The Economist examines 'recession-proof' games industry

by Alexander Sliwinski { Dec 18th 2008 at 6:15PM }

Although much of the information contained could be classified as "duh" (or in few cases: "wha?") to our loyal readers, The Economist has a piece about how "recession-proof" the video game industry is. Clearly, The Economist is looking at a very macro level when it calls the industry "recession proof," because given recent events we'd be more comfortable if the industry had been classified as "recession resistant."

The magazine notes that the global sales of console hardware and software are expected to reach $50 billion this year. Regurgitating NPD data from October, the mag points out that sales in the US totaled $697 million, which is a 35% increase from the previous year (November wasn't too bad either). The question, of course, is whether the industry can keep it up if things get worse.

Update: We contacted NPD to find out the specific increase in November. The group let us know that software sales were $1.45 billion during the month, up 11% from the prior November.

Tags: recession-proof, recession-resistant, the-economist

Reader Comments (Page 1 of 1)

Moptimus Slime @ Dec 18th 2008 6:20PM

I WAS RIGHT! THE WII IS KILLING GAMING! Once the Wii "console" was launched, the industry went into a nosedive!Wait....it increased by over $10 billion dollars into 07? Then again in 08? Shit.

THE WII IS HELPING GAMING!

ice~ @ Dec 18th 2008 6:22PM

It doesn't matter. What goes up must go down, and this applies to the economics of the gaming industry. It seems like gaming has reached it's peak and there is no reason to believe that the sales will get better next year. This year had an amazing amount of quality games, and next year is looking less active when it comes to that category. I think we can all say that this is the doing of GTA IV, Gears 2 and many of the other big name games.

zygote55 @ Dec 18th 2008 6:39PM

You're wrong. Currencies aren't backed by tangible assets and therefore can go up forever. This isn't a zero-sum game.

ice~ @ Dec 18th 2008 6:45PM

Actually there are no tangible assets to the US Currency. It's Fiat currency. There is no gold or silver or any other tangible assets to the dollar, its faith based. Im saying that the gaming industry isnt going to keep growing forever, and we're not going to see these pretty numbers all the time, just expect it to go down.

ice~ @ Dec 18th 2008 6:46PM

Crap i completely misread your comment and mistook you for a moron because i thought you said currency "IS" backed...I completely apologize, now i see your point

WiredKnight @ Dec 19th 2008 4:30AM

That's what everyone said last year. There is no reason to expect the same thing can't happen again.

FraGNeM @ Dec 19th 2008 5:33PM

You're right, zygote.

A more accurate number would be the dollars spent on the industry, adjusted for inflation, but I'm sure that the industry received more money than simple inflation can accommodate.

When the true worth of the money received by the industry is less than the prior year, then we can start worrying.

colinbell @ Dec 18th 2008 6:41PM

Or maybe, games sales have gone up simply because in mid to late of 2008, we have price cuts and sequel to Gears on the 360, we have some of the big PS3 exclusives (MGS. LBP, resistance) coming out, we have seen some of the biggest multiplats (GTA, Fallout, Price, etc) and the biggest racing franchises as well (Burnout, Midnight Club, Motorstorm, Grid).

So maybe game sales have increased because there are so many factors driving them during 2008, it just happens to be the same time when the world went into recession.

So maybe its a spurious correlation, and not simply because games are "counter-cyclical" or " recession proof".

J @ Dec 18th 2008 6:42PM

I don't mind standing all day in a bread line as long as I get to come home to teh Haloz!

John Perkins @ Dec 18th 2008 6:50PM

I don't see quite as many games coming out next year that get me excited as there were this year. Things may change after E3 and we find out more about next Fall's lineup, but right now I only see a small handful of games that I'm excited about.

I also think the Wii will see a sharp decline in the amount of hardware and software sales within the next couple of years. Most of the people who are buying the Wii are casual gamers and would easily give up their gaming budget for food. We, of the more hard core gaming variety, are willing to eat top ramen if it means scrounging the money to buy FFXIII or something.

