You Failed SEGA - great advertorial by IGN

[Picko]

famousringo said:

Picko said:

theRepublic said:

I bring this up now specifically because of the economic climate. In 2001, there was an assumption that videogames were recession-proof. After the last six months of heartbreaking stories about studio closures, we know that's not true.

This is just wrong.  The video game idustry had record revenues in 2008.  If it was the recession that was the problem, revenue would be down.

Inflation suggests that revenues will always trend upwards - and this is worth taking into account. While this recession has largely affected the industry through the financial side, borrowing costs are up for example and naturally they are not accounted for by revenues.

The idea that videogames are recession-proof is quite frankly absurd.

 

 

Video game revenues have been rising far faster than the pace of inflation. They've been running between 10% and 20% in recent years, including 13% last year in the US according to NPD, despite the looming recession.

"Recession-proof" might be a misleadingly strong term, but the sales data we've seen this year so far doesn't suggest that the games market is slowing, except perhaps in Japan. Some publishers are in trouble, and the you're right that the credit crunch is affecting how they deal with necessary restructuring, but the recession hasn't itself been the root cause of their problems.

 

Videogame inflation is probably much higher however, particularly considering that the average game is now a higher price than it was in 2007. It is likely that a significant proportion of the rise in revenues can be explained by increased sales of both Xbox 360 and PS3 games. Of its own, this isn't a bad development, afterall revenues are increasing at a faster pace than economy wide inflation. However, the price change is not an exogenous development - it came as a response to higher funding costs, which have continued to rise as financial conditions have deteriorated. We cannot say anything about the health of the videogame industry without looking at the cost side - particularly in this economic climate.