Occasionally I come across articles like this one from the Motley Fool where you see a rather negative forecast for the gaming industry despite a general and steady growth.
Normally I disregard these naysayers and continue to invest in gaming stock but obviously with the recession and the massive drop most gaming stocks took, I find myself pondering things a bit more. Sure, most industries, most stocks were hit. But looking at the recovery rates of gaming stocks, I’m not really satisfied with their recovery compared to other stocks I hold.
Are they recovering more slowly? Or is it just perception? I’m far from an expert in investing but I having my doubts on their long-term viability. Don’t get me wrong… the gaming industry is going to continue to grow. But by how much? How strongly?
And I think in a recession we have to accept that the gaming industry might be hurt more so than other types of markets — not only are they an entertainment luxury, but they are an expensive entertainment luxury. Sure you get many more hours of gameplay for a game as compared to a movie but most people I think don’t analyze their purchases into an hours of entertainment versus dollar type scenario. They see $70 for a game and $10 for renting a couple videos.
They rent the videos.
See my casual gamers blog from a few days ago for some other thoughts on this.
Maybe an economic downturn might encourage consumers to turn away from boxed, retail games and instead focus on micro-transaction types of purchases, such as buying games from Steam or Xbox Live. I know I’m spending more of my gaming budget on smaller games that I purchase online through my Playstation 3, or for my iPod Touch. Are others doing this?
So, I’m looking at some of the stock I have in gaming companies that are still focusing on multi-year development, massive-cost retail games and not producing ‘small games’ and I’m wondering… is it time to pull my money out and put it elsewhere?