by the way, if you're not familiar with the Federal Reserve, it's one of the largest criminal organizations in the world. They control our monetary policy in the United States, even though they're unelected. How do these people get power? Let's put that aside for another day. But anyway, the Federal Reserve, which controls interest rates in the United States, they don't answer to anybody. They can print money willy-nilly, whatever they want to do. They quietly did something that most people totally missed unless you're in the finance world. They lowered interest rates once again. If you're keeping track, they recently, just a few weeks ago, lowered interest rates. This is the second time now. Why? Because unless you're really into macroeconomics, it might not sound like a big deal. Hey, that's great. They're low on interest rates. I can, you know, not have to pay as much on my credit card. I can get a a mortgage for cheaper. But lowering interest rates usually means the Fed is panicking. They're seeing signs of a recession or at least a major slowdown in consumer spending. And they are. In fact, Federal Reserve Chair Jerome Pal even said that they're seeing a slowing down of consumer spending. So, and he he doesn't like to alarm people. So, when he says something, you know, there's like a bubbling of of concern. We're seeing a slowdown in consumer spending. People going to the store. H. Okay. That means when they lower interest rates though, the value of a dollar typically weakens. You're weakening the US dollar and it hits all of us. I mean, your paycheck doesn't go as far. Your groceries cost more. Your rent goes up. And what do people start cutting when they feel that pinch? They start cutting entertainment always. That's the first thing to go. And what's hilarious is then Netflix increases its prices. Disney Plus charges more. Xbox Game Pass charges more. But these are the things that people are cutting. And I think they're raising these rates because people are ditching Netflix. They're cutting their they're cutting these services that they're not they don't need anymore. Is it vital to my family that I have Hulu? No. No. You'd probably be better off actually. Is it vital to my family that I have Netflix? No. You'd probably be better off. And video games though sit squarely in those crosshairs, especially when you're staring down $70 price tags for new titles. But it goes deeper than just the price tag on this. Because see, cheap money fueled this last generation of mega game development when borrowing borrowing was incredibly easy. Venture capital was pouring into it everywhere. Publishers felt emboldened to take risks. But now those funding pipelines are drying up. Risk tolerance is vanishing. I just did a big interview with a producer in Hollywood who talked about how, you know, a few years ago Netflix and all of these streaming services, you had Apple and all of them, Amazon, they were pouring just billions of dollars into that's why we saw so many TV shows cuz they were just pouring so much money in like what would stick, you know, what would stick on a wall? What spaghetti would stick on a wall? And then once Netflix won, all of that money just dried up. All of that venture capital money just totally dried up. And risk tolerance is is now vanishing. Developers are suddenly being asked to do more with less. Projects get cancelled midstream and executives start eyeing big cuts, not expansions anymore. It's not a coincidence that the Fed blinked. Just weeks later, so did the gaming industry. We see it happening in real time. Now, let's just talk about burritos for a second. Let me paint a picture for you. Chipotle. Chipotle, the fa the fast casual burrito king this week just reported that people are pulling back on spending, consumer spending. This is exactly what Jerome Pal just said. This is a huge red flag. If folks are thinking twice about buying a $12 burrito, do you think they're lining up to spend $500 on a new console or $1,000 for a new gaming handheld or $70 on a single game or $80 on a game? Consumer behavior is shifting fast. And it's not just restaurants. Retailers across the board are warning that shoppers are buying fewer non-essentials. That includes everything from jeans to earbuds and yes, video games. We're also seeing a huge surge in buy now pay later services for entertainment and technology, which I think is in many ways like demonic. It's like satanic. By the way, Charlie Kirk, who was just on my friend Tucker Carlson's show like a few weeks before he was killed, this is specifically what he was talking about among young people. young people being lured into these buy now pay later services for entertainment, for everything, buying groceries. Literally, I can finance a burrito. That's what Charlie was talking about. These people are drowning in credit card debt. So, people are financing games. They're financing consoles in ways they didn't before. Buy now and I can just pay for it over time. Sure. We're entering a season right now of financial anxiety, which is kind of terrifying. And when that happens, luxury purchases dry up. Pre-orders disappear. Collectors stop collecting. Deluxe editions sit on store shelves. Why would I buy a collector's edition, you know, for 150 bucks when I can just get the standard edition or buy a used copy, if at all? So, it's all part of a wider contraction right now in consumer confidence. And it's really only just begun. Because let's talk about the layoffs and the blood bath that we're now seeing. Amazon just cut thousands of jobs this week in its gaming division and its streaming divisions. Yes, they're going to continue on with their Tomb Raider project, but tens of thousands of people laid off. Gone. I think a lot of people