The thing about crashes is, of course, that by their very nature you never see them coming until it’s too late. The games industry seems to be under the impression that now that it’s all grown up and corporate and everything, it will never again be caught out like the naïve old not-so-grown-up-and-corporate games industry was in the disastrous crashes of 1983 and 1993, when what were with hindsight entirely predictable combinations of circumstances caused unsustainable losses, companies going down by the dozen and, in the earlier case, almost the premature death of the entire videogaming industry. Both of the industry’s big crashes happened in the tricky period between generations of hardware – in 1983, primitive early consoles like the Atari VCS and Intellivision were at the end of their natural lifespan, and the next generation, led by the likes of the NES, was yet to arrive. In 1993 the 16-bit Mega Drive, SNES and Amiga were coming down rapidly from their respective peaks while everyone waited for the 32-bit wonderconsoles (Sega having released a half-way would-be stop-gap machine that flopped badly). In both cases the software market was being suffocated by racks and racks of low-quality me-too games, in hackneyed, overworked genres of which the public was finally tiring after lapping them up happily for several years, and sales were subject to a law of diminishing returns.

Jump cut to the present day. We’re clearly between generations (although Sega have launched a half-way would-be stop-gap machine that’s, well, not doing too brilliantly), and the full effect of the coming hardware is a way off yet. Software sales, suffocated by racks and racks of low-quality me-too titles in tired old genres, are (though not actually to the extent that publishers trying to explain terrible figures would have you believe) in decline. So far, so same old.

"So what’s to worry about?", you might ask. "After all, you’ve just pointed out that after every crash in the past came a period of unparallelled prosperity and growth that’s led us to be the healthy, rich industry we are now. Things aren’t great right now, but they’re about to get better, not worse. Just like they did before. It’s the same old cycle we know and love. What’s different about this time, Captain Doomy?"

If you listen, I’ll tell you.

There are several things this time round the cycle that aren’t as they were before, and the first is that this time round, we’re not going to be able to blind the punters with science. In both 1983 and 1993, the incoming generations of hardware were so technologically ahead of the existing ones as to be staggering. The leap from the blobby, flickery graphics of the VCS and the Colecovision to the sharp, bright, detailed multicoloured sprites of the NES was astonishing – Super Mario Brothers looked identical to its counterpart from the arcades (understandably, since it was running on basically the same technology).

Even more so, the jump from the 16-bits, where 2D platformers and basic-looking sports games were the norm, to the 32-bits with their astonishing, lifelike, lightning-fast 3D, was mindblowing, and instantly so to even the most casual, uneducated observer. It doesn’t take a genius to spot the magnitude of the difference between Stunt Car Racer and Ridge Racer (almost identical, again, to its coin-op counterpart), or between Super Mario World and Super Mario 64. In both years, the new generation of hardware gave birth to games, to entire genres of game, that simply weren’t physically possible before.

This time, though, things are different, in that they’re not all that different. Dreamcast and PS2 games are identifiably the same as PS1, Saturn and N64 games. (Indeed, they’ve often got the same names.) Show an ordinary member of the public Ridge Racer 4 on PS1 and Ridge Racer 5 on PS2, and he’ll be vaguely aware that one is a bit sharper-looking than the other one, but he won’t be gobsmacked by the advance, and he certainly won’t feel compelled to rush out and blow a few hundred quid to join in the fun. Houston, we have a problem.

But you know this already. Why am I wasting your time pointing out the obvious? After all, nobody’s too worried, because the Americans went nuts for Dreamcast (they went nuts for Jaguars and N64s too, and hey, didn’t we all make a fortune out of those?), and the Japanese have just bought their three-millionth PS2 in just five months (they’re not buying any games for them, mind you, but that’ll come later, no doubt). Everything sounds just fine so far, and certainly nothing to worry about. But wait. There’s more.

As each new technologically-stunning generation of hardware has come along, the cost of developing games for that hardware has risen accordingly. Luckily, though, so has the size of the gaming audience and, more importantly, the size of its pockets – the average gamer aged almost ten years between the 16-bit and 32-bit eras, and his disposable income for gaming kept pace with that rise. But this time, the industry could be a victim of its own success. Conventional wisdom has it that the PS2 will see the costs of game development triple, on average, compared to PS1. The hardware is much more demanding, and (Bruno Bonnell’s desperate pleas for sanity notwithstanding) the vogue is for ever bigger, ever more epic games. So huge are these games, so cumbersome and time-consuming to develop, that there’s barely time for a single team to develop more than one game during the console’s lifespan. Games are getting hugely more resource-intensive, and there’s a shortage of good talent as it is.

