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Analysts Predict Continued Growth in 2009

| 3 Apr 2009 15:47
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As the recession forces people to cut back on entertainment expenses, the videogame industry is expected to continue to grow this year, although analysts warn that consumers are going to expect higher levels of quality in the games they buy.

Toon van Beeck of the research firm IbisWorld predicted the industry will hit revenues of $41.9 billion this year, driven largely by Nintendo, whose Wii console has attracted significant numbers of females to videogaming. In 2008, despite the effects of the economic downturn, videogame sales in the U.S. increased 19 percent over 2007, reaching $21.3 billion dollars, according to NPD Group numbers, and in the first two months of 2009 sales are up 11 percent at $2.81 billion.

IDC analyst Billy Pidgeon said videogames provide "strong entertainment value" and typically do well during recessionary times, but noted that even as more people turn to videogaming, they will be more selective about the games they buy. "What this means is that games will see double digit growth in North America and worldwide, but that gamers will consider purchases more carefully," he said. "Gaming enthusiasts will demand quality games and will not buy games that are considered second rate. The mainstream consumer will also buy fewer games but will be less savvy about quality."

Many game publishers are also adapting to the tough times by spreading game releases throughout the year, rather than focusing heavily on the lucrative Christmas season. The holiday shopping period has become so clogging with competing releases that some publishers now feel their games are at risk of being lost in the shuffle. "So many companies try to get all of their games launched in the holiday season that we all end up fighting and competing for the same dollars," said Capcom Vice President of Marketing Mona Hamilton. "Consumers, particularly in this day, can only buy so many videogames at one time."

Ultimately, said Interpret Vice President of Videogame Research Michael Cai, publishers will have to provide consistently high-quality gaming experiences if they want to continue to attract the consumers' dollar. "Videogame sales have been impacted the least from the global recession and there are no real signs of it slowing," he said. "In order to maintain this healthy growth momentum, however, the gaming industry needs to continue providing appealing content and innovative experiences to compete for consumers' entertainment time and share of wallet."

Source: Reuters, via Joystiq

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