Analysts bullish on 2009

Gaming industry watchers expect the business to continue growing this year despite economic concerns.

80 Comments

While 2008 was a record-breaking year for the US retail gaming industry, a handful of industry analysts are expecting 2009 to be even better.

Wario apparently invested heavily in Nintendo stock.
Wario apparently invested heavily in Nintendo stock.

In a Lazard Capital Markets investors note covering technology themes for the coming year, analyst Colin Sebastian this morning said that the industry's success was tied more to the console generational hardware cycle than to the economy at large. While the US retail gaming industry posted gains of nearly 19 percent last year, Sebastian sees that growth "slowing to more modest mid-single-digit growth in 2009" due to tough comparisons with the explosive growth of 2008 and "potentially fewer hit titles."

While Janco Partners' Mike Hickey didn't put a growth range in his note for the European retailer GameGroup (operator of GAME and Gamestation stores) today, the analyst seemed more optimistic about the product lineup than Sebastian.

"We expect continued video game market growth in 2009, fueled by an exceedingly strong 2008 hardware sell through and a powerful 2009 game slate," Hickey said.

Wedbush Morgan Securities' Michael Pachter was likewise encouraged by recent hardware sales, pointing to them as a leading indicator of strong software sales in 2009.

"As Nintendo increases Wii supply further, Sony markets Blu-ray, and Microsoft fully benefits from its price cuts, we expect hardware sales to show year-over-year increases for the first half of 2009," Pachter told investors in a note regarding NPD's 2008 totals, adding, "a strong release schedule early in the year [will allow] the industry to sustain double-digit sales growth for the full year."

Pachter also returned to the notion that the gaming industry's financial fate isn't tied to that of the larger economy, although gamers might find his reasoning on that point to be rather unflattering.

"It is important to note that the bulk of purchases between January and October are driven by the user of game software," Pachter said. "In our view, this indicates even greater recession-resistance ahead, as most hardcore video game consumers are either ignorant or apathetic about current economic conditions."

Pacific Crest Securities' Evan Wilson didn't commit to a growth projection, but shared some of his peers' guarded optimism.

"2009 has difficult comparisons due to the release of GTA 4, MGS 4, Mario Kart, Wii Fit, Super Smash Bros., and a few other big titles," Wilson told GameSpot. "It also saw tremendous pent-up demand for big holiday titles like Guitar Hero 3 and Call of Duty 4 as well as Wii hardware. We could very well see industry growth continue, even with the current recession in consumer spending, but the comparisons in the first half of the year may make the growth rate below what many have become accustomed to."

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Avatar image for mvlbr
mvlbr

This year the good old bargain bin games shall probably hit the list of top selling games just because of the price and the fact that people are strapped for cash ;)

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zeniftan

An absolutely fantastic point of view RoboWizard. And so wonderfully put too, thanks for pointing it out mate.

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Rhubarb9

with nintendo taking so much space with wii and DS one can not know how much the others benefit from this :/

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LosDaddie

good predictions :)

Avatar image for Humorguy_basic
Humorguy_basic

In this thread Hope seems to be winning out of Reality. Which confirms that in a recession, dreams get ever more fanciful. Such are the dreams that we will have just as many developers, publishers, game releases, gaming websites, gaming retailers and gamers one or two years from now.

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ShadowBass989

i have a wii and ps3, and strongly considering a 360 this week. so ill benefit from all angles. more systems, more games. cant go wrong there.

Avatar image for RoboWizard
RoboWizard

Well it's a well known fact that entertainment tends to do quite well during recessions in spite of the more logical argument that people don't need entertainment and thus it would be the first to go. People don't live to live, they live to enjoy themselves, so they'll do what it takes to accomplish that goal. The reason why some firms might go under, however, is because people will also be more selective about their entertainment purchases, and look for value, which is another win for gaming as the content-price ratio beats out all other media by a large quantity.

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spencer_harper

I dont think think that will end up happening because even with the recession their is still a large amount of people that still dont have games and the Wii is cheap. Gaming is becoming very much mainstream and alot of people are buying Wii's that would not even have considered a game system. Plus the hardcore people sometime even have a Wii along side thier 360 or PS3

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ChamomileBaths

Wii will sell less if it really is the mass market that is purchasing them because the mass market is very aware of the recession. 360 and, especially, PS3 could see boosts in sales because they are core gamer systems. People who play these system really like games more, on average, and see the value in them. Nintendo has some core games coming out from thrid parties though like The Conduit and MadWorld that could break through to all of the core market and be the first real example of why those people would like Wii. They could spike sales. I'm very weary to say there will be growth but with a new president taking over maybe people will have hope and spend more than they otherwise would.

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hatieshorrer

Anyone notice that the companies that most support Nintendo have been doing well but companies that dont report that they arent making the as large profits as they predicted.

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Zain-Midori

Soceity man i swear never ceases to amaze me..

