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Pachter, Hirai Downplay Economic Troubles

| 13 Oct 2008 18:18
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Noted industry analyst Michael Pachter believes the videogame industry will come through the current economic downturn in relatively good shape, and SCEI President Kaz Hirai doesn't seem too worried about things either.

Pachter said that while there will likely be a "visible" reduction in year-over-year growth for the industry, he attributes it to last year's monster launch of Halo 3 rather than any kind of reaction to the current economic climate. "Notwithstanding this month's anticipated decline, we believe that the videogame software sector remains highly recession-resistant," Pachter said in a note reported by Gamasutra, adding that he thinks "videogames are likely to weather a recession quite well."

"We think that games fit within a larger category of discretionary spending that encompasses all entertainment and leisure," he continued. "In a recession, we think that the number of hours spent by consumers engaging in leisure and entertainment activity is likely to increase, with a shift from higher cost forms of leisure and entertainment to lower cost forms. As a category, games are one of the lowest cost forms of entertainment, particularly to those households that have already invested in a home console."

At least one major industry figure agrees with Pachter's optimistic outlook: Kaz Hirai, president and CEO of Sony Computer Entertainment, told the Financial Times that videogames will prove resilient during the economic uncertainty, by providing "cheap home entertainment" to consumers as an alternative to going out. "As long as we can generate excitement, then we will be less affected than other industries," he said.

To that end, he confirmed that Sony has no intention of cutting the price of the PlayStation 3 during the Christmas season. Hirai said that while the PS3 is more expensive than both the Wii and Xbox 360, particularly following recent 360 price cuts, the system provides more bang for the buck than its competitors. "When you really compare apples to apple, then I think we have a very good value proposition," he said.

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