The video game industry is being hit hard by the economy, just like every other industry. And although I believe it's potentially recession-proof, it won't be easy for gaming to stay that way.
Things are looking bleak for game creators. In a statement Tuesday, Electronic Arts, the world's largest video game developer, announced that it was forced to lay off about 1,100 employees and close 12 facilities worldwide to streamline its business operation and cut operating expenses by $500 million to prepare for uncertain economic times.
Microsoft Game Studios was hit hard by Microsoft's recent announcement of 5,000 layoffs. Avalanche Studios, another prominent developer, cut nearly half its staff late last year. And Take-Two Interactive, a former EA acquisition target, announced in its last quarterly filing that it incurred a $15 million loss for the three months ending October 31, 2008.
On a macro level, oddly, things look just fine in the video game industry. But when we look closer into sales data (from NPD), it becomes blatantly clear that that's mainly due to the Wii's success and the popularity of established game franchises. So as the recession worsens during 2009, I think we can expect a slew of third-party Wii games, and many more sequels, as developers try to capitalize on the best ways to make a lot of money from very limited resources.… Read more