NPD: November Sees 10 Percent Growth
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The video game industry saw November revenues up 10 percent over last year to nearly $3 billion -- even amid an economic recession, and despite the fact that last November had seven more post-Thanksgiving shopping days, the NPD reported today.But, before we all announce it is party times for the game industry, it might be a good idea to recall that multiple companies (including EA and NCSoft) have been forced to go through job cuts or are on the edge of bankruptcy. Gamasutra's analysis.
This brings the industry's revenues to date to $16 billion -- and according to the NPD's Anita Frazier, who describes this month's revenue performance as "blistering," the games biz is still on track to reach NPD's previously-estimated $22 billion for 2008 as a whole.
"One reason for the continued strength of the industry compared to other forms of entertainment comes from a number of sources," says Frazier. "Certainly, the expanded audience for gaming due to the availability of a wider variety of compelling content is a strong contributor."
1. We Are Not Recession-Proof
Former U.S. Presidential candidate John McCain received a widespread backlash when he faced the darkening economic horizon and claimed, "the fundamentals of our economy are strong." He later clarified that, in making this assertion, he was referring to the spirit of the American worker, but general consensus held it was still something of a naive statement.
And the fundamentals of the game industry may indeed still be strong -- monthly NPD is still growing, with declines largely due to mitigating factors in year-over-year comparisons. Hardware is still selling, and a raft of analyst opinions and retailer surveys show that even the cash-strapped consumer is still buying video games.
But even the stalwarts among the industry's major publishers feel the pinch when investors -- themselves cash-strapped consumers -- get skittish. And lowered share values, sales declines or profit gaps that might be statistically insignificant to them can be outright punishing to smaller or more challenged companies.
In the end, nobody likes reporting on layoffs, but we did quite a lot of that as the whispered word "recession" grew into a roar, and the industry indeed felt the impact from the bottom to the top. Companies like Electronic Arts, THQ and NCsoft tightened their belts and terminated projects and staff.
Midway now threatens to buckle under the weight of its backers' credit crunch, and many smaller studios were jettisoned, acquired or shuttered. Those that remain face major challenges -- a credit crisis can spell the end for promising venture-backed startup studios who may now never see their projects get off the ground.
So it'll likely be another successful holiday for the video game industry, even more impressive and positively portentous considering what it's up against. But even when products sell, when people are hurt, "recession-proof" is the wrong word.
Rather than parrot the gratifying refrain, it may be wise to prepare to consider how the displacement of talent and the climate of increasing risk aversion will affect the creative direction of the industry in the coming years.
