disclaimer: i have no insider knowledge or access to any financial statistics or other secret sauce. this is all informed conjecture.

i think that the real heart(s) of the matter around this video game implosion has been mounting for a decade+, as you've said, but that the thing that crucially kicked it all off was when veil of speculative capital was lifted after heavy hikes to interest rates. what that exposed was an industry whose margins had become unacceptably small for the sheer amount of capital used to sustain them. once you take away speculation, the actual dollars-and-cents margin of average income for the majority of video games is absolutely precarious. investors figured this out and have been pulling out en masse.

this has been a problem for tech across the board because so many platforms aren't profitable and have no clear path to profitability (remember how long it took twitter to make money?). video games have it particuarly rough for a multitude of reasons, though, largely because of the exponential costs of AAAA development and the fact that industry tools and pipelines simply have not been able to scale efficiently to meet the scale of crafting insanely ornate worlds. the reason why so many people say games "haven't advanced since the ps2 era" is because the graphics improving was the easy part. the hardest part, the part that continues to be the bottleneck where vast amounts of money get burned, is entirely in building content - art, design, interaction, you name it. the more games feel the need to out-spectacle one another and the more elaborate their systems become, the more humans need to build out insane minutiae that wasn't even part of the conversation 20 years ago. that, not graphical fidelity on its own, is the true cost of "lifelike game development". until there is a drastic redefinition of how that production pipeline is managed (this is why goons in management are drooling over ai), there is no solution at scale, and margins will continue to be unacceptably thin. this is why this implosion is hitting the biggest games the hardest.

i am hesitant to call this implosion a crash, because a crash implies a crater in demand. demand for games remains strong - i think one of the big problems in video games right now is that they haven't yet identified that the "games industry" as a monolith no longer functionally exists. the /reasons/ people play - their motivations, the role they want games to play in their life - differ so fundamentally from one another that their market ecosystems are no longer comparable.

turns out that we have some major redefinition of borders to do here, and if you do break the video game industry down into distinct reasons-for-play, the distribution of time and expenditure is extremely lopsided in ratio to development costs. to simplify it, imagine a 100 pound bag and you know the name of everything that's in it, but when you open it up fortnite is 90 pounds and the other dozen games make up the other 10. the problem is that they were even sold in the same bag in the first place when they are fundamentally different goods. you can get away with masking that when interest rates are zero and capital is essentially free. once that stops? not so much. and here we find ourselves.

if that wasn't bad enough, we're currently experience complete and total saturation of all available outreach/pr channels for informing new audiences about new games. this is the primary squeeze on mid-tier/indie games without a major brand (ip, big streamer/vtuiber, etc)  attached right now. i've seen several people say "marketing isn't working" as a general statement and i think that's accurate. again, the problem is that we're at the dying end of the era where "video game" was considered a hobby monolith, during a time where attention is simply divided too many ways to keep audiences engaged under such an enormous and incongruous umbrella. nothing keeps anything in the public eye for longer than a 72 hour cycle anymore - even big budget trailers and presser reveals can just be dust in the wind. it's only the games that play to the "hardcore gamer" sensibilities - which in and of itself is a lifestyle brand, matched in intensity and passion by many other types of gamer, for instance, the gachahead - that seem to perpetuate in this sphere, which is in turn leading to more insular focus on catering to their tastes. one only needs to look at comics or wrestling to see what a slow, doomed spiral that is. we have to exit it, sidestep, and build something new.

a great template of how we need to adapt, and one that is flourishing right now across all forms of media let alone games, is horror. it's a genre that knows why people come to it - to be frightened, unnerved, to think about uncomfortable things in an exciting way, to reflect on the existential - and understands its common appeal. it's able to build communities of people who have that in common that are strong because of that shared ground. it's able to maintain its own news cycle, and even its own streaming services like shudder. it's not exclusionary, but it knows its identity is everything. that's the strategy we're going to have to apply to games - to figure out the why of a distinct group, appeal to it, and build a community. see also: the sims, nancy drew, factory/simulator games, etc. these are distinct industries!

the problem is, these lines aren't drawn yet, and there's a good chance that when they are, many chunks of the industry will have a much smaller base of regular buyers than previously thought. that's gonna take a readjustment of scope, outreach, everything. the era of a rising tide of income from megahits raising all boats in games is dead. without those boundaries defined, investors will be nervous, marketing will be scattershot, apex predators will devour each other, and the bloodbath will continue. but it's gotta end sometime. just gotta hope we end up in the right spot when it does.