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 think your right in the sense that all the companies will be very aggresive in marketing this holiday season in order to get high revenues and make it through this financial slump, however what comes after? Are we going to see sales slowly wither away?

The key is only new games are $60.00 which overall is not that big of a jump games were $50.00 for years. You can get platinum edition games for $30.00 and after 6 months most can be found for $20-$40.00. I waited for DMC4 to drop in price its at $40.00 waiting for it to hit $30.00. I think games are not recession proof but overall fair well in recessions due to price to enjoyment time factor. Take me and my family to a movie $60.00, 3 hours buy a game me and the whole family can play 30-60 hours of fun time

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.

As long as gaming remains one of cheapest hobbies it will do well in recession.

The $ per amount of hour of hobbie is still the cheapest by far in console/computer gaming...

Those games that will do the best in recession times are especially MMORPG.

If you are poor and have to game on a very low budget , something like Wow will keep you entertained forever for 15$ a month...

Thats actually what I'm thinking, that the handheld market will come out of this depression the strongest. Handhelds have the advantage of being cheap and portable which allows for the consumer to take a short break from life even when their not at home.

@Ail

I disagree I think mmorpg's will do the worst durring a recession. $15 a month just to play one game is ridiculous not to mention adding the original cost of the game.

@Mendicate Bias - That depends on how severe you think this economic slump really is. The desperate bail out for Wall Street and the effect it may have in stimulating a productive economy has been pretty big news--it even managed to take away some of the focus on Palin lol. I don't think the video game industry will remain as healthy as it has in previous recessions. On the other hand, xman may be right; people may be so starved for entertainment as a result of less vacations etc. that they'll buy more video games to make up for it. Imo, I think it'll hurt the industry a little if this recession keeps worsening.

There is no such thing as a recession proof industry, and especially no such thing as a depression proof industry. When we look at the games industry we are probably seeing a deferred reaction, because it was a logical downgrade in entertainment budgets. However there is little doubt that entertainment budgets themselves will be curtailed if economic trends persist.

Gaming has reaped a shortfall this year as consumers curtailed expensive entertainments they instead gravitated to more cost effective entertainment. A game has longer entertainment longevity, effective resale prospects, and has few secondary expenses. Further more it can be shared with others providing even greater benefit.

This all said the increase can be followed by a comparative decrease, and a polarization of the audience towards particular games. Most specifically games with greater replay value. Gaming is like most anything else consumers when they need to will do what it takes to stretch their money to the greatest benefit.

Let us use an example of a person that spends two hundred dollars every month on entertainment. Prior to economic hard times they would buy a retail game every other month at full retail price. The rest was spent on cable, eating out, movies, music, and group activities. Once the economy started to go south, and the price of gas started to go up they shifted to buying two games a month. The games went farther. That would be a four fold increase.

However if the economy continues a downward spiral there is little doubt that fears will curtail an entertainment budget, and the guy buying two games a month might return to a single game every two months or even less. What happens when the budget reaches a hundred dollars a month. Not enough to buy a game every month, have cable, have broadband, and occasionally go out with their friends. So economic pressures can force the games industry to retract its initial gains, as everyone has to fight for a diminishing entertainment dollar.

Bottom line if the economy turns below a certain point then gaming that enjoyed the initial fruits could become the industry that flounders the hardest. While it may be good entertainment value it also usually requires the greater up front investment. Now were you placed in a position between deciding to buy a new game or have cable which would you choose? After all most gamers have a couple dozen games to play you can make due. However unless you have a massive unwatched movie collection you might have a problem letting go of the more diverse entertainment.

Gaming is not this generations movies. This generations movies are cable and the internet, and for most consumers those entertainments will take priority over buying a new video game let alone a console.

@BoleroOfFire

The reason I think this recession is going to be worse than any we've recently had is because of the way it's mimicking what happened in the great depression. The stock market starts to collapse and the government pumps a large sum of money into the market temporarily stabilizing it, then the same thing happens all over again until no amount of money can fix the market and the whole thing collapses. Except in the 1930's it was a mixture of government and a select few extremely rich individuals.
I think like you that the video games industry will take a small hit but continue to function although I also think that's dependent on how much crap our economy is really in.