Bad Economy, Bad for Games

The collapse of Bear Sterns was unexpected. A year ago, the firm appeared one of the strongest in its industry; now a deal is under way that will result in it being either bought out for two dollar a share or, if for some reason shareholders reject the offer, result in the bank collapsing. Bear Sterns is just another in a long line of events that have been occurring since late last year, when an invisible pin-pricked popped the housing bubble and everything about the American economy began to lose its luster.

It is not clear if we are currently in a recession. A recession, technically speaking, requires negative growth of the nation's economy. However, many people seem to feel we are in one, as indicated by the polls splattered randomly across the gloom-and-doom of major news networks. The Fed appears to be freaking just a little, and it seems clear that we're going to experience a period of very, very low growth at the best. This isn't doomsday, but there will be consequences.

How the gaming industry weathers those consequences should be interesting. Gaming is an entertainment industry filled entirely with products that no one needs to live, and so it will be one of the first things cut from the budgets of people who want to save a little extra cash just in case. However, the games industry in its modern incarnation has never been through a serious economic downturn (the gaming industry of the 80s was a MUCH different business), so the results could be unpredictable.

For PC Gaming, the threat of recession couldn't come at a worse time. The major consoles have been out for some time now, which means we're starting to again see PCs competing with consoles for the wow-power of advanced graphics. More importantly, prices on very good graphic cards are now reasonable enough that more people can afford them, and I would expect that the lowering of these prices would also result in a lowering in the prices of PC gaming systems. As the consoles age, and the prices drop further, PC gaming could begin to become a viable platform again, with major games being seen in 2009. A recession at this point would steal the PC's thunder, threatening to undermine the benefits of cheaper hardware and better performance. A recession could essentially end big budget titles for the PC, if they arn't already dead.

But budget games, such as various Sims titles, and MMORPGs, like World of Warcraft, would probably remain successful.

For the 360 an the PS3, sales would likely go down, but the biggest impact would probably be on micro-transactions. To play new games on the 360 or the PS3, you essentially have to pay the 60 dollars, and the option to choose a Wii or a PC isn't more efficient. Players looking to save cash will probably cut out the optional stuff, instead, choosing not to drop five dollars for a Forza car pack or 10 dollars on a new Gears of War map pack. Even this, though, would likely only occur if he recession was very obvious, so for the most part the 360 and PS3 will see their biggest pain come in the form of console sales. This could be particularly bad for the PS3, which is only now starting to get a foot-hold in the market.

The Wii will likely do well, as it will remain the cheapest option for gaming entertainment on the market. But as a Japanese company with games and hardware developed and produced almost entirely in Asian countries, a following dollar is bad news. This is also true for the PS3, but less so for the 360.

For all platforms, it will be hardware sales that are most severely hurt, then games. Budget games will be the winners, and MMORPGs will also do very well. Game companies will probably want to engage in less risk, and some projects may end up cancelled. Unfortunately for hardcore gamers, a recession will likely mean a rise in the number of cheap, for-the-family products, and a further reduction in games with intense and difficult gameplay.