As for why that's not a factor now, technology costs have dropped tremendously since then - it's no longer an either-or decision. As an example, my first computer was a Vic 20 which I got in 1981. Paid $374 ($299 for Vic, $75 for Datasette), which is about the same as $1000 today. That $1000 could easily pay for a console and a computer, and you'd still have money left over for to buy a few games.
Gleebergloben- I think there are plenty of quality titles today and I believe the smartphone market is most at risk of losing revenue since those games can be made by pretty much anyone and like with Atari they're suffering from the "way too much garbage" syndrome, titles like Angry Birds lost considerable popularity after they were milked to death.
Jon- I'm not the biggest Sony fan myself, but it's sounds kind of silly to complain about games taking "too much time".
This makes zero sense to me. Ridge Racer, Crash Bandicoot, Spyro the Dragon, and the Tekken games--all major titles born on the PS1--epitomized instant fun.
As for "games that take way too much time," perhaps you should blame Starcraft because it inaugurated a trend of complex, strategic competitive play? Creative developers who saw that new technology would allow them to do more than gratify the pleasure centers of the human brain and actually challenge players to think, plan, and commit?
Even that would be overlooking the fact that there are still plenty of fast, fun, and simple games capitalizing on the more basic elements of play. For these kinds of games, I would steer you towards an iOS device and/or the Wii U and 3DS.
Jon- Just because your friend likes games that you don't does not mean he is "buying into crap", that's nonsense.
2-D games were still made during the PS1 era and were pretty good(Symphony of the Night being one shining example)
I do not believe the industry is a "joke" in the least, I think that's utter nonsense.
With the success of Shovel Knight it seems like the genre is indeed doing a fine job of standing side-by-side with AAA games.
* The low entry barrier leading to a glut of poor quality games on mobile is a concern, but its been that way for some time now. I think the difference is that a bad mobile game is bought with a trivial amount of money, not $40 in 1982, which was a lot of money back then. In fact, a legion of low cost games of various quality can be a good thing, as maybe Sut and his Speccy will agree to.
* Seems like big software developers churn through young programmers quickly, and not value them. This choice may have impacted gaming, but the industry as a whole is still thriving. Many industries have treated the creative staff the same as blue collar staff, and done quite well. Sad but true.
* While the value of the industry did plummet from 1983 to 1985, how much was basically a panic? In other words, self inflicted by marketplace fear?
* While too many choices of hardware is cited as a cause of the crash, the choices were very few. There were only a few consoles, and while there were many family computers, most used some form of BASIC.
* The consoles were still cheaper than the family computers by a large margin. In 1983 or so, a Colecovision would run $150-$200, the same price as a Commodore 64. Except the C64 did very little on its own. A floppy disk drive was another $150-$200, and even a datassette was about $35. Many of us started with the cassette drive, and then got the floppy as soon as possible. The difference was once you had that C64 and a disk drive, the days of being burned by a $40 E.T. cartridge were behind you. In addition, consoles only play games, while learning about computers was the S.T.E.M. push of its day. For awhile, that seemed very important.
What's interesting as well as the form post-crash video games took.
What turned out to be the fad were not consoles but the family computers and the kids needed to learn about computers. Kids still just wanted to play games, not learn programming, and with a little marketing savvy, a lockout chip, and values of family and fun, Nintendo rose to a brand making position of legendary proportion.
The number of game developers and potential game developers today has grown exponentially. It's no longer a club of a select few who know how to rasterize graphics efficiently in Assembly language. Any literate human being with a modern computer can learn and do game development with a lot of available free tools. The present-day pool of game developers, whether professional, amateur, or independent, is huge.
The business environments and relationships between console/PC hardware/mobile developers, manufacturers, game publishers, game developers, retailers, game journalists, and customers are so robust that it's practically impossible for the market to ever crash save for a global economic crash or the mutual destruction of the world. There are professionals in the industry with world-class skills in psychology, marketing, and data analysis who know exactly how to extract money from customers.