PSP News: Analysts Predict Lending Crisis Won't Hurt Gaming Industry - PSP News

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Analysts Predict Lending Crisis Won't Hurt Gaming Industry

You may focus on video game news, but if you were online at all in the past couple of days, you couldn't miss the news concerning the stock exchange. After the House failed to pass the Bush administration's $700 billion rescue plan, stocks tumbled two days ago, resulting in the worst points drop ever. However, yesterday, the market saw a big resurgence as the Dow closed with the third-highest point gain in history. So...in other words, things are pretty volatile right now.

But according to analysts, any stock shortcomings probably won't affect the ever-blossoming game market. Wedbush Morgan's Michael Pachter spoke to Gamasutra on the subject and predicted that none of the publishing companies will be affected by the lending crisis, and Lazard Capital Markets' Colin Sebastian mentioned the well-known "cocooning" effect." If you're not familiar, it's one of the more logical and straightforward theories in business: when the economy starts to go south, people tend to stay home more often. But of course, they still wish to be entertained, which means games - often the leading profit-maker month-to-month of all major entertainment industries in North America according to recent NPD results - are the perfect option. Sebastian called it a "cost-efficient form of escapism," which is exactly what it is. A movie will cost anywhere between $15 and $30 but it will only offer 2 hours of entertainment time, while a $60 game can provide, at the bare minimum, 6-10 hours. In many cases, that number is between 20 and 40, and well over 100 hours isn't unusual.

Traditionally, this theory holds true. Gas prices went up; people stayed home...and game sales rose. GameStop's financial projections for the '08/'09 fiscal year show stunning year-over-year growth, and those projections may even be conservative according to some analysts. So you needn't worry; the DC boys can bicker and debate all they want. In the end, home entertainment will benefit.

9/30/2008 Ben Dutka

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