EDIT: After some more thought, I think I'm wrong about this. There were a number of factors I didn't take into account. These factors dramatically reduce the chances of the market crashing.

I think one major factor is to do with the market's increased variety (not necessarily its overall size). Due to limited hardware back then, the types of games that could be made were also limited. The fact that PC games were capable of providing similar experience allowed for consoles to crash, as people could make a quick shift to PCs.

Mobile games, while their competition today could be comparable to PCs in the 1980's, does not provide the same outlet for most people. It does not allow a quick shift the way PCs did (Unless smartphones get a rapid increase in power, game quality, and more popularity among core gamers)

These were indeed very basic oversights. Thanks for the insults, as they were motivating to getting more reasearch done into this topic.

Here is the original, idiotic hypothesis below:

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It has been over 30 years since the market last crashed, way back in 1983. Of course, the industry has matured 1,000-fold since then. However, today in 2015, we're starting to see a lot of similarities with the 1983 crash. Let's look at those factors now:

1983: The market was bigger than it had ever been

The fledgling video game market was exploding at the time, with an annual revenue of over $3 billion (Over $7 billion when adjusted for inflation). While not directly the cause of the crash, this did cause some other factors, which shall be explained later.

2015 equivalent

The PS4 is breaking sales records, and in the US/UK, the Xbox One is also doing very well. The 3DS is a strong performer, despite stiff competition from mobile games. The market is doing quite well, indeed! However, many people are using this fact as an excuse to say it won't crash. Just remember, bubbles always grow before they burst, as what happened in 1983.

1983: Over-saturation of the market

As a direct result of this massive growth, many companies were trying to cash in on this new market. Unfortunately, many of these games from inexperienced companies were quite bad, even for their day. The problem was that pretty much anyone could make a game, or even a whole console, and start selling it for a profit. With little-to-no quality control, this flood of bad games and bad consoles led to a drop in consumer trust.

2015 equivalent

We're starting to see something similar to this flood of games from 1983. Now that Sony, Microsoft, Steam, and many other platforms allow self-publishing, this means that pretty much anyone can make and sell games, often with almost no quality control (Looking at you, Steam!). While we have reviews to seperate the good and the bad, the large number of poorly reviewed indies means that many people simply don't trust indie devs to make good games. (This is also a likely reason as to way many people dislike indies these days).

1983: Alternative platforms for video games

At around the same time consoles were exploding, so were PCs. Of course, many games were available for PC. So if the console market crashed, there was still the PC market providing plenty of games. Many people did indeed move away from consoles to PC, both before and after the crash. After all, PCs had far more functionality and usefulness beyond games, unlike consoles at the time.

2015 equivalent

It's no secret that mobile gaming is huge. Regardless of whether you like them or not, mobile games are just as just as important a market as their console/PC counterparts. If consoles crash, mobile games are likely to stay strong throughout. Primarily, because mobile games aren't as expensive, and don't require dedicated hardware just to play them. The same reasons PCs stayed strong during the 1983 crash.

1983: High-Profile flops

This is arguably what triggered the crash back in 1983. A number of highly-anticipated games turned out to be bad, and resulted in commercial flops and loss of consumer trust. The best example of this is ET for the Atari 2600, which many say is the game that caused the crash in 1983.

2015 equivalent

We haven't had any high-profile games turn out to be massive flops... yet. Instead, I'm noticing a slower trigger. We probably won't have a 21st-century equivalent of ET.  But we are seeing more and more hyped games turn out to be very "meh" at times. Games like Titanfall, Watch Dogs, Destiny, The Sims 4, and Orer: 1886 are prime examples of this. In addition, while many games aren't bad in terms of gameplay or value, many people were angered when games launched essentially broken, such as Driveclub, Halo MCC, and Assassin's Creed Unity.

1983: Consumer trust was lost

This is ultimately what caused the crash. After lots of bad shovelware, and high-profile failures like ET, most consumers lost trust in video game makers. So what did they do? They stopped buying games. With no one buying games, there was not enough money to make new ones, meaning less games for people to buy. And this snowball effect continued until market revenue dropped by more than 95% in just 2 years.

