Most pundits analyzing the rumored "imminent" US economic recession in light of overwhelming video game revenues merely reiterate sales figures before shrugging into an assumption that gaming is siphoning revenue from the rest of the leisure market. No one knows, of course. No one actually has sales data that proves as much. We just know that despite all the doom and gloom in the general media about "markets," video game sales are up, and we're talking way up. The rest is just a guessing game -- just like the notion of "when" (as opposed to "if") in relation to the "R" word.
Is the U.S. economy slowing? Perhaps. I'm not an economist, but I know two things: the U.S. economy is driven mostly by consumer spending, and it's also therefore driven mostly by psychological disposition -- call it the "belief" that the economy is healthy or sick, i.e. a self-fulfilling prophecy. USA Today is running a story about 76% of Americans (it says "more than three in four") who now think the country is, in fact, in a recession. If you think the economy's shrinking, then it probably is, because you'll spend in kind and help make it so. All it takes is a certain segment of the market (say housing) to go even a little bit sour and the psychological shock wave can be a bit like watching a snowball grow from hand-sized to stadium-sized over the length of a single football field. Consumer psychology to a large degree actuates market reality.
Assuming that's true -- and remember, I'm not an economist -- what does that say about market reality and consumer psychology as it relates to video games?
February video game hardware sales were up over 2007 by $78 million and 19 percent. Software sales were up from $454 million to $669 million, a staggering 47 percent. Game accessory sales were up $49 million and 36 percent. Overall, NPD says the market jumped 34 points in February over the same period last year. That's especially noteworthy because (a) February is conventionally a slow month for video games, (b) we're over a year past a new product launch and well into each new game system's life cycle, and (c) nothing notable software-wise arrived in February to account for those sales. Read that again: only four of the top 10 software sales charters debuted in February -- the rest, including the game in slot number one (go Call of Duty 4!) came out intermittently over the prior three months.
So games haven't (yet) been affected by...let's call it "pre-recession" spending trends. Assuming the doom and gloom isn't just hysterics, but also that game revenues wouldn't be any higher in a "boom" market (i.e. that they've been unfazed by all the purported turmoil), does that mean games are taking from other leisure markets?
It's impossible to say with certainty, but let's look at film, books, and music. The new movie Horton Hears a Who shot to number one with $45 million in ticket sales this weekend, and box office sales in general were up .43 percent over the same weekend last year. And in case you hadn't heard, the movie industry actually set a record in 2007 with total ticket sales of $9.6 billion. That's despite claims of piracy and declining ticket sales. (Movie execs will claim anything, it seems -- they embarrassed themselves and their industry last year by trying to explain away last October's terrible box office numbers, the worst in eight years, as Halo 3's fault.)
Book sales on the other hand are admittedly flattening, but that's due to a long-term trend blamed on competition from the Internet, video games, and other electronic devices. And retail music sales? They've been declining for years for similar reasons, including an ongoing shift in the way consumers relate to traditional music packaging, e.g. albums versus individual songs. The point is that any encroachment by games into either area has been occurring for years.
Is the economy tanking? Like I said, ask an economist, not me. But we can recognize that game sales are up, that they're up despite media doom and gloom about the economy, that they don't appear to be tapping unexpectedly into other leisure markets at this point, and that there's nothing suggesting sales won't keep on booming.
That's the beauty of entertainment -- up or down sales-wise, it's certifiably "bubble" free.
Replay
Agree? Disagree? Have your say below in comments, visit Wake the Happy Words for expanded dialogue, or pelt me with emails here
i believe that our government is a collection of retards who insist upon denying the truth. that is that we are in a recession. i spend alot anyway, but it doesnt matter because this recession is caused by housing. people losing their houses arent really going to to buy other things and so forth. so you cant really blame people for not spending as much, blame them for buying into these houses at 300% more than they are actually built for.
Home entertainment will increase in a recession. Think about what it would cost to take a middle-class family of four out to dinner and a movie. $100 for dinner and another $60 for the movie. If you do that only twice a month(a lot do more) your looking at $320 a month($3840 /yr. Or you can throw down a one time cost $500 for a console and peripherals. If you buy two games a month (thats a lot IMO) your monthly spending is now only ~$100. So, now the kids and the parents(everyone plays now) can glean a lot more entertainment for a lot less money ~$1700 year. You just cut your entertainment costs in half. When you do the math video games are cheaper for families.