Video Games- Beating the Economy

Earlier this year, I discovered that the Gaming industry is well on its way towards overtaking the Movies business.

Video Games are almost 75% the size of the Movies Business! And growing at close to 50% per annum!!……Admittedly, the show biz is a mature industry and is not expected to have a blistering rate of growth – but Gaming almost as large as the entire Movie business?

And now, amid the doom and gloom of slowing economy and stagnant consumer electronics business, the market research specialist NPD Group is reporting

In the U.S., third quarter total industry unit sales grew 8 percent versus 2007, even as the economy showed accelerating signs of recession…… Heading into the critical fourth quarter, the U.S. games industry is on solid ground..

One of the largest companies in the industry, Take-Two

….envisions future revenue for the video game industry, …sees microtransactions and downloadable content as the “biggest opportunity” and calls subscription revenue the “holy grail.”

Meanwhile, Television viewing is moving online in a multiple-viewer, social, ‘gaming’ environment. Jenna Wortham writes on Wired

As television audiences migrate online, media companies are eyeing social networking as a possible killer app for hooking viewers through their laptops. From simple chat rooms to unique games, the race is on to develop content that complements traditional shows — the more creative and addictive the better.

Then, the Wall Street Journal reports on Gaming coming full circle back to a hand-held device – the iPhone

The iPhone and its sister device the iPod touch, which feature big screens and powerful graphics, are emerging as serious competitors to Nintendo’s DS handheld and Sony’s PlayStation Portable….Developers are being lured by Apple’s online method for delivering games, which has lowered distribution costs and made it possible to profit on games that sell for just a few dollars or are given away with advertising…

So, Games are overtaking Movies…both are moving online along with the TV shows…these are all framed in interactive, social settings…all are available via pay-per-use subscription models…and right on your iPhone. All your entertainment is now in the palm of your hands to be consumed at will.

It’s clear that the ‘game format’ has taken over entertainment and online subscription has eroded purchase thresholds. Economic news and debates do not matter in the pastimes anymore.

Update 11/26/08 – Daniel Terdiman at CNET is also writing about the video game industry being recession-proof despite noting some caveats from Wall Street-types.