Tag Archives: recession

Amazon’s blamed a “slowdown” in games sales as a primary factor in a Q2 profit drop.

“You’re seeing an industry slowdown in videogames and consoles,” said CFO Tom Szkutak.

The retailer’s upside dropped 14 percent in the three months running to June 30, down 10 percent to $142 million, or 32 cents per share.

Sales were up 14 percent in the period, rising to $4.65 billion from $4.06 billion a year ago.

Costs resulted from a legal dispute also impacted profits in the quarter.

More on the WSJ. Thanks, Joystiq.

GDC boss Megan Scavio’s admitted that the global recession will cast a shadow over this week’s GDC, but that game developers are a creative lot that thrive on a crisis.

“People are finding ways to make money with smaller budgets, and that takes creativity,” Scavio told the AP.

“The thing about game developers is that they are a resilient bunch. What they do is find their way through this downturn.”

The exec said she expects attendance for this year’s show to be slightly down this year from last year’s 18,000 people thanks to cost-cutting, and also expects fewer, more informal parties.

“It’s kind of like let’s celebrate, but do it quietly,” she added.

More not-so-doom-and-gloom through the link.

SCEE president David Reeves has said that the game industry is not recession-proof, and that it’s “difficult to explain” why PlayStation products are achieving European targets.

“From our point of view which is in the videogames division, in PlayStation, it’s not recession-proof, of course,” he told Dutch TV station RTL.

“I don’t think any industry is, and eventually we may see a downturn.”

Reeves said that SCEE’s products are holding steady across Europe, and that much-cited recession-related factors surrounding the games industry of late may be causing the trade to be suffering less than other sectors.

“For the moment we’re seeing that our sales for both hardware and software are hitting projections in most countries in Europe,” he added.

“Difficult to explain: it could be that parents don’t want to disappoint their children in buying PlayStations, or whether it’s the competition as well… or maybe it’s because people are spending more time at home and this is a safe haven, rather than going out to restaurants or spending money on buying cars and fridges and things like that.

“We seem to find that in timres of recession that people tend to stay at home, but they still want to be entertained.”

The exec went on to assure that there will be no scaling back of SCEE staff “at all,” despite Sony Corp recently announcing 8,000 job cuts.

Well worth a watch.

Speaking to MTV, Blizzard design boss Rob Pardo has echoed the sentiments of many of late, saying that the current global financial situation is unlikely to harm the games industry in general.

“Historically for us, the game industry hasn’t been affected by recessions like a lot of other businesses,” he said. “I think the reason for that is [that] games really offer some of the best entertainment value on the market.

“People might not want to go out to the movies and spend $100 for a couple of hours and then go to a restaurant. You can go home and pay $15 a month for 100 hours of entertainment if you’re staying at home more — and I think that’s one of the reasons why you don’t see games really go in the same recession as the rest of the economy a lot of times.”

More through the link.

In a research note this afternoon, Wedbush Morgan analyst Michael Pachter has added to a statement made by Kaz Harai over the weekend saying that the games trade is likely to fair better than most in the worsening economic climate.

“Software sales growth has been extraordinary thus far in 2008, up 48% through July before slowing to +13% in August,” he said.

“Notwithstanding this month’s anticipated decline, we believe that the video game software sector remains highly recession-resistant… We do not think that the decline in software sales is demand driven; rather, we think it is attributable to a difficult comparison.

The comparison is that of September 2008 compared to September 2007, thanks to Halo 3.

“With that said, we believe that negative sales growth in September will likely cause investor confidence to wane, with the likely consequence that video game publisher stocks will continue to perform weakly until sales growth resumes in October,” Pachter added.

Responding to an MSNBC column about how games are recession-proof in the US, readers have said they would rather have less food and clothes than less videogames. We hope you’re taking note of this, history.

Improbably named contributor Michael A Ratajczyk, said, “During a recession, I’d probably buy more games and go out to the bar or dinner less for my entertainment.”

“If people don’t want to face reality when times are good (at least for the overall economy) then I don’t see them wanting to face reality as things get worse,” said another reader, Matt Ellington.

Hit the link for more sorry quotes from people hibernating in Neverland while the US economy explodes around their ears.