alt Hacker NewsI worked in the video game industry from the 90s through to today. I think you are over generalizing or missing the original point. It's true that there have been boom and busts. But there are also structural changes. Do you remember CD-ROMs? Steam and the iPhone were structural changes.
What Microsoft is trying to do with Gamepass is a structural change. It may not work out the way that they plan but the truth is that sometimes these things do change the nature of the games you play.
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Not in the game industry but as a consumer this is very true. One example: ubiquitous access to transactions and payment systems gave a huge rise to loot boxes.
Also mobile games that got priced at $0.99 meant that only the unicorn level games could actually make decent money so In-App Purchases were born.
But also I suspect it is just a problem where as consumers we spend a certain amount of money on certain kinds of entertainment and if as a content producer you can catch enough people’s attention you can get a slice of that pie. We saw this with streaming services where an average household spent about $100/month on cable so Netflix, Hulu, et al all decided to price themselves such that they could be a portion of that pie (and would have loved to be the whole pie but ironically studios not willing to license everything to everyone is what prevented that).
But the thing is that Steam didn't cause the death of physical media. I absolutely do remember PC gaming before Steam, and between the era when it was awesome (StarCraft, Age of Empires, Unreal Tournament, Tribes, etc.) and the modern Steam-powered renaissance, there was an absolutely dismal era of disappointment and decline. Store shelves were getting filled with trash like "40 games on one CD!" and each new console generation gave retailers an excuse to shrink shelf space for PC games. Yet during this time, all of Valve's games were still available on discs!
I think Microsoft's strategy is going to come to the same result as Embracer Group. They've bought up lots of studios and they control a whole platform (by which I mean Xbox, not PC) but this doesn't give them that much power. Gaming does evolve and it often evolves to work around attempts like this, rather than in favor of them.