Can the Economy take the Video Game industry down under too?

videogameindustryIt would appear that the gaming industry has been doing well, better in fact, ever since the economy took a dive off a really high cliff with no visible safety net below.In fact, the industry has done well. At least if PC Games and Console Games & Unit sales are to be believed.

But the truth is that nothing is recession proof.

While Blizzard may have broken all previous PC game single day sales records and may have set a record that will probably be broken only by them it’s not long before even games sales begin to decline.

I know lots of people who spent a lot of money on ‘Black Friday’, the day after Thanksgiving. A survey conducted before ‘Black Friday’ indicated that 46% of consumers were expected to buy some kind of video game system or a game. Even retail analyst firms reported that video games were the probably the last kind of products that they’d cut back on to save costs.

A major reason for the rise in game sales is that video games offer the most bang for the buck in terms of value and returns. If I had to sit at home for an entire month, or maybe more(and with the current economic situation and ridiculous unemployment rates, there are quite a few people sitting at home), and didn’t really have anything to do, I might as well buy a video game that will give me hours upon hours of entertainment. It’s definitely a better than Prozac and much cheaper than therapy.

WOW - WOTLK (image from releaseinfo.net)

Take for example the new World of Warcraft expansion, Wrath of the Lich King. For $40 (roughly Rs.2000) which is not a small sum for some Indians, but isn’t a very large sum either, I get an entire month of entertainment. Not to mention, that if I still don’t have a job at the end of the month (which I am not likely to have since I spent the entire month playing WoW instead of looking for a job) for an additional $15 (Rs.750) per month, I can keep myself occupied for as long as I please.

However, this is just one side of the coin. If you take a look at the top 6 Video Game Manufacturers; Electronic Arts, Activision Blizzard, Take Two, THQ, Gamestop and Nintendo, all of them took a nice beating in the stock markets. It is said they all suffered a drop of about 40-60% in their stocks. (This was in December of 2008.)
Gaming companies that continue to produce good titles or quality games that people like to buy will do fairly well for the time being. However, in the long run if the economy doesn’t improve, more and more people will being to look at video games as something they can do without just to cut costs.

But since we’re a generation raised on Atari, Sega, Sony Playstation (etc..) and the PC let’s just hope that never happens. And since we here at Techtites like to end on a positive note, we’d like to confidently say that it will not happen. (At least if you look at the way the Video Game Industry grew last year in December alone.)

(Some of my sources: NPD Dec ’08, cnet review, Gamasutra ..)

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