A growing market during a recession

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Description:

Although a recession in the year 2001 the video game industry generated over $4.3 billion in revenues. In the year 2004 this amount was $25 billion. And optimistic prospects predict a revenue over the $100 billion in the year 2010. It seems that the recession and the weak economy in most part of the world do not influence the revenues of this industry in a negative direction. The reason is simple. People need entertainment. In these days with a high mental pressure people need some entertainment to calm down. People used to read a book, watch television, visit the cinema etc. But nowadays games are the substitute. This implies that people prