Mark Cerny is a big of a legend in the game development world, from 1982 to 2011, he's been there since the days of the arcade boom to working on today's current-gen games. He witnessed the crash of the video game crash of 1983 (and the not much talked about arcade crash of 1982), and he laid out the roadmap for the immediate future of video game development.
Everyone talks about the great consumer game crash of 1983, where many popular publishers flamed out through a variety of bad business decisions, and bad development choices. But, not many people talk about the great arcade crash of 1982. It's relevant because we're currently experiencing a slide in video game sales, which were down 5 to 10 percent in 2009, and even further in 2010.
Back in 1982, arcade machines cost $2,500, so an owner had to have well over 10,000 plays on a machine in order to break even on the purchse price, once you consider rent and other operation costs. Mark joined Atari in January of 1982, but by that summer, the arcade market was in complete free fall.
What was the problem with the arcade model? First of all, it was an economy based on quarters, and the value of a quarter dropped by a third from 1979 to 1981. As a result, that made it harder and harder to recoup an investment in a new machine, especially since arcades were no longer the only place to play games. You could play them down at the local 7-11, or even in homes.
The arcade giants tried to fight back against sliding returns by offering up machines that costs 50 cents to play (which wasn't very successful), and they lobbied Washington to produce a dollar coin, since they thought it would lead to more profit since people would have lots of dollar coins in their pockets. There was of course the Susan B. Anthony dollar coin, but it wasn't very popular (too similar to the quarter) and so that didn't work, whereas in Japan, where they adopted the 100 yen coin, which is roughly equal to a dollar, the arcade was healthy throughout the 1980s.
But how does this translate to console gaming? Cerny himself worked on Crash Bandicoot, which suffered from design issues. Primarily the fact thay you started with five lives, and when you lost your last life, you were dumped back to the beginning of the game. Also, if you wanted to quit playing, you had to play a minigame to get a password so that you could return later. The game performed poorly was a result, but with the sequel they learned from their mistakes and greatly improved the game.
Mark wants the industry to use what he's calling these current "quiet" years in the video game development cycle to unlearn the arcade heritage of the past. His "canary in the birdcage" warning signal that the industry is in decline is a lack of diversity in games. Currently, we don't have that ... although with companies like Activision jettisoning other properties and only focusing on current cash cows like Call of Duty, that could change quickly. But, with social games coming, could a title like Heavy Rain merge with something like FarmVille to become a popular product? We'll find out at the same time you do.
And The End of Death? Mark says that we need to stop thinking that you need to die in a game for it to be a game. Personally, I would welcome no more Continue screens.