are like, "Wait a minute, Amazon had a gaming division. Microsoft just laid off an entire teams at Bethesda, 343 Industries, and other parts of Xbox. We're kind we're cutting all these jobs because we're moving and focusing on AI." Sony just canceled some major unannounced titles, paused investments into certain live streaming service initiatives. This isn't just a realignment. This is not just restructuring. This in many ways is a panic mode for these companies. These companies are reading the same tea leaves. Gamers are spending less on games across the board. Development costs are skyrocketing. The return on investment is no longer guaranteed. I mean, look at Marathon for crying out loud. I mean, look at uh I mean, look at any of these other big titles that have just they've spent billions of dollars like Concord pushed billion millions of dollars into and realize like we're just not going to make our money back on these things. We need to cut bait. And you know what really seals it? When Microsoft CEO Sachi Nadella says this week that Tik Tok is Xbox's biggest competitor, not Sony, not Nintendo, not Steam, Tik Tok. Short form content. Let that sink in. A major CEO is telling you that the battle isn't within traditional consoles or even the PC gaming anymore, the console wars. It's with short form vertical videos, which I hate with a passion, by the way. It's not just corporate buzzword. That's a brutal realization about what today's attention economy looks like. You can see it everywhere you go. Just look at any young person and they're on a phone and what are they doing? They are watching short form content. We are in a dopamine war right now. And right now, short form content is winning. When your kid would rather spend 90 minutes scrolling through TikTok than playing 90 minutes of a storydriven game, that tells you something. And it's not just kids, right? A 30-second video is easier, more addictive, less commitment. Hey, do I want to go downstairs and sit down, grab a PlayStation controller, and dive into Resident Evil 4, or do I just want to kind of lay in my bed and just kind of scroll through TikTok for 30 minutes before I have to go to swim class or whatever it is, you know, dance practice or something? I can tell you what's going to happen. The intentionality of going downstairs, sitting down, firing up a console, grabbing a controller, and being focused on that thing is not going to happen. these 30 secondond videos, this short form content. I I know I sound like an old man like get off the lawn, but you can see it. It's more addictive and there's less commitment, right? You don't need to learn controls. You don't have to sit through a tutorial or invest emotionally in characters. You just scroll and the dopamine hits you and the algorithm is serving it up on purpose. And that shift in behavior is killing traditional games in my opinion. Why spend $300 million on a cinematic masterpiece when your audience would rather watch, you know, Mr. Beast give away a car in 20 seconds or some other little quick short video of like the stuff my son watches, you know, like teenagers hitting each other with something stupid or falling off a roof or doing, you know, a cat doing something 20 30 seconds or do I want to sit down and intentionally play like The Last of Us? Publishers are paying attention right now. And like as Microsoft just pointed out, games are now getting shorter. Live service models are being abandoned. Singleplayer epics are becoming huge financial risks. You can put more money into Spider-Man, of course, but what about a a big risky game? You know, hundreds of millions of dollars into Concord or Marathon? It's a huge financial risk. Even casual mobile titles are pivoting towards instant gratification mechanics. Tutorials are gone. Depth to the game is optional. Monetization, of course, is king. How much more can I put into this game, you just jump right into the game. There's an entire generation growing up that doesn't know the joy of like getting lost in a 60hour JRPG. They don't miss it. Like, I'm just thinking right now about Dragon Quest. You know, Dragon Warrior, Dragon Warrior 2 were games that defined my generation. Games that made me a gamer. Absolutely loved them. the original Metroid, as I've talked about many times here on the show, the first game I ever beat, and I got lost so often. You know, I can only imagine if I had Tik Tok or YouTube shorts, Instagram reels back when I was trying to beat Mother Brain in the original NES Metroid. Like, would I have? Probably not. My attention would have been focused on these short form dopamine hits. Like, I'm really going to sit down and focus, go through this game. The economic pressure is also accelerating another trend. We're seeing this death of physical media. And let me be clear, this is not an accident. You know, publishers want control. Digital games can't be resold, can't be shared, can't be preserved unless you're buying it through like GOG and their game preservation system, which by the way, hey, great for GOG. I heard John on Spawnway the other day talking about, you know, they need to do a better job of marketing like good old games. GOG got some incredible preservation things they're doing. They just like released a whole bundle of um Resident Evil games preserved. You download them. They're DRM free. You can store them on a hard drive. But otherwise, you're buying into these services like Xbox Game Pass and you don't have any ownership of these games and they can be removed from storefronts at any time. We, you know, I know Mystic Ryan over on his channel, he talks about like, hey, this is what's coming to the PlayStation Network. You know, you can play this for a short amount of time. Guess what? This is