K&AJones

Hello

I know it's known or been talked about but after reading some articles I don't think we really understand the effect now or what might really happen down the road. We know of MS but the ripple effect is hitting the whole industry and it may get worse. This year might be the worse for the Gaming Industry in a long time. We're going to lose small firms, Devs and probably many talented folks. So don't be surprised we're all dusting off those previosus games and playing them again. Here are some recent headlines so read and say a prayer....


Sony announces restructuring, $2.9 billion loss
http://www.gamespot.com/news/6203468...renews;title;2

EA Black Box staff sent packing
http://www.gamespot.com/news/6203548...renews;title;5

Microsoft deleting 5,000 jobs after profits slip
http://www.gamespot.com/news/6203503...renews;title;9

EA sacks Madden, NCAA staffers
http://www.gamespot.com/news/6203478...enews;title;12

Sega confirms US layoffs
http://www.gamespot.com/news/6203476...enews;title;14

Confirmed: Microsoft Flight Sim Studio Closing
http://www.gamespot.com/news/blogs/r...o-closing.html

DVDChris

Well, I don't think the Gaming Industry is doing that bad after the December NPD numbers:

http://forum.dvdtalk.com/video-game-...s-numbers.html

Overall the gaming industry saw growth as all 3 systems sold more in 2008 vs. last year. I think all companies are just being cautious.

However, Microsoft's loss might be attributed to poor sales on Vista. Sony is still losing money for every PS3 sold.

mndtrp

It's strange. I've bought more games for my PS3 than I did for my PS2. That doesn't count the PSN games I've downloaded, plus any additional content I've purchased from their store.

rabbit77

In my naivete I thought the gaming industry was recession-proof.

fujishig

Even companies (whether they're in video games or not) that are doing well now are making layoffs to prepare for the future, and to lower their future risk. This isn't that surprising, considering the similar layoffs in other entertainment fields, as well as tech. I know the rationale is that consumers need something to take their minds off of how bad the economy is doing, but there are many, many older, cheaper games that consumers can either buy or wait for. When you have a commodity that gets devalued to less than half price in a few months (sometimes less), why pay the premium when times are tough?

Besides, I can think of few blockbuster titles that weren't sequels to a franchise. Lots of critically acclaimed titles, sure, but not really at the top of the sales charts. So they can always pare back and just make the blockbuster games.

Giantrobo

Yep, it's combo of things ranging from the economy and people holding back money to companies restructuring and just being cautious even when they're doing relatively well. It's easy and quick to just dump people to save $$$$.

Cory02

From what I've heard and read, the gaming industry is the most recession-proof of all the entertainment industries due mainly to the face that games (even at $60 a pop) are the best value in entertainment (think of how many hours of gameplay are in modern games like Fallout 3).

That being said, I'm sure all publicly traded companies are feeling the need to cut costs significantly to please The Street. It also helps to save as much money now as insurance against further worsening of the economy. Finally, everyone knows how bad the economy is so its good cover to get rid of people and save money.

PopcornTreeCt

This is what I read and I think this would be happening without a recession.

Tuan Jim

I was reading some articles about this just last month about how game sales (after Thanksgiving/Christmas) were just as high as they always were despite the fact that people were cutting back on purchases almost everywhere else. So, some of these numbers are a bit of a surprise - Sony/MS I can understand (they're cutting folks in Japan as well) - that'll fix em for pricing their tvs so much higher than comparable models.

Re: firing madden staffers - are they going to hire them back a month before Madden '10 comes out or what? Seems a little like poor planning for a game that essentially needs an annual release.

maxfisher

The rate at which this thing is snowballing is truly alarming. Most companies in an industry that just got off a record year have no reason to be making these kind of cuts, other than paranoia that things are going to take a dive. And when companies start cutting massive jobs out of the fear that things will get worse, it will almost surely become a self-fulfilling prophecy.

chuckd21

I think Microsoft's loss was mostly Zune related. The Zune division lost almost $100 million last year.

