Monday, August 8, 2011

Troubled times



The initial failure of the 3DS and the price drop that followed show the troubles video game publishers are now facing. On one side they have to deal with a global recession and on the other the challenge posed by digital distribution and the low cost alternative it has made possible.

With the sluggish recovery of the world economy consumer spending is low, especially on luxury goods like video games. When times are tough it is hard to convince consumers to spend $60 on a new game and especially several hundred dollars on a new system.

This situation is made even worse with the emergence of a new low cost alternative in Apples iOS market place. Offering consumers a much more affordable alternative. Of course these $1 games are lacking in quality and content compared to their pricier siblings. But for the price they are sure to offer compelling alternative, especially to the portable game systems which also offer mainly simpler gaming experiences.

The good news for the old giants is that the economy is bound to (eventually) recover, bringing consumer spending on entertainment up with it. The bad news is that the low cost alternatives are likely to become more plentiful and increase in quality as more and more developers shift development to the platform. There is always the danger that gamers who put off purchasing a new portable for budget reasons will get so used to gaming on their phones that they find that they can do without a dedicated portable gaming machine.

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