what's leaving the service. So, you better get in there. Witcher 3 is now being yanked off the service. Sorry, can't play it anymore. All of it can be changed, nerfed, locked behind subscriptions, which look like Nintendo online service, right? So, you get access to the GameCube games and Game Boy Advance and all those, but you're paying a monthly service fee. When you stop paying, guess what? Sorry, you can't play anymore. So, what happens when this economy dips and you're already locked into an ecosystem with no ability to sell or trade your games? you you just stop buying them. That's why retro gaming is quietly booming right now because people want ownership. They want certainty. They want to know that if they buy something, it's actually theirs. I can't tell you how many comments I see here on my channel who tell me, "My god, I've just been playing PlayStation 3 games lately. I just play retro games. I own them on the disc. I just play them. I don't have to be online. I don't have to be connected to the internet. And I don't have to worry about what's going on in this industry because I'm a retro game player." I agree. I mean, going out there buying old like Xbox One games or things like that to play on your to play on your Xbox. You can pick them up at a retro game store for like a buck, two bucks. Classic games that you have access to. You don't have to rely on what's happening right now in this economy. I mean, just look at the rise right now of retro emulation devices. Look at limited run games. It's got a whole limited run box set here of Yakuza. I'm going to talk about that in a separate video, but I mean, people want physical games on a cartridge, on a disc. Look at the secondary market for GameCube, DS titles. I mean, go to a retro gaming expo for crying out loud. People are going backwards in order to move forward. That's what I've been doing. Most of the games I've been playing lately are all classics. Playing Resident Evil 1, you know, I'm playing Silent Hill, you know, going back to the classics. I'm playing The Thing right now. So, we're going to see a shift away from the $300 million blockbusters. Studios simply can't, you know, justify this risk anymore unless it's a known IP. Wolverine, Spider-Man, some sort of a Star Wars game, although that's been watered down. I mean, churn out another Star Wars Outlaws and you're likely never to see another Star Wars game again. These things are too expensive, they're too slow, and it's too volatile. So instead, we're going to see more remakes, which are lowrisk. They're high nostalgia appeal. You're going to see way more remakes, I think, in the coming years. And actually, I'm okay with that cuz there's a lot of games that I missed back in the day. So, if you're going to give a modern polish on some of these older games that I never got a chance to play, great. But it certainly hits that nostalgia appeal. You're going to see more more early access games so that the company can make some instant revenue and a slower burn. You're going to see more mobile and cross-platform development. They're not going to be locked into any kind of particular ecosystem in consoles. And frankly, you're going to see far fewer ambitious new IPs. Games like GTA 6, Elder Scrolls will still happen. All of that, you know, but there's those will be the exceptions, not the rule. Meanwhile, indie developers are rising to the occasion. You're seeing people like, my god, what's his name who made Animal Well, you know, one guy one guy who made Stardew Valley, one guy. You know, you're seeing the pixel art boom, not just nostalgia. It's budget friendly. It's fast to develop. I mean, look at, for crying out loud, Hollow Night Silk Song, $20, and it's sustainable. Studios like Super Giant Games, Concerned Ape, Team Cherry, are showing that you don't need a $100 million war chest to create something memorable. Take your time, build something great, put it out at an affordable price, 20 bucks, and millions of people will buy it. And then there's the sub subscription fatigue. It's real. People are cutting Netflix. They're cutting Hulu. Yes, Game Pass. We saw that in droves. The Netflix model doesn't scale forever. And as economic conditions tighten, users are going to start to prioritize ownership over access. Expect to see a wave of game subscription consolidations, price hikes, or even shutdowns over the next 24 months. And when that happens, physical media might make a comeback. Not because it's trendy, but because it's smart. Imagine a world where you just only buy a few games a year, but you own them outright. You trade them with friends. You collect what matters. You don't rely on updates or servers. And of course, there's the free games like Fortnite, you know, and these games that kids can jump into and they can play hours and hours and hours. They can play with their friends. Maybe they buy a skin or whatever, but for the most part, it's free. Free to play. So, you're seeing kids a lot more downloads on their phone. Even the mobile games that they're playing on their phones, freetoplay games, so they don't have to spend any money. My son, we have an app alert. So if he ever like downloads an app, he has to get a parent approval. We have to approve the apps he's downloading. But if it's like a free game, he can just download it. We don't have to approve it, you know? I think I think that's how that works. I don't get cuz he'll have like a bunch of games on his phone. I'm like I don't remember approving that. But he's playing like a retro football game that all these kids love. He's playing like what is it? Uh Brawl Stars and these other games. So, I don't know. I mean, maybe the future feels retro. Um, and I think maybe that's where this industry shifts, could