We have lost count of the number of company spokespeople that have claimed that the games industry is recession proof. While it may be true that the recession does not have as significant an effect on games sales as it does on other luxury spending, to call the industry recession proof is bullish and naive.
Apart from major publishers like EA and Activision taking massive financial hits, it’s the smaller developers that are really feeling the brunt of the credit crunch according to Games Investor Nick Gibson.
Gibson told Kotaku that “In the last four or five months there has been a collapse in venture capital and, more broadly, private equity funding for privately-held games companies” According to Gibson, private funding for games is down around 60 % from where it was last year.
This is very bad for the games industry, and gamers in general, especially those with an acquired taste for unique and original IP. In times like this, when companies are strapped for cash, they are far more likely to invest in sure-thing money spinners. So expect a lot of sequels, and a lot of games catering to mass audiences.
Fortunately for franchise fans, we can rest assured that games Grand Theft Auto V, Guitar Hero and The Sims 3 along with all its expansion packs will keep coming hard and fast.
Developers are also more likely to look to developing for platforms that see bigger sales, and while some argue that this will lead to publishers abandoning the likes of the PS3 for the Wii, recent software sales figures indicate that the “core gaming” market buys more games than the casual market even thought the casual market has a far greater install base. Therefore, it stands to reason that Xbox 360 and PS3 owners are safe for now.
PC gamers on the other hand have got something to worry about, as the odds that developers have to gamble against, namely piracy, costly hardware upgrades and increasing console popularity, make it the least attractive platform to develop for when times are tight.
While we may not be feeling it very much now, with a reasonable variety of PC games being released over the past few months, we have to consider that these games were in development long before there was any clear sign of an economic slowdown. Therefore, the current release calendar is not really indicative of the current economic situation. The current economic climate is, and will continue to most certainly affect game investments going forward, and we should start seeing the results in the next 3 years.
We are expecting less developers focusing on the PC, less original and creative (read “risky”) new IP, and more sequels and rehashed money spinners over the next 5 years, so enjoy the remnants of pre-recession game development, because change, as they say, is coming.
Discuss the economic recession’s effect on the games industry in the forums
Loading ...
