The effects of the economy on the videogame market

[Godot]

Mendicate Bias said:

gnawkz said:

I dont think comparing Vegas to the Video Games Industry can be completed.

Las Vegas:

The business model of Las Vegas has changed substantially within the past several years.  From a place where gambling was the original focus it has become more focused on a high luxory resort island in the middle of a desert. 

The old Vegas was cheap ... $50-100 a night for decent hotels, + a little money for gambling and several cheap shows and cheap food.  Coming out barely a few hundred for a family.

The new Vegas (today) that is unthinkable.  The business model has shifted from relying on gambling as the only source of income to a mix of Shows, Entertainment, Food, and Shopping.  Gambling is still significant but is not the majority anymore.  Hotels prices have sky rocketed, gas has gone up, food and shows are more expansive, and no one is going to Vegas for the shopping anymore. The price for a weekend can easily run into the thousands for just a few days.

Video Games:

Video Games business model has not shifted to becoming a high priced luxory item.  Rather, it is still migrating to become finally a main stream entertainment device.  Price points are still shifting lower, and as games become older and less valuable but still great, the ASP of each game has been dropping.  Enjoying a game over the period of 2 weeks can cost around $300 (if console has not been purchased, and its not the PS3 since it has the lowest market share).

$300 cannot be compared to the current Vegas where a few days of entertainment can cost around $1000.  There will be no large shift in spending over games.  A small shift can definitely occur, but nothing drastic where the Video Games industry does not end up growing again this year.

One good point you did bring up was to show that money is leaving the Luxory sector and leaving fast.  It is flowing to cheaper forms of entertainment.

 

I concede consoles have not reached a price point where they would be seen as a high class luxory item however coupling the price of consoles with the current price of games still leaves the pricepoint well above an impulse buy or mass market appeal, leaving the industry somewhat vulnerable during rougher economic times.

 

Video games are cheap. Snes, nes and N64 games were all more expansive than what we pay today and that's without inflation. Wii games are between 20 to 50$. 50$ for a game isn't that much so parents can buy 1 game for Christmas and 1 for their kid's birthday. For those that can't afford the console (199$ for a 360 or 249$ for a Wii), they can't buy a DS which is really cheap. DS games are even cheaper.

About iPods... I think they are reaching a saturation point. Everybody I know and their grandmother have a mp3 player of some sort. It's just that sometimes it's a iPod from 2-3 years ago or a cell phone.