The Economy Will Affect The Video Game Industry

1up editor Garnett Lee wrote that contrary to analysts prediction that the video games industry is recession proof, lay off show otherwise as tougher times dawn on us. He writes :

Economic news here on the cusp of Christmas points to this being one of the worst holidays in memory for retailers. Yet the videogame industry continues to chant its mantra that games are recession-proof. NPD sales reports get cited most frequently as evidence of consumers taking the much ballyhooed "staycation" and spending their discretionary money on entertainment that can be enjoyed at home (as opposed to holiday vacations).

He went on to state that the NPD numbers shows sales of video games and consoles during these holidays to be strong. This was often touted as proof of the video games industries recession proof label. He went on to lament that:

Little good those reports do for the many members of the development community hit by layoffs over the past few weeks. In an interview for an article appearing in the Economist Piers Harding-Rolls of the media analyst firm Screen Digest attributed these job loses to the regular cycle of the industry. Publishers, he says, "go all out for investment, trying to produce ideas, then at a certain stage in the cycle they pare down." While true that teams swell to finish projects and then contract after a release, the notion that publishers would be curtailing development in what should be the strongest part of this current generation flies in the face of common sense. If anything, with installed hardware numbers hitting critical mass, you expect publishers would be putting their foot on the gas to drive as much product as possible into the growing number of gamers' hands.

The growing number of lay offs among development studios are disconcerting to say the least. While some analysts claim that it is normal production cycle. As game developments wind down end of the year, projects near completion, teams get cut in size.

There may be some ounce of truth in that, but the number of lay offs in the United States development studios point towards it being more than just the end of production cycle's.

I do believe sales of video games will slow down simply because of the fact that people will be buying less games because they earn less or they can afford less. The argument that people will buy more games because they cant afford other things is just pure guessing. Which I suppose is what analyst's do.

I might add that analyst's may have their own interests lined up too when declaring that the games industry is recession proof. Everything may not look as rosy as it sounds.While the industry may not be hit as hard as the automotive industry, that's not to say it will be great.

The full article over here : http://www.1up.com/do/newsStory?cId=3172059