The State of Video Games 2009: An Industry in Flux

Courtesy of Kotaku.com

The video game industry, once declared recession-proof by analysts and tech editors alike has been forced to eat a prodigious helping of crow as of late. With the financial climate still in a state of flux, many people are feeling the pain from long periods of unemployment. As a result, unless the expense has been deemed absolutely necessary, folks are pinching every penny until Lincoln hollers bloody murder.  Since video games are not a basic necessity, there are a lot of copies of great games gathering dust on video game retailers’ shelves. And if the six straight months of sales decline are any indicator, the video game industry needs a shot in the arm — stat.

The popular thinking used to be that in difficult financial times, people would still buy video games because it was

Courtesy of Walletpop.com

a form of replayable entertainment as well as a form of escapism. According to Boy Genius Report, even though console sales are up thanks to companies lowering their prices, game sales are looking abysmal at best. At $60 a pop before taxes for the latest Xbox 360 or PlayStation 3 game, consumers have gotten stingy with their dollars.

Another thorn in the video game industry’s side is the increasing popularity of mobile gaming and downloadable content. While gaming on the iPhone may not be the mind-blowing blockbuster event that hardcore gamers are accustomed to, at an average price of approximately $2.50 per game, mobile gaming is getting the job done. And then’s there’s the question of downloadable games.

While Microsoft, Nintendo, and Sony have accepted that they must have viable downloadable content to compete, that doesn’t address the ever-growing elephant in the room — how will content be delivered in future gaming systems. Being able to provide content to consumers via the internet is definitely cheaper, but if the industry goes totally digital, what happens to the tried-and-true method of console gaming? And with the possibility of using cloud computing and streaming to give gamers their daily fix, the industry is at a crossroads. PlayStation has made the first furtive steps into going totally digital with the new PSP Go, but with only a week on the stands,  it’s still too early to gauge its impact on the industry if any at all.

With the holiday season around the corner, the console wars are at a fevered pitch with everyone doing their best Kratos impersonation, hacking and slashing their prices. While it’s anyone’s guess whether Q4 will give the industry that holiday miracle they’re hoping for, one thing is for sure, the gaming industry is quickly finding themselves in a predicament similar to the music industry. Hopefully, they can learn from the music biz mistakes and adapt accordingly.