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Video game industry on edge Expect more emphasis on games than consoles this holiday season IN ABOUT three weeks, Orlando Megia and his wife are set to celebrate the one-year anniversary of the launch of their video game store Play N Trade in San Mateo. Shortly after, the holiday season is coming up. Ordinarily this would be a time for them to be filled with excitement. But these aren't ordinary times, and the last few months have been a greater challenge for them than any video game they've ever played. "I'm scared as hell that this finance crisis is gonna kill the credit market and holiday buying," Megia said. "I do think the economy is effecting our sales because people have less expendable income." Traditionally, the video game industry over the years have been relatively recession proof. And this year might be no different. But this time the talk is one of hope rather than certainty.
"I think that with less credit available and less money out there that nothing is immune to the financial problems we're having," said video game analyst Ted Pollak, and president of EE Fund Management in San Francisco. "But I think there's a chance when it comes to choosing where people are going to spend money on entertainment they'll find they get a lot of value for the time spent with video games." During the 2007 holiday season it was the Nintendo Wii that became the "must have" for shoppers. This time around, analysts still believe Wii will still top many Christmas wish lists, but the need for parents to put "I.O.U. slips" in boxes might not be necessary. don't see any reason to believe Nintendo will slow down," said Jeff Keighley, host of Gametrailers TV on Spike TV. "I still think it will sell four times more than the Xbox 360 or PlayStation 3." Up to now, video game retail sales, which include consoles, in the U.S. has been relatively strong. In August, U.S. retail dollar sales of video games increased 8.8 percent from the month prior, according to the NPD Group. This year the industry received a nice boost from the popularity of music games such as Rock Band and Guitar Hero. Not only did they have to buy the game, but add on accessories. A special edition bundle that includes a bass guitar, drum kit and microphone set retails for about $169.99. The question is if the economy worsens, how will the costlier accessories hold up. Sony, which had hoped to convert more PS2 users to its next generation console, might have to wait a little bit longer. A 40 gigabyte PS3 costs about $400. A PS2 goes for about $129. So instead of bringing in new gamers this season, the focus is going to be on those who already have their consoles. Therefore, the games themselves are likely to hold the spotlight. "I think despite the times right now, we will still continue to have a banner year of growth through the end of 2008," said Joseph Olin, president of Interactive Arts & Sciences, which trains students for the video game industry. "There are just so many strong titles coming out this year, that it's hard for me to imagine that those that play games right now are suddenly going to stop." Some of the most anticipated titles include Gears of War 2, Guitar Hero World Tour, and Resistance 2. Some of the larger retail stores are going to try and lure users away from small boutique game stores with exclusive offers. Redwood City-based EA's Rock Band, for example, will offer an AC/DC expansion pack only available at Wal-Mart. "Obviously we haven't seen an economic situation like this for 20 years, and at the end of the day video games is a hobby so it might be the first thing to go," Keighley said. "But I just think that with the value it provides and the strong titles to be released, it will do all right."
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