Games Love A Lagging Economy
A few days ago, analysts released a statement saying the lending crisis and general lowering of the economy won't have a negative effect on the video game industry. Lazard Capital Markets' Colin Sebastian talked about the "cocooning" effect, and I'd like to elaborate on that, here.
It's just common sense. When an economy isn't doing so hot, people tend to stay home more often. Throw in the elevated gas prices and when the weekend rolls around and things are tight, most individuals and families will consider: "well, I could go out...and pay for gas, food, and entertainment, or..." Or, he or she could simply toss in a game and get an evening's entertainment out of that. Now, I'm not saying everyone should just stay home all the time and play games (I know I'll get the catcalls if I say that, ironically from the people who actually do stay home and play games all the time). But when normal people begin to tighten their belts, the very first things to go are luxuries, and that includes eating out and partaking of expensive entertainment outside the home. But even a brand new next-gen game only costs $60, which can offer anywhere between 5 (at the very low end) to 20, 30, 40, or even hundreds of hours of entertainment. Using simple math, anyone can see that a DVD or Blu-Ray movie is far costlier.
In addition, you should probably see book sales rise, and Internet traffic should be up, too. The bottom line is simple, and quite obvious. Granted, the consoles can still be a pricey endeavor in an ailing economy, but again, in the long run...well, they're one hell of an investment. Many years and hundreds upon hundreds of hours of entertainment for a few hundred dollars? Few entertainment industries offer this kind of cost-effective option, as indicated by those aforementioned analysts. Sure, sales may not be through the roof as they would be in a strong economy, but they sure as hell won't suffer the way other industries might. So if you're wondering why GameStop is one of the few stores in the mall that has scores of customers these days (geez, Abercrombie & Fitch is deserted!), just think for a few minutes. The answer is clear.
10/3/2008 Ben Dutka