There has been rumors during this generation that the gaming industry might be hitting a bubble, which would eventually pop like the one in '83 and bring the house down once again.

But the thing is that in economic history bubbles tend to be situations were a lot of money is invested, but time passes and there's little or no actual return. There's s a great numbers of these, the most recent (and close to the industry) being the .com bubble.

The .com bubble was powered by a (at the time) dwindling silicon valley that saw its influence being taken away, and needed to push for something new. So, the essence of the .com bubble were then future possibilities of the internet, which ironically we are just seeing now, a decade later. This didn't stop product evangelists and so called entrepreneurs from convincing old captains of industry (and people who needed their money laundered) to invest in their unproven ideas. Problem is that results never came, and there was little or nothing to show to the investors.

Compared to the current state of our industry the situation is VERY different: not only there are results, gaming is becoming the leading entertainment industry, making waves all over the world. Compared to the early internet which burned through tons of money, gaming is making more money every quarter.

Most gamers were afraid of a bubble because of the rising costs of console manufacturing, since except for the Wii every other console were subsidized at a certain point. But actually there was more of a bubble during the Golden Age of consoles, when almost every electronics company launched a console to see if they could capture a share of the market. One could say the market is in perfect harmony right now compared to the 90s, when more than 10 consoles went to the market and only two came out winning: the Genesis and the Snes.

There were dire results: Atari folded, Phillips lost a giant wad of cash, Nec closed its console division, 3DO died and Panasonic cancelled the M2, Bandai kept trying with little or no results. Sure SEGA went down not too long after that, but the fact is that it didn't die because of rising costs, but due to all the money lost during that period (90-98) that left them with little to work with.

I'm actually more worried about a stagnation of the industry: because of high budgets only big companies can make AAA games now, and they like to play safe, so we see some innovation but not the kind of crazy experiments we saw years ago. Sure most sucked, but those crazy ideas captured the public's imagination, and kept people waiting for more. And even with all the profits investors are still wary of putting their money in gaming, limiting the possibilities of small indie studios.

Lets remember that the 1983 videogame crash wasn't a consequence of a bubble like the .com were there were no profits to begin with (beyond stock speculation) but that the flow of money to the industry suddenly stopped when people began to feel games were getting too boring and redundant and stopped buying altogether.