You combine the two issues, slowing sales of the Wii to casual gamers, and less Triple-A titles, and that equates to an industry that is not recession proof.

Mr Khan @ Dec 18th 2008 7:24PM

fewer AAA titles are inevitable, initial results from the holiday season point to signs of oversaturation. As for the Wii? Who knows? There certainly won't be a "great awakening" where people just lose interest overnight. It would be a gradual decline, and even then, Nintendo is still selling the things at launch price. Wii development might indeed benefit from the financial straits of publishers, moving on to more profitable pastures

Deck @ Dec 18th 2008 8:02PM

I thought this last holiday season. "Oh next year doesn't look as good."

I would bet that there are things that probably are going to be coming Fall of 09 (Mass Effect 2 perhaps) that have not been announced yet. So I think we just need to wait and see, and realize that our pocketbooks will be hurting once again next holiday season.

Mr Khan @ Dec 18th 2008 7:17PM

Yes, revenues are up, but if you look at financial reports, you're not going to see such a happy story. Does a 10% growth in revenue really help if you're $10 million in the red?

LaughingTarget @ Dec 18th 2008 7:31PM

It isn't that simple. There is strong evidence that entertainment industries don't suffer under recessions and depressions. If anything, people flock to them when times are bad to at least get away from their current troubles.

The above mentioned companies that are doing poorly are doing poorly not because of the economy, the timing is good to give them an excuse, but because they produced games that no one wanted to buy. Gaming in general is doing remarkably well, but even in the best of times, companies go out of business.

What I see as necessary is the gaming industry putting stronger focus into more positive games. War games are likely going to see a decline in popularity over the next few years much like how war movies in the 30s failed miserably. We'll see a stronger growth in sales of party oriented games like Wii Sports that focus on the social aspect. There'll also be an increase in sales for more upbeat games, both in color and content. Possibly a resurgence of adventure gaming that focus on either lighter elements or comedy.

So, I say that developers should switch away from shooters and put more effort into building games with excellent humor content. When times are bad, there's nothing worse than trying to sell a gloomy product.

NOT ME @ Dec 18th 2008 8:07PM

Not to be a wii hater but Im started to think wii numbers are started to get skewed. somehow almost every month you hear that the wii has sold in the millions worldwide but the total number is still around 20. that doesnt make sense. all the multiplat games came out in november and somehow the wii is that only one that broke 2m....or even a million for that matter. somehow no one knows anyone that just bought a wii. and lot of stores are out stock or only have a couple. I work at a gamestop in NJ and ive gone at least a week and a half where no one has bought a wii. cant say the same for the other 2 at least 1 day. and i know im only in 1 store. but just doing random talking...i cant seem to find (locally) were wii are flying off the shelf especially in november when it didnt offer as much. I wish there was a way to get real numbers as to how many actually own wii. I have a feeling it wiil be a lot lower that the numbers that weve been seeing

Phillip @ Dec 18th 2008 9:05PM

Do you really think independent sources are lying about the amount of consoles sold during the month? There is no incentive to do so, so I really have to ask, huh?

SKI @ Dec 19th 2008 10:50AM

Your logic is very wrong.
Where I lived, people only bought Xboxs and not PS2s, so that means that the PS2 failed hard and all this talk about it selling more then 100 million is a lie! My friends agree so I must be right!

Kia @ Dec 18th 2008 9:49PM

Recession proof, eh? Tell that to the people in the industry who have been laid off this 3rd & 4th quarter 2008.

Ben @ Dec 19th 2008 12:56AM

I'm not a magazine I'm a newspaper!!!! I promise!

Love,
The Economist x x

Poke4Christ @ Dec 19th 2008 10:43AM

I actually find it somewhat disturbing that the game industry would be one of the ones that is "Recession Proof" Wisdom would seem to dictate that if you are experiencing hard financial times one of the first things to be sacrificed should be your video games.