The Recession Proof Video Game Industry
Wednesday, December 24, 2008SUZANNE PRATT: With shell-shocked consumers holding tight to their cash, many retailers are likely to ring up only bleak holiday sales this year. But as Lucy Craft reports from Tokyo, there's one gift-related industry expecting 20 percent annual sales growth.
LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Financial disasters or no, it's still fun and games as usual for the $35 billion video games industry. 2008 is expected to be another banner year for the business, as it rolls out long-awaited sequels to blockbusters like Final Fantasy and Monster Hunter. While other Japanese companies like cars or electronics are sweating over a slowing world economy, here in the video game industry, they're unfazed. In fact they say, the video game business is immune to recession. The industry isn't merely shrugging off the global slowdown. Chris Kramer, spokesman for Japanese software maker Capcom, says a sour economy is actually good for business.
CHRIS KRAMER: What we were finding was that people are being more cautious and more careful with their entertainment dollars. Instead of going out for a single evening of entertainment, what they'll do is they'll, they actually are going out. I'll take my $50 and I'll buy a game, because I know I'm going to get 40 hours, 100 hours of entertainment out of this game. People were actually buying more games, because they were looking at it as a better investment for their entertainment money.
CRAFT: Okasan Securities analyst Masashi Morita says software makers are just starting to cash in big on a huge installed user base. Tens of millions of game consoles have been sold.
MASASHI MORITA: Game software is relatively cheap. So I think it's hard for them to be hurt by the economic downturn. The only losers would be with those with less interesting titles. Right after 9/11, Christmas sales were virtually unaffected. So that's why I think we won't get hurt this year, either. I think this will be the industry's best year ever.
CRAFT: There is one fly in the rock 'em, sock 'em ointment -- the game business is quite a different beast from what it was back in 2001. Instead of catering exclusively to so-called hardcore gamers -- young males with an insatiable appetite for new titles -- nearly half of the market is in what's known as casual games, like this software for people who are trying to quit smoking or release their inner rock star. Klee Kuo is a spokesman for software company Square Enix (ph).
KLEE KUO: They're not necessarily people that would grind 50-60 hours in one game. They just want to carry something on the go where they can play five minutes on the train, on the bus, things like that.
CRAFT: In other words, casual games are aimed at just about everyone. Some analysts, like KBC Securities' Hiroshi Kamide, warn that by courting casual gamers, the industry has exposed itself to recession.
HIROSHI KAMIDE: It is a massive market. Unfortunately though, you can't really convert these casual gamers to core gamers.
CRAFT: But with so many new offerings in the pipeline, the industry argues even a monster of a recession can't stand in its way. Lucy Craft, NIGHTLY BUSINESS REPORT, Tokyo.
