Filed under: Products and services, Industry, Consumer experience, Recession
In a column in Barron’s (subscription required), analyst Todd Greenwald provides a bullish outlook for the video game industry, macroeconomic trends be damned:
We believe that this industry is virtually recession-proof and will be driven almost entirely by the release of new games, and continued hardware sales, rather than any macro-level consumer spending trends.
Last year’s momentum has continued into the first half of 2008; year-to-date software sales are up 41% in the U.S., following 34% growth last year. Furthermore, this will likely accelerate in the coming months, driven by the releases of Grand Theft Auto IV, Nintendo’s Mario Kart Wii and Wii Fit, and Konami’s Metal Gear Solid 4.
I tend to agree with the notion that video games should be pretty recession-resistant — they just aren’t that expensive for the amount of time that so many young, male hardcore gamers spend with them. There’s an argument to be made that a $50 video game actually provides a positive return on investment to the consumer because a night at home playing PlayStation in your underwear is cheaper than a night out on the town.
But one word of caution: Much of the growth, especially in more casual games like the Nintendo Wii, is being driven by a growing number of non-hardcore gamers. People who don’t consider video games their main hobby may be more prone to give them up if things get tight.
Another problem to keep in mind: the Associated Press recently reported that teens are having a tough time procuring summer work in light of the struggling economy. That means less spending money for video games. But teen-oriented fashion retailers are more likely to be the victims of that.
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