2015 equivalent

As a result of many "meh" games, broken games, and a flood of DLC/microtransactions, people are indeed losing trust in publishers and developers. It's just a matter of time before we reach a tipping point.

What should we do?

Nothing. Let it crash. I think this is probably the best way to fix these problems. When the market crashed in 1983, companies that consistently spat out bad games went bankrupt. Companies realized that people actually have quality standards (who knew!?). And who rose from the ashes to save us? It was none other than Nintendo, with the NES. That "Nintendo Seal of Quality" was introduced specifically as a result of low consumer trust, to prevent another ET from happening. If not for the crash, Nintendo probably wouldn't be nearly as big as they are now.

Who will save us in after the market crashes again? I'm not a fortune teller. Probably no one will have to "save" the industry at all.

I'm not a market analyst either. So maybe it won't crash at all. But these factors lining up again makes it hard to dismiss the possibility.

DOOOOOOOM! I won't sleep at night.

Now are you serious? Videogames are on the rise brah every year they make more money and Xbox One and PS4 both are selling like beasts wich is good for industry's health. Also Steam userbase is growing like crazy due to 8th gen console's low end hardware, free online, cheaper games and mods :)

So you see consoles and PC both are better than ever.

A crash might be good for the industry cause we are getting too much nonsense these days which is just becoming worse and worse. The most recent example is how Evolve does DLC... Like not only is there a shit ton of nonsense like buying the Monster Pack and the Hunter pack and etc, but there is also in game cosmetic stuff from day 1 which is something that I really hate cause you have to pay sooooooo much to get everything and while not everything is nessessairy, a lot of the things should have been included with the game. And thats just one example, 2014 had plenty of underwhelming games as well as broken games so an industry crash should lead to cleaning out the bads with these nonsense practices.

But with that being said, if there is going to be a crash, I don't think it will be anytime soon though

The market is too big to crash. Even the biggest flops this generations sell in the millions. Smaller games are still viable and the market craves for games. People will not just stop buying games all of a sudden. They will just look harder for good games and it's not likely that people will just stop making good games. Again, the market is just too big, both on the consumer and producer side. There will always be enough products for any taste and enough consumers for a certain game.

we do need a crash imo and nintendo and sony(microsoft will be taking over your pc gaming in the future anyway) will rise and we will have a sega nintendo gen again
/jk jkjkjkjkj!

yup, doom mongering. move along people, nothing to see here. Oh and this too...

This is exactly what I though people would say, saying the market is too big to crash.

Remember that in 1983, the market was also bigger than it had ever been.

No market is immune to crashes, no matter how big it is. It simply makes the process take longer.

I think there's some stretching in your comparisons, especially on the saturation of the maket point. People were blind back then, buying games based on word of mouth or brand recognition (E.T. and Pac-Man). Of course when both games ended up being terrible, that was it.

Today we have the internet, TONS of videos before the game even releases, even more people telling you all about the game... really, you have everything you need to know if the game will at least distract you.

But yeah, the market is too big and too old to crash. There are A LOT of people who will always follow the industry and keep an eye on any quality game that releases. And it's a 30-year old industry, as opposed to the 5 or so years it had in the 83 crash. A huge loyal fanbase was created in that huge timespan.

Hmm

let me see 

ac, cod, smash

they all sell well with word of mouth my friend.

You are wrong here. Over the last generation we saw massive consolidation of 3rd party publishers. Kin to what happened in the movie industry with only 3-4 massive studios existing after the consolidation. All through ast gen we saw consolidation of major publishers as well as the death of several smaller ones (sierra, Atlus, Majesco, THQ, etc etc). We also saw the consolidation of many smaller devs/publishers into larger publishers. 

People also aren't buying those indie games. They remain low on the sales chart. While popular good indie games usually get the attention they need.  I doubt there are that many people that bought Bad Rats and then chose not to buy Braid. And if they were to lose faith in indie developers they would just put more money into bigger games... Which would just help the industry anyways