In 2004 I made a talk on Quo Vaids, the largest German developer conference, about our game industry cycle. (btw. the next Quo Vadis is in April, highly recommended!). This talk was adapted into a major article on MCV, the leading industry magazine by its time.
From there on people knew what it meant to be in a transition year. Although the term "transition year" was coined by EA I can take credit assembling the facts and regular events what a transition cycle causes.
Basically the games industry goes through a cycle which is kicked off whenever a new console enters the market. The old one doesn't do the revenue anymore it used to and the new one hasn't grown enough yet to do good revenue.
This forces the big players into a conservative mode which means:
- Studios are getting shut down
- Media spending is reduced
- Releases are safe bets, i.e. sequels
The side effects are usually that independent studios are no longer able to place their next developments and shut down if they don't have already one under contract. Also some media are shutting down like games magazines or game web sites as the reduced media spending also hits them.
However as developers and teams are looking for alternative revenue streams they put their creativity into other platforms like the new wave of good games on PC digital or the immense growth on mobile games this transition cycle. Some also find ways into f2p on consoles or PC.
Why is this important? Because 2013/2014 is the current transition year where bad things already happened and worse is still to come. From the last count of studio closures at least over 15000 developers were laid off over the course of the last 18 months in USA and Europe. Some cities were laid to waste in terms of game development like Austin or Boston.
Why I am saying this? Simply because I want to calm you guys down that this is perfectly normal and part of our cycle. It is like hitting Ctrl-Alt Delete and re-install. Everything will be smoother and better afterwards, you just need to be prepared.
Not complete overview, just samples: