How Recession-Proof Are Video Games?


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While major home electronics are still selling despite the sagging economy, smaller personal electronics are sitting on store shelves, according to the Consumer Reports Index, our new economic survey. I expect that finding is hardly a surprise to the video game industry--sales of video games and game consoles have been dropping for months.

The decisions by Sony and Microsoft to slash $100 off the price of their Playstation 3 and X-Box 360 Elite systems, respectively, could help slumping sales. (With the cuts both consoles now cost $299.) Those price cuts could increase unit sales by as much as 60%, NPD Group analyst Anita Frazier told Gamasutra recently. That’s welcome news to both console and game makers: NPD has reported a year-over-year sales drop of 37% in console sales and 29% drop in game sales.

Thanks to the $100 cut, the Xbox 360 Elite system is now $300, while the Xbox 360 Pro package, which is being phased out, is $250 following a $50 price cut. A basic Arcade version is still priced at $200. One change is that the Elite system, which has a larger hard drive, will no longer include an HDMI cable.

New game titles may also help not only manufacturers but the retailers that sell their wares, such as game-rental giant GameStop, which reported a 32% profit dive in the second quarter. GameStop CEO Daniel DeMatteo sees some hope with the impending release of several new games this fall (including "Halo 3: ODST" and "Call of Duty: Modern Warfare 2"), according to Reuters, but says his company is “cautious” given ongoing concern about the economy and consumer spending.

Less than a year ago, some analysts speculated that the video-game industry could be recession-proof. Obviously, that’s not the case. Nintendo, the third of the “Big 3” game-console manufacturers, is now facing pressure to drop the price of its $250 Wii.

Are you considering buying any video games or consoles this fall, or are they still too expensive? Let us know in the comments section below.

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