Recession casts shadow over video game conference

ByABC News
March 23, 2009, 10:59 AM

NEW YORK -- The video game industry is holding up, but the gloom of the recession will be on the minds of thousands of people at this week's Game Developers Conference in San Francisco, a key event for video game insiders looking to learn new skills, showcase innovations and if they're lucky enough, find work.

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 Conference's event director, expects attendance to be slightly down this year from last year's 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.

"It's kind of like let's celebrate, but do it quietly," she said.

Even amid the recession's 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 industry's explosive growth now means there's 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 aren't going to be hits.