Video games are crisis proof. Or they were – technoblog

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The tail is not tied

In 1983, the game market almost collapsed. There were too many companies making games that were released in a bunch without actually having enough of a community to get them. The result was shelves full of products. The damage was such that many cartridges were dumped in a landfill in New Mexico, USA.

Tecnocast 257 – How is the gaming market reacting to the recession? (Image: Vitor Padua / Technoblog)

The crash of 1983 taught the video game industry several lessons. So much so that since then there has been no other serious crisis in the sector. On the contrary: the performance of the gaming market is usually good even during the economic crisis. Even the maxim was created that it is an industry recession proof.

But recessions happen from time to time. And, according to economists, we’re on the brink of another one (including the United States, which, technically, may already be there). Thus, games will have to once again prove their strength in the economic slowdown.

But not all recessions are the same, and each presents unique challenges. And there are those who are betting that the next recession will hurt video games more than the last.

However, before entering into this discussion, it is worth understanding the positive experience of the gaming industry in the face of crises.

Where does this “anti-recession” story come from?

After the crisis of the 1980s, the gaming market experienced a wave of growth in the next two decades. According to analyst Rob Fahey games, this can be attributed to the frequent updating of the community. While video games were initially marketed to entertain teenage boys, this profile has grown wider over the years.

It has become more acceptable for older people to play, not just for younger people. In addition, the female audience has become more prominent in the industry. The habit of gambling has become a very pervasive form of entertainment. Gaming was for everyone, and the industry responded with games that could dialogue with different audiences.

The cost of games is also included in this equation. In the US, gaming tends to be cheaper than other forms of entertainment. Even more expensive AAA games can be considered an interesting investment. After all, the experience they provide can last for weeks, maybe months. Much more than a trip to the movies or a vacation. In comparison, gaming can be a cheap hobby.

With an ever-growing audience (quite different from the 1983 scenario) and delivering a product that was cost-effective, the industry went from strength to strength. Does this mean that video games have become a crisis industry? Rob Fahey explains the situation as follows:

(…) “anti-recession” is a wrong term; It’s not that the gaming business was immune to the effects of the recession, but that it grew so fast that even the recession couldn’t offset the growth enough to push it into negative numbers.

It’s a slight exaggeration to describe the gaming industry as recession-proof; However, its performance during the crisis showed that the sector managed well when things went wrong.

More than a consolidated audience

Rising inflation around the world, damage to production chains caused by the pandemic, war between Russia and Ukraine, which hampers trade between the countries. These are some of the elements that make up the recession that’s coming (or already here, depending on who’s analyzing it).

What makes this crisis more worrisome than the rest of the video game industry? The first point to consider, according to Fahy, is the market’s ability to create more public. The meteoric growth that occurred in past decades has slowed to a much more controlled pace. Games are already mainstream; It is natural that the society no longer has much room to grow.

It is also worth considering that the favorable scenario brought about by the pandemic – stuck at home, many have incorporated games into their routine – is collapsing. As vaccinations progress and a return to face-to-face activities, the market is already showing signs of slowing, with several companies in the sector reporting lower-than-expected numbers.

Think twice about spending

Another point that has been raised is the decline in purchasing power. Economic downturns are usually accompanied by increases in the most essential products, such as food. In our context, we can transfer fuel to the bill as well. This is the context in which people reevaluate their spending — and that’s where the danger lies in video games being seen as overspending.

Here too, the constant spending model used by many players in the sector weighs in: games with DLCs and separate content where the customer needs it. Continue Spending after initial product purchase. Or mobile games where you literally have to pay to win. It’s hard to justify such expenses when you need to save.

In addition, inflation can cause the cost of games to increase as well. Not to mention consoles. Sony has already announced that the Playstation 5 will have adjustments in some markets, for example. And AAA games can keep you entertained for months, but even so, shelling out R$350.00 can weigh a lot on your monthly budget.

In this sense, the age range of the players is very important, as Fahey argues:

As the gaming audience has aged, the most engaged parts of that audience (…) are younger male users, and in most countries this group’s income is stagnant at best, meaning it’s actually declining dramatically now. . A price increase will be difficult to sell to this audience.

Does this mean video games will lose their ‘defense’ against the recession? It is not necessary. But analysts like Fahey are betting the industry will be hit harder this time. It all depends on how he uses the experience he has accumulated since 1983 to overcome the difficult times ahead.

But what about subscription services? and mobile?

Don’t worry, we also have content on the relationship between these business models and the recession. You can see the talk about Tecnocast 257, crossover hit to killThe Home Games Podcast.

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