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Spartan_418

Agree with kakarote gamers are just as aware of the economic situation as everyone else. However I also disagree with Wilson in that I believe the industry will be impacted less by consumers and more by the effect the economy is having on the development side- just look at the number of studios or developers that've either shut down or layed off a ton of employees during the past few months. Not just struggling shovelware devs- look at what happened to Ensemble. This will probably result in fewer quality titles being released, and thus fewer game sales.

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kakarote22

Thats not fair, I don't think video gamers are ignorant or apathetic about the economy, just because something costs 60 bucks doesn't mean it doesn't have value. What do I get from a movie? 20 bucks for two hours of entertainment. With a video game(not all) you can expect atleast 10-15hr minimum of entertainment, if not much much more. I don't think its such an unwise investment in entertainment these days. Take the extreme, Oblivion for example, I've logged over 140hrs of gameplay. How much would that cost in movies? Well it would be 1400 dollars. Savings in entertainment value over movies 1340 dollars. I say your wrong Mr Pachter. As the economy declies I believe you will see more people buying games because of the increased entertainment value.

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maverick_76

I personally think that there will be still more growth, but at a much slower rate. Overall the game industry is very much recession proof, but not for reasons that Pachter alluded to. It is not our ignorance, merely the ease at which video gaming takes your mind off the real world. I personally love when I get home and have nothing better to do than fire up my PS3 and kill some people or score some touchdowns. It is a mini vacation in my hectic life, and that is why I rather spend money on a new game than a car, house, etc....these things only remind me that the economy is bad. Video games allow me to be carefree for a couple hours a day, and that is awesome.

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Mr_Ploppy_z

Hoorah to docwoo well put

Avatar image for docwoo
docwoo

That's great news that the game industry continues to grow despite tough economic times. But I don't agree with the "ignorant or apathetic" comment. Like anyone else, gamers are willing to spend money on anything that's considered a "good investment". I'm sure most gamers will agree that buying a great video game is definitely a good investment. In a time where half the TV shows, movies, and radio programs are utter crap, who wouldn't rather be killing infected monsters in Resident Evil 5? "Ignorant or Apathetic"?......HA! We're smarter than you think, Pachter!

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pilot_riaz

Ghostbusters, Mafia 2, Bionic Commando

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tank32123

I never trust predictions. I also think that the games coming out this year is going to be better. Killzone 2, God of War 3, Resident Evil 5 (getting this one for sure), Halo Wars, Halo O.D.S.T, Bioshock 2 and many more.

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sieg6529

so maybe my ATVI stock won't suck so bad in 2009?

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airsoftmanic

i just want battlestations: Pacific to come out in 2009 and then my 2009 will be a most joyous one. but we know that'll never happen so my money is invested for getting a PS3 and R2/LBP.

Avatar image for Humorguy_basic
Humorguy_basic

xophaser: When times get tough, people may play games,but they certainly play the games they HAVE. I doubt if anyone unemployed or underemployed would be spending $50-60 on a new game! Maybe all the downloads on 360 Arcade and Sony LIVE, the continuing high sales of PS2 and the 5 million DOSBox downloads, among other statistics, show people are ALREADY playing their older games more and more!

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Ash_Korsair

i find it strange that the ds continues to sell loads of games. everyone i know who has one (about twenty people) use something called r4 and dowload all from the net.

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xophaser

when the economy is down and people get layoff. Gaming would be a cheap time passer.

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TalonComics

"...a handful of industry analysts are expecting 2009 to be even better." That pretty much says it all. A handful of these guys are saying this year will be better. That's like saying, "a handful of people think the world will end this year." I can find anyone to agree to something no matter how outlandish it may sound. I mean seriously, there's always a group of crazies that think horrible politicians are doing great why wouldn't be the same for any other topic?

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gameking5000

If those predictions are correct, thw game industry won't go deeper into recession.

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Aurey

Ignorant or apathetic... That was a bit harsh

Avatar image for mcginnism
mcginnism

Have they even looked at the release schedule for next year? 2008 had an unusual number of blockbuster titles released, I don't see more than 3 or 4 for next year. These idiots count beans, they don't play games.

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KityKittyCatCat

People will still buy games, no matter what the economic situation is. It's the 21st century, and games are played by all ages now. Nothing will stop them. @BRAWLL: I prefer COD4 to COD:WaW. Quite a few people do.

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BRAWLL

lol... people stilll buy COD4 over COD: WAW

Avatar image for Humorguy_basic
Humorguy_basic

Take out Nintendo and you had an average 2007, a less than average 2008 and the liklihood of a poor 2009. Problem is we never get the details. Let'ssay Valve had sales up 200% and Ubisoft and EA and Eidos has falls of 30% each. Do you think anyone would report it as '3 out of 4 publishers lose money', or do you think the headline would be 'games sales up 110% (200-30-30-30)!!!!' There's a saying - if you don't talk about a problem it will only get bigger. I see gaming problems getting bigger.

