Analysts: Game Innovation Will Feel Impact Of Recession

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Although analysts are predicting that November was a decent month for the video game industry, and many of those analysts still claim the industry is recession-proof, there may be another casualty of the ailing economy: innovation.

According to GameSpot, a DFC Intelligence panel believes that although the industry will work their way through the current crisis, "there exists potential for a significant upswing in years to come," so said David Perry. Perry, creator of the Earthworm Jim franchise and founder of GameInvestors and GameConsultants, echoed PSX Extreme's previous beliefs that gaming really is enveloped in a bubble of sorts, as more people are staying home in a recession, and thus, more people may be playing games. But DFC Intelligence's lead analyst, David Cole, added to these sentiments by saying that smaller game developers are in for some rough times. Said Cole:

"I think it makes it much harder for the smaller players to compete. Large publishers are already very conservative with new projects, and the financial situation will probably make them even less willing to take risks. This means even more of an emphasis on sequels and well-known licenses, assuming that is possible. Capital for smaller companies, unproven ideas, and startups is likely to be hard to find."

In other words, innovation may fall by the wayside while we struggle through the slow times. Senior vice president of Lazard Capital Markets, Colin Sebastian, put forth the possibility that all this tightening isn't good news for third-party investment, either, and publishers might even slow down in their push to roll out the next generation of consoles. Essentially, all this translates to publishers only wishing to hand out money to the tried-and-true; to those development houses that have proven themselves in the market. Therefore, unless you have a successful past, publishers are less likely to forward you the capital you require for your project. And if it's an original concept that may or may not appeal to the mass market, you're far less likely to get your money. In the end, Cole had this to say about the current situation:

"I agree with the basic assessment that games provide a lot of bang for the buck and thus overall spending could actually increase during a recession. However, it will clearly not benefit all companies equally. Mediocre products that are license driven tend to appeal to a less savvy consumer that is more likely to cut back on spending. Publishers that don't have a strong product portfolio could be in real trouble. I think it is likely that we could see a major publisher go belly up in the next year or so."

12/10/2008 Ben Dutka

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