be more resilient thanks to kind of looking backwards in many ways. I think this is a wakeup call. You know, if you're a gamer, you're a collector, your parent, or someone who loves this medium. I mean, pay attention. This this collapse, you know, won't happen overnight, but it's already started and the signs are everywhere. And I think the biggest sign of it all is the attention. We're in this attention economy where kids just want to be on a phone or an iPad and they want to be watching short form video content. So I know there were a lot of people that like sort of crapped all over Sachi Nadella at Microsoft cuz it's easy to do that, right? But when he says our biggest competitor is Tik Tok, he's not lying. I see it. I see it. Even even if it's anecdotally, even with just my kids or other kids that I see at the mall or other places, you know, they're not they're not like pulling out a Nintendo Switch when they've got a free moment, they're pulling out their phones. So, I have to yell at my kids all the time like, "Get off your phone, get off your device, get off your iPad or whatever it is, and go play a game." If you're going to have screen time, like the screen time that I want for my kids in my house is like go play a video game. Go solve a puzzle. Go play Luigi's Mansion 2 right now for Halloween and figure out like how to navigate the this puzzle and solve this thing. It's not passive where you're sitting there with your mouth open watching Netflix or some stupid show or some 30-se secondond clip on YouTube shorts, something you don't even care about. Or I, you know, see my 9-year-old daughter. She'll come home from school and she gets a little snack and then she just wants to sit. We have a PC in the basement. and she just wants to go down like she puts on YouTube shorts like in the middle of the screen and she'll watch like other kids playing Roblox in like little 30 40 secondond clips. I'm like you're not even playing a game but you're watching somebody else playing a game and you're watching them play it in like 40 secondond chunks. Like this is not good for your brain. Stop it. Okay, so we got rid of that PC. I sold it. I'm like I don't want you doing that anymore. If you want some screen time, maybe watch something long form, you know, like a you're going to watch like a 30-minute show. Okay, that's it. Then you're cut off. You're going to sit down for 30 minutes with a screen. I prefer that you'd sit there and, you know, play a game that you have to solve puzzles. Think, read, play a visual novel where you're having to read text on the screen. Play Animal Crossing where you have to read so much text. It's like reading a book and you have to build something and take care of your characters and farm and all of these other things, right? I'd much rather have you do that if you're going to have screen time. But this is what we're up against. So, what can all of us do? Because, you know, I don't like to be down on this. I mean, I think we should support developers who value ownership. So, when developers are putting games out physically and the full game is on the disc or on the cartridge, that's why with the Switch 2, these developers who've put out, you know, like on like Cyberpunk, the full game is on a cartridge. I bought it on the Switch 2. I want to show those developers, you put a game out on the cartridge, I will support you. The Mortal Kombat Collection that just came out, you know, on the Switch 2, full game on the cartridge, I'm going to buy it. I'm going to support it. Rune Factory, you know, Guardians, Guardians of Isuma on the Switch 2. Again, I bought it. I've never played a Rune Factory game, but I'm doing it to support those developers. So, support those developers who value ownership. Buy physical when you can. Share games with your kids. Instead of handing them an iPad, you know, sit down and play something together. Encourage it. Say, "Hey, you know, you're home from school. Instead of just sitting there blindly with your mouth open watching something stupid, like, let's play Disney's Illusion Island together. Let's play, you know, for for 30 minutes before you have to go to dance class or something, whatever. Play something together. I don't know. I Because I think the more we speak up, the harder it becomes for these corporations to ignore us right now. I mean, this is your wakeup call. I I think and I think it's also important maybe go support your local retro game store as well. So many great games at a really affordable price. So, pick up an old PS3 game that you never played. Pick it up for four bucks on the disc. full the game fully on a on a disc. You know, buy a used game at one of your retro video game stores. Go just support that community. Bring your kids there. You know, let them pick out a game maybe, you know, on an older system. And uh and then work through it as a family. You know, hey, we're going to play this game together and and and complete this as a family. And uh I I you know, I think maybe that's the silver lining here, but I think the industry is going to see a significant pullback. I think you're going to see a major major reset, a major collapse in a lot of ways. And I think we're looking at a different environment. But I think this is the rise of these smaller indie developers. I think it's the rise of publishers like Super Rare Games and Limited Run Games who are putting games out physically where we can have ownership of these things, not have to pay for these subscription services. And I think that's where we're going. So, I'd love to know your thoughts on this. I don't want to be doom and gloom here. I think there is a silver lining. and maybe it's great for us physical collectors. But let me know what your thoughts are down below.