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xatman911

If analyst/bankers could predict anything then we would have avoided the credit crunch.

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webdoom

so far, i think 2009 is a bit empty.. Resident Evil 5, Halo:ODST, Call of Duty 6.......err thats pretty much it atm common BioShock 2!!!! please come out this year!!

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MFmotion

Is like this year isn't so good for the videogame industry .... But I know that people won't stop buying.

Avatar image for Unholy_Terror
Unholy_Terror

And not to mention the less money they have, people will spend less money on big things like trips, but I bet they'll still spend some money on in house entertainment like video games

Avatar image for Unholy_Terror
Unholy_Terror

Swamptick, there's no real need to jump down GIF's throat like that. Soon-President Obama has stated that he intends to have several public works projects that will give many people jobs and as for America being a free market economy...Just look at all the paperwork and everything you need to start a business (in comparison to Hong Kong...I saw a 20/20 or something about this) and look how heavily our government still subsidizes a lot of products (even New Zealand's government stopped subsidizing lamb). Despite all of our promoting of Free Markets, we're pretty hypocritical. In my view (Admittedly it has been a few years since I took an Economics class)we're more of an...Indentured Market. But any way I bet that the video game will continue to grow with a few big releases (RE5, Killzone 2, Halo: ODST, and others) and if there are some speculated price cuts. Of course, both of these need to be coupled with lower production costs.

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plm3d_basic

We'll likely see more cheap shovelware junk from Nintendo or third party developers like Wii fit or Wii Sport or Wii music aka Wii trash and less large budget productions like Dead Space. We'll also see more sequels. Also, GIF you sound like one of those many morons on youtube who think Obama is going to somehow change the world and pays your bills. Obama as a community agitator was one of the direct reasons for this financial meltdown. Go search Community Reinvestment Act or go watch: watch?v=nRmB93McZeI&feature=channel_page

Avatar image for Jebril
Jebril

Well I think most people have cut down on what they spend cuz of the times and how hard it is to get a job and what not, I for one have stopped getting new clothes and eating out and what not, but one thing I refuse to do is keep buying good games, I feel that most of the game markets and developer still aren't as corrupted as many of the other corporations that exist in this world. Aside from say....EA and 2K, and what not. >,>

Avatar image for swamptick
swamptick

GIF, you have no clue what you are talking about. You CLEARLY have no idea what free market economics are all about. It is not the Presidents job to create jobs. America is still a free market (for the most part). The government needs to stay out of the economics business. Your words are not only contradictory, they just plain show a genuine lack of any business sense or education. Here, have a crayon and get back to your coloring books. Leave business for the adults please.

Avatar image for BulletsnOctane
BulletsnOctane

A belated New Years toast: Here's to bigger, better, and much more ambitious games in '09! Let's hope so. Oh. And through these trying times, we can at least say that we (most of us) can still do something we love. Let's be thankful for that. I know I am. =)

Avatar image for shawn7324
shawn7324

The comment that us hardcore gamers are ignorant or apathetic about the current economic conditions pisses me off a bit. Ignorant shouldn't have been used & how the hell can anyone whom has to work for a living unaware or not concerned about our declining economy?

Avatar image for Nokoryous
Nokoryous

H yeah. even if this wasn't true/accurate, recessions are panic-driven, and people need to hear that the economy is sound.

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gam3r3OOO

[This message was deleted at the request of the original poster]

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khariss

trust me guys there not joking economic recession's have bin good for gaming in the past and will probably be this time to.

Avatar image for ZonaBoy89
ZonaBoy89

thats crazy to think that with todays economy but then again theres gonna be a price drop in the spring time for PS3 and 360 i guarantee it so that will help tremendously

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Hot-Tamale

It will probably keep on growing, but not nearly as much as it has been...

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InuyashaX

Predicting this kind of stuff is like trying to hit the atlantic ocean on a spinning globe with a dart....its just ridiculous!

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pencilpusher69

Except GIF, that investors are scared out of their minds about the capital gains tax that he's going to raise. So the opposite is going to happen. Maybe you noticed investors sold off their stocks en masse after the election? They did so, because they want to make their money back, which they'll lose probably up to 25 percent of their profits after that capital gains tax is passed.

Avatar image for GIF
GIF

Dudes, in a mere matter of days investors are going to be excited we don't have a moron president and many people being laid-off work will find new opportunities as investor confidence boosts the job market. This in turn will hit every industry, including the game industry where lay-offs are rampant.

Avatar image for Balo_the_Gamer
Balo_the_Gamer

dynomitemasta- that is the best sentence I've read in long time. How true!

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Garren666

@PsychoLord13 Also when money is tight gamers are typically going to spend money on high quality games, or games with a lot of replayability. Which means that during recessions devs are going to have to put a focus on quality, and not just putting out some mediocre game.

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