Are Videogame Stocks the New Bowling Stocks?

Just learned from *The Wisdom of Crowds* that there was a "Bowling Company Stock Bubble" in the fifties.  After the invention of the automatic pin-setting machine, bowling company stocks were the darlings of Wall Street.  Predictions about how the market would continue to expand at an amazing rate, yada. 

Right now, we may be in a videogame stock bubble:  Take Two, EA, and Activision stock have been pretty much tracking each other for years now, continually beating the market by a wide margin.  Wall Street continues to predict that the industry will expand.

But what if videogames are like bowling?  A fad buoyed along by some new technology that will lose its interest in a year or several?

I don't really believe it--bowling was just one game, but videogames are...lots of games--but I do admit that maybe it's a possibility.

Comments

[Brett Douville]

Let's just hope they don't turn into a tulips craze.

I worry about stock inflation a little bit -- I'm worried that the industry is mostly not doing the things that would make us more sustainable. In all the presentations about new hardware, only Nintendo was the one spending any time talking about expanding the gaming market, and Nintendo currently trails Microsoft and Sony in the American and European markets for consoles. The only reason I don't worry about stock prices a lot is that if EA goes down, I'm not sure that it's necessarily bad for the industry, although it will be bad for a lot of friends of mine who are working for EA these days, and I worry a bit about them.

The next generation is going to cause dramatic increases in project costs, which will in turn snowball into even greater marketing costs (gotta ensure those bets). I won't be surprised to see total budgets for triple-A titles coming in at around $20 million, give or take a few million, since hitting more mainstream markets (via network TV) is going to cost more than many titles have previously been able to afford.

Increasing the cost to consumers isn't going to help enough -- adding ten bucks to the cost of the game is a no-win for the next couple of years, when the mainstream is still pretty happy with their Xboxes and PS2s, and the mainstream hits (think Madden) are still hitting both the next-gen and the current-gen.

I agree that this isn't really equivalent to bowling; but actually, I think in many ways it's worse. In the 1950s, bowling was a social pastime -- there were tons of bowling clubs, and people (mostly men beyond a certain age) used these leagues to bowl together, forming teams and making it into a real social outlet, and it was everywhere across the country (compare this to arcades, which haven't flourished nearly as much). No matter how much Microsoft may trumpet the number of Xbox Live subscribers, it's still a vanishingly small number of people against the market as a whole, and even then, gaming really isn't all that social. (Even when you talk about the 1.5 million people playing WoW in the states, you're talking about a fairly small percentage of the population, as opposed to the percentage of people bowling in the 1950s).

Anyway, people who are interested in the decline of social networks in America should probably check out Bowling Alone, came out a few years ago as I recall.

Of course, the only reason I care all that much is because of the games. I was pretty astounded to see games I really enjoyed, like Psychonauts or Ico or Beyond Good and Evil, come out in this generation. I don't think it makes any financial sense whatsoever to fund games like those in the next generation.

My only hope rests on Nintendo being able to grow the market, which is their stated goal for this next generation of hardware. Iwata gave a talk at TGS which I sat through, even with its slow and and unexciting translation. I really hope that they are able to create a greater market for videogames, and in some ways I'm pretty afraid that the hardcore work against them in this regard.

[Apar]

Maybe this is not a very informed opinion, but I think like movies (I hate to make that comparison) games are a form of entertainment which some people will like and some will not but I doubt they would cease to exist sure the medium with which you interact with it like movies, with tapes, cassettes VCD's DVD's etc. so would it happen to games and I kind of agree that bowling was just one activity that appealed to only a certain section of people whereas gaming is a lot broader

[vince]

It's already happened once -- remember how Atari crashed and burned?

I have to admit its one of my fears that a big videogame crash could happen again.

I think what will keep people coming is new and novel experiences. Note that this isn't a rant that all games should be completely unique and if you aren't doing something totally unique you're making shit. I hate that line of thinking. Novel doesn't mean unique -- you look at something like The Matrix (the movie, not the game), and not much in that movie was truly unique -- it was lifted from other movies and other genres. Putting it all together is what made it new and novel.

[vince]

One more thought on why something doesn't ahve to be totally unique to be novel: I think it's a pretty safe argument that World of Warcraft definitely expanded the MMRPG genre. Yet again you look at WoW and you can see elements that it lifted from every previous MMRPG. It's just that they did such a kick-ass job in execution, threw in some of that Blizzard magic, and the whole thing feels new and novel.