But to cut a long story short, the point is that the industry has survived until now on a decadent, arrogant, wasteful economic model by which it’s utterly crucial that the market keeps growing at the rate it has during the previous eras, and given the uncannily perfect alignment of factors that led to the phenomenon that was the Playstation (and the once-only novelty value that gave the big push to the VCS generation), it’s very difficult to see that happening again – for one thing, we’re certainly not going to open up an entire new wealthy demographic to the joys of gaming, as PS1 did. The industry has locked itself into a cycle where the costs and risks of development are now so huge that it’s all but impossible to develop any kind of game other than the same three or four knackered old genres that the public already seems to be growing heartily weary of (people have been predicting this for years, but only now does it actually seem to be happening, with even reliable big hitters like FIFA – in the shape of Euro 2000 - performing poorly in recent months) only this time we can’t knock ‘em out by quadrupling the polygon count or adding another dimension. We’ve played all our trump cards, and all we’ve got left is bluff, hence our increasingly frenzied attempts to get a reluctant and increasingly cynical audience excited about Dead Or Alive 2, Ridge Racer 5, Wipeout 4 and Gran Turismo 3 (which is, of course, just Gran Turismo 2 with a new lick of paint). Hold on to your horses, folks. They just might not fall for it this time.

But perhaps you think this is all just needlessly negative doom-mongering at the most exciting time in the industry’s history. Perhaps you think the Dreamcast’s disappointing performance was just a fluke, or entirely down to Sega’s tattered reputation, or the lack of any really genuinely stunning new games for it, and that everything will be different when the PS2 comes out (even though its software line-up looks even weaker), or maybe when the Xbox comes out (because hey, everyone loves Microsoft, don’t they?), or even, God help you, when the GameCube comes out. Perhaps you think that the massive losses posted over the last couple of years by even the most blue-chip of software publishers were all attributable to bad luck, or just a predictable and manageable blip in the cycle. (Though if everyone was expecting it, why didn’t they just take a year off and save their cash?) So let’s stop for a minute and have a calm, rational look at the whole thing, one piece at a time. Maybe, when we look at it, everything will be fine, and there’ll be no need to sit here fretting about crashes at all. Maybe this time next year we’ll all be sitting around huge piles of money and laughing at our pessimism.

But at least this time, nobody’s going to be able to say they weren’t warned.

PART 1

SONY

For so long the golden boys who could do no wrong, recent months have seen Sony show signs that their feet are made of the same clay as everyone else’s. The PS2 pre-order scheme - while it seemed to this reporter to be the fairest and most sensible way of dealing with the limited stocks at launch – pissed off most retailers no end, and the reduced allocation and delayed launch until the end of November hasn’t done anyone any favours either, but it’s the PS2 itself that’s giving the industry most cause for concern. Unwieldy, complex and expensive to develop for, the console’s software sales in Japan have been barely half of Sony’s predicted targets, not helped by a software range that, even eight months on, is extremely uninspiring. Whether through a terminal lack of imagination or because of the aforementioned difficulties with development, pretty much every PS2 game so far has been a slightly tarted-up sequel to what in most cases are already pretty tired franchises. Talk of the Emotion Engine and its potential for revolutionary new kinds of gameplay has gone mysteriously quiet – when the PS2 was announced, it was Emotion Engine this and Emotion Engine that, but when did you last hear anyone even mention it?

None of this, of course, really represents a potential disaster to Sony themselves – publishers will blindly churn out at least enough games (even if they are just FIFA 23, Final Fantasy 12 and Tomb Raider 9) for Sony to recoup all their development costs, and in Japan at least, the machine seems to have had such a positive effect on DVD movie sales that other tentacles of the Sony octopus will pull in stacks of cash and offset any possible disappointing game revenues. But it could be terrible news for everyone else – the industry is desperately waiting for PS2 to give it a massive shot in the arm (and indeed has been for the last year and a half), and if it ends up selling as a DVD player that people play the occasional game on, as it has in Japan, an awful lot of people will have pissed an awful lot of precious development time and resources up against the wall.