By now you’ve probably heard the news, 1UP Digital Network will be sold to UGO Entertainment, which also means that Electronic Gaming Monthly will be put to rest. According to EGM, the decision to call it a day has been a result of a decline in the demand for print. As if that wasn’t enough, 30 people were also made jobless as a result of the buy-out. This is just the latest story amongst countless reports and news stories relaying to us the grim reality of the effect that the growing economic crisis is beginning to have on our games industry.
Daniel Terdiman wrote not so long ago about how the video game industry may well be immune to the problems that the economy is facing, and although he may have missed the mark, he wasn’t totally crazy. Video game sales in the UK have seen a 23% growth over 2008, which some say is due to the rise of casual gaming. Needless to say though, figures like that certainly don’t paint the picture of an industry in crisis. Microsoft also saw the Xbox 360 enjoy its biggest Christmas yet in Europe, and have enjoyed an 84% growth in the sale of online content over Xbox Live. To top it off, Nintendo seem to still be going strong despite fears that they would be hit the worst. Daniel Terdiman wasn’t the only person to suggest that the industry would be safe back in November, as game sales appeared strong.
Not all is fine in the world of video gaming, however, and the industry is starting to feel the heat. Even with its Christmas success, Microsoft has revealed that as many as 15,000 jobs may be under threat as we head into 2009, and rivals Sony intend to cut off 8000 employees by 2010. Publishers aren’t safe either, as Activison Blizzard’s stock price has fallen to its lowest point since 2006, even with strong sales from huge titles such as Call of Duty: World at War and World of Warcraft: Wrath of the Lich King. The worst part of all this is that these stories aren’t surprising, or anything new. Every week you can do a quick search around the ‘net and find numerous stories about video game companies losing money and cutting staff.
Right now you might be wondering how all this depressing stuff effects you, the average gamer. One of the most likely outcomes is the demise of many of the smaller developers. Indie developers won’t be able to secure the huge finances that they need in order to continue developing games, and as a result will either try to find someone to buy them out, or close up shop for good. Larger developers are likely to survive, but lesser known titles will be either put on hold, or axed completely. Developer giants THQ have recently closed some of their key studios, which will result in some previously planned games never seeing the light of day. Larger companies will choose to focus on titles that are more certain to sell, much to the dismay of gamers that already feel let down by the lack of originality in new titles. Furthermore, we might see more semi-finished games being released early as companies scramble to clear their growing debts.
I haven’t seen the figures for video gaming magazines, but if the fall of EGM is anything to go by, they aren’t doing too great either. No doubt journalists will be losing their jobs as the population tighten their belts and cut down on spending money on things such as magazines, especially when they can get most of the same information on the internet for free.
My predictions for this year? I wouldn’t be shocked if the amount of video games hitting the shelves decrease, and several indie developers will probably disappear as they struggle to raise funds. I think that bigger developers will suffer, but will manage to stay above water, although I wouldn’t be surprised to see a major takeover or two along the way. Console developers such as Microsoft and Sony will cut jobs, but I don’t think they will see too much harm done to them in the long term, apart from losing more money in Japan if the Yen continues to fare badly against the Dollar, thus cutting potential profit margins. Video gaming magazines will probably by hurt be declining sales and I can see one or two more magazines deciding to stop printing for good, although I can’t say for certain because as I’ve stated, I haven’t seen the figures. As for video game sales, it’s hard to say. The most obvious conclusion is that people will be less inclined to spend their money on games this year, but some will argue that in a time of crisis such as this, people buy more things such as video games to help them escape from reality. Personally, I think sales will be down from last year. I don’t think sales will drop sharply, but I do think they won’t be as good as previous years.
Can the year ahead really be that bad? Let me know what you think.
In the meantime I’ll leave you with some more food for thought…
High Street entertainment chain Zavvi is closing 22 stores, with 178 employees losing their jobs.
Free Radical Design, developers of such titles as Haze and TimeSplitters, are currently facing closure unless a buyer can be found.
Video game sales in Japan saw a drop of 15% in 2008.
Publishers Oxygen Studios are currently trying to find a buyer for their London studio.
Sony will be closing factories and taking a serious look at its major divisions in an attempt to cut costs by 2010.
Grim indeed folks, grim indeed.
