Are Video Games Recession Proof?
Just in case the skyrocketing oil prices or all the news about the weakening dollar haven’t clued you in, the United States is most likely headed towards a recession. You would think that during a recession most people are less likely to spend money on nonessential things like video games, and focus more on feeding their family in the time of need. However, the latest NPD numbers have been very, very good and show no signs of dropping off. Is this an indicator that the video game industry is completely recession proof?
Video games haven’t been around for long enough of a time to make a comparison of peoples’ old habits during recessions so I’ll go with another entertainment form: movies. The biggest recession the United States has ever had was the Great Depression that occurred in the 1930’s. During this time, there were massive layoffs and huge numbers of unemployed people. However, there was also a rising number of people who made their way to the movie theater to escape from their own troubles for a few hours.
So can video games do the same thing? In the troubled economic times that are likely to lie ahead, will video games be solstice? I don’t think so. The thing with movies during the Great Depression was that they were somewhat inexpensive (about $3 inflation adjusted) so someone could go to the movies without digging too far into their pocket for cash that didn’t exist. Video games, as everyone reading this knows, cost many times that amount. So people who are in economic trouble are unlikely to be able to lay down $60 per game or hundreds of dollars for a new console. And if the recession turns out to be as bad as most media outlets are hyping it to be, there will be plenty of people who are in economic trouble.
There is another angle to look at. All of the adults (now great-grandparents) who were part of the escapists of the Great Depression are deeply entwined to movies. For them, movies were the shining moments in a dark part of their life. These people encouraged their children to watch films and their children continued that tradition. After a while, this ingrained feeling to watch movies spread far and wide and the film industry is huge. If the gaming industry was to be that shining beacon, think of how many benefits it could reap in the long run. But games have to become much more affordable for that to happen. It would be a risk of course, but one that, if it worked out, would accelerate the motion of the already growing industry. And who doesn’t want the games industry to be huge?
Sources:
Escapism during Great Depression
This post has 4 comments
April 15th, 2008
The $ 60 price per game can be considered high, but these game developers deserve it. They pour their blood, sweat, and tears into these games in order to put high quality content in games.
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April 15th, 2008
yah but read my article about why do games cost $60… they could sell many many more copies with a lower price
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May 2nd, 2008
Selling more copies might be the reason they don’t want to lower the price. There is a mathematical equation that has to relate to the sale rate and how much the producer profits. Since in your case comment two is talking about deterrence of sales, if they have a low price (40 dollars) and they sell 12,000 units, they make $480,000 dollars. If they raise the price to 60 bucks but only sell 8,000 units, they make the same amount ($480,000) and have to buy less products (DVDs and cases) thus increasing there profit. The second way makes them more money even if some of the population doesn’t buy the game because we all know that once friends get games, there is only a matter of time before we buy the game as well. Sadly, the industry is not to make good games, but to makes games that are marketable and profitable.
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May 2nd, 2008
that is a very very good point kal
why no update on the site recently?
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