Video
Bolstered by an ever-expanding audience that is turning to games for cheaper entertainment, video games are benefiting in some ways from the economic turmoil. Yet the industry is not completely immune, with layoffs and closings of studios that produce games. Electronic Arts Inc., the game publisher behind the “Madden” football series, is cutting 1,000 jobs, most by the end of this month.
Meggan Scavio, the Game Developers Conferences event director, expects attendance to be slightly down this year from last years 18,000 people. When game studios cut back, she noted, travel and training budgets are among the first to go. She also expects fewer, more informal parties.
“Its kind of like lets celebrate, but do it quietly,” she said.
Even amid the recessions pall, this is a fertile time for video games. Blockbuster games with intricate story lines and movie-quality graphics have become popular entertainment for millions. Technological advancements like digital distribution are making it easier for new developers to get their games into players hands. People are playing games on more platforms than ever – on their mobile phones and handheld systems, on social networks like Facebook and on consoles not just in their living rooms but in bars and retirement homes.
In 2008, Americans spent more than $21 billion on video game hardware, software and accessories, up from $18 billion in 2007, according to market researcher NPD Group. And sales continued to rise in January and February of this year.
However, while people are still buying a lot of games, the industrys explosive growth now means theres more competition. Consumers are looking more carefully at which games they want to spend money on. And mindful of the recession, stores are watching their inventories carefully, reluctant to offer too much shelf space to games that arent going to be hits.
Game companies that cant recoup their development costs – which can be in the tens of millions of dollars – face steep budget cuts to stay afloat. If they are publicly held, the companies must also please their shareholders.
In addition to EA, THQ Inc., which last month reported a loss and lower sales, is cutting 600 jobs – nearly a quarter of its work force.
IDC video games analyst Billy Pidgeon suggests job cuts in this industry are a knee-jerk reaction to Wall Street. “What worries me about the economic climate is that you are losing research and development (talent),” he said.
Compared to people in other industries, laid-off video game developers might have a better chance of landing another job. There are still video game companies hiring – the game conference will have nearly 50 companies recruiting new talent in the career pavilion.
Among the companies looking to fill jobs will be Activision Blizzard Inc. and Microsoft Corp., though its not clear how many positions are open.
It also might be easier today for a talented developer laid off from a big publisher to make it as an independent game designer. With a broadening audience, the definition of what counts as a game is expanding, as is how we play.
Another highlight of the show will be a keynote speech by Satoru Iwata, the president of Nintendo Co., who started out as a game developer. Nintendo is responsible for much of game industrys recent success, ever since its 2006 Wii console broadened the definition of what it means to be a gamer. Now Nintendo has high hopes for the DSi, the latest version of its handheld system, which can incorporate sound recordings and photos into game play.
Still, theres no escaping the recession. This year will mark the first time that the Game Developers Conference features panels putting the economy front and center, with sessions entitled “Surviving the Squeeze” and “Stability in the Stormy Weather.”
“People are finding ways to make money with smaller budgets, and that takes creativity,” Scavio said. “The thing about game developers is that they are a resilient bunch. What they do is find their way through this downturn.”