DVDChris

I stumbled onto this interesting article:

http://kotaku.com/5137824/dont-blame...the-developers

fujishig

How does that make them recession proof? Doesn't that just mean the people can buy less games?

I love videogames. But if times are tough, I have no problem not buying games as they come out, and waiting for used or cheaper copies (or even better, just working through my huge, huge backlog). For many "casual gamers" a game like wiifit or Madden or even Rock Band is enough to last them for many months, if not the year. The top games will continue to sell to dedicated fans, but what about the niche titles, the revolutionary ones, the ones that don't have buzz yet? And then when you have such a deluge of great games coming out all at the same time... I'm sorry, Ubisoft, but I'm buying your games last, because I know that right after Xmas there will be massive price drops on your games, no matter how good they are.

In addition, they're too expensive for impulse buys, and I assume that's why the holidays are such a big push for the game companies.

On a side note, I think one of the most recession-proof games is something like WOW. Relatively cheap to subscribe to, and it can take over your life so that you don't need to buy other games.

lordwow

I've pretty much decided to only buy 2 or 3 games this year. Anything I buy I'm going to have to sell something off to pay for. I sold off The Bigs (since I 1000/1000ed it) and L4D (since a lot of my friends sold it). The game I'm planning to spend that money on is COD 6.

Otherwise, I just don't have the finances to fund my gaming habit. I'm just going through my backlog instead.

Mikael79

Don't bring this fact into the Tech Forum! Way too many Zunatics in there.

Artman

Game sales are fine. Big companies are trimming because they overhired to begin with, wasted too much on R&D, etc. or just released a lousy product.

tcoursen

The articles seem to indicate that these companies are cutting on R&D and on "new" games and just focusing on their series.

To me this is the problem with companies in this country right now. Companies are not run with long term goals, everything is so short sighted. companies that are making profits are cutting r&d and that will only hurt them in the long run. But their numbers next quarter will be good, but that is all that seems to matter to companies any more, the next quarter.

DeanoBKN

Exactly. This could be said for most retailers going under as well.

DVDChris

Here's the problem I see. Companies who spend a lot of money on R&D come out with new games. However, people only buy the games with names that they know, so the new games that are more creative don't sell well. What does that tell the game company? They'll think that consumers want sequels.

fumanstan

Yup, just look at the reports from EA at the end of last year. After all the whining about EA sucking developers dry and pumping out sequels, they had a pretty good lineup of fresh games, a large amount that ended being disappointing as far as sales go.

I've mentioned this before, but the game industry is tougher to follow, especially in regards to research and development. Games are pretty much always delayed, the ones that are pushed out to meet schedules often fail, and developers can fail with just a single bomb or disappointment. It's pretty tough to play around that and project future development when it's a volatile industry.

CreatureX

Don't forget the developers we lost in 2008:

Microsoft shuts down Ensemble Studios (Age of Empires, Halo Wars)

Free Radical shuts down (Haze, TimeSplitters)

Also Factor 5 (Rogue Squadron, Lair) shut down as well.

Cory02

I meant that people will buy games instead of going to the movies, for instance. Or when people are cutting back their entertainment spending, spending on games will be the last thing they cut.

orangecrush

I wonder how many new developers were created in 08'?

chuckd21

And yet Crystal Dynamics just fired a bunch of their Tomb Raider developers and EA lays off Madden people. MADDEN for god's sake.

Edit: Yay! 1,000 posts!

orangecrush

It is possible that there will be a crash in the videogame market. I think the crash prior to the NES followed some serious boom years. However, I don't think the industry (on the whole) will suffer nearly as much as many other industries will/have, if at all. You have to remember that the industry encompasses a lot of companies that will probably do quite well next year (i.e. Nintendo, EBGames, Amazon, etc.) in addition to the stinkers.