Why Gaming Is Not Recession Proof

Amadeo Plaza of Gamer 2.0 writes:

"Barron's West Coast Editor and technology writer, Eric Savitz, joined us again to delve into this matter by commenting, "There's just no way the videogame industry is going to be immune to this. It can be recession resistance, so it might go down less. And there are a lot of entertainment businesses that can argue the same thing. You can argue the same thing if you're in the cable business. Are you going to shut off your cable? Are you going to shut off your broadband access, or your phone? On the other hand, if you get kicked out of your house..."

The gaming industry isn't going to see the kind of growth it saw last year, and although that was already an expected reality, it's not as though there was a shortage of stellar titles this year."

[Amadeo]

Writing this was really fun. I strongly believe that no one can hide from the economic crisis we're in. My whole deal is that a lot of gamers are either apathetic to what's going on in the rest of the world, or they're simply blind to it. That upsets me because so much affects our industry, and the economy is one of them. Despite the fact that sales are doing exceptionally well, everyone's stock prices have plummeted, and honestly, at the end of the day, that's all that matters when it comes to the health of a publicly owned company.

[chaosatom]

lol.

[AlexQuevedo]

Yeah, it seems gamers don't really give a damn when it comes down to stuff like this. But I think once it gets to a certain bad point, they will

[solidsnakus]

im not buying a single game till RE5 comes out. :)

[XXXCouture]

let me guess. Killzone 2 is too gray for you right, or is it too exclusive?

[Danja]

well sucks for you dude...KZ2 will rock...SF4..will be amazing...

[ultimolu]

...Wow.

[poeo]

i'm buying at least 2 before RE5. no way in hell am i going to miss out on KZ2 or Skate 2..

[Heldrasil]

or maybe the guy just doesn't want it...that is possible.

[XXXCouture]

ooh trust me. he wants it, he wants it really bad. he just wont admit it

[techwizz]

Well if we remember, September was down (I believe) and October was up, but only by a small margin (a little over 10 percent). If you compare that to the growth before the economic fallout, it's pretty big. There were months earlier this year like March that was up 30-40% over 2007, so for October to only grow so little by comparison to the growth earlier in the year, the industry is showing signs of slowing down.

I think it'll grow from 2007, but publisher stocks are sliding.

"Six game industry companies (Electronic Arts, Activision Blizzard, Take Two, THQ, Gamestop and Nintendo) saw their stocks fall an average of 52.53 percent from September to November while the Nasdaq fell 36.91 percent."

Source: Wired Game|Life - http://blog.wired.com/busin...

[JBaby343]

But I remember reading something about how entertainment (includes video games) usually picks up during recessions because people want to go to movies and other such "distractions" to take their minds off things. Until it gets REALLY bad anyway then it just isn't doable but I thought that all entertainment actually picks up during hard times.

[Gammbit]

True but you have to remember that considering how much more expensive games are than movies, that somebody would likely opt for 3 DVDs for something like $20 in those used movie deals or a Neflix subscription where they can see unlimited movies each month for as low as $10. That's how you entertain yourself cheaply...

[JBaby343]

But one video game can offer much more entertainment than even 3 DVDs. I've put literally days of time into COD4 and Warhawk among other games. Not so with DVDs but I see your point.

[AmpedMan]

I agree.

With a recession comes less spending money. While people would like to have distractions from what's going on, if they have to choose between RE5 and dinner for their family most people will choose dinner. (Except for me, I can live off games!)

[poeo]

me too man, sweet graphics on the TV make me forget about my stomach. lol. (seriously it happens sometimes, it's way too easy to forget to eat)

[IzKyD1331]

how many industries can currently say they've had a 30% increase over last year? (I got the 30% from msnbc)
Software and Hardware wise, the video game industry looks like it is going in only one direction and that is up

[techwizz]

As I said though, looking at if from a full year standpoint is a little misleading:

"Well if we remember, September was down (I believe) and October was up, but only by a small margin (a little over 10 percent). If you compare that to the growth before the economic fallout, it's a pretty big drop. There were months earlier this year like March that was up 30-40% over 2007, so for October to only grow so little by comparison to the growth earlier in the year, the industry is showing signs of slowing down."

[FilippoDinolfo]

The thing about Gaming is that whether times are down or not, people still want something to do. During The Great Depression the entertainment industry did well. People want a way to take their mind off of stuff. Back then it was Radio, now it's Games. While things might slow down, I don't think it's going to grind to a halt like some believe.

[JayTee0902]

Exactly when times are hard we always have something to fall back to. In many cases people turn to games and movies, etc.

[Gammbit]

The industry may not be recession proof, but I agree that the medium is--this economy won't break people's need to be diverted. And more so than a movie, games offer hours of entertainment for one ticket price. I think if anything, it'll be the entertainment industry (aside from the adult, of course) that does the best in this climate.

[Mgoblue201]

Like it was pointed out in the article, the important thing is that the industry responds. Companies that weren't doing well during the boom probably will be in trouble, but other companies also cannot keep expanding and expect the industry to expand at the same pace. The industry probably will slow down, so companies need to slow down and watch how they are spending.