The Recession VS. Videogames - Your Thoughts?

[mike_intellivision]

There are "recession proof" (counter-cyclical) industries.

For example, since people cannot afford to buy new cars, they instead try to keep their existing cars running. So auto parts and repair often does even better when the economy is bad.

Entertainment is often held up as being something that can do better in tough times because of the ability to escape reality. The movie industry had many hits in the US during the 1930s.

This is especially thought to be true for video games. The reason for this line of thought is that you get something that lasts. A movie might provide 90-120 minutes of entertainment whereas a video game lasts 10-15-more hours. Plus, many games can be used by more than one person, increasing their value.

However, price creep ($60 game) and shorter games (less than 10 hours) have decreased this value. A 10-hour game that's costs $60 has the same $/hour cost as a 90-minute movie with a $9 ticket ($6/hour). Plus costs associated with on-line play, additional content, micro-transactions, etc. can add up.

What will probably happen is:

1. Existing "AAA" IPs will continue to do well ... but their sales numbers may decrease. This may be especially true where the new release is more content oriented than game-play oriented (e.g., single band version music games, annual sports editions, etc.).

2. New IPs (or revamped IPs) -- "AAA" and "AA" -- will have trouble, however. People are going to be hesitant to invest monies in something they know little (or nothing) about.

3. Renting and bargain-priced games should do better. People will want to play a game some but ensure that they are not stuck with it (or that greater value than a Gamestop trade-in after they have finished playing it). And people will want to limit their investment, so they will be more likely to buy an unheard of low-priced game or a reduced price greatest hits game than a full-priced new game.

4. Game companies that don't adjust will have problems. Planning for this generation like it is 2006 won't cut it in 2009. The old assumptions were wrong and the old economic conditions are gone. What this means is more sequels and spin-offs, more multiplatform games, and lower prices (SE may this right with its approach to FF13, FF13v, and FFCCBB($40)).

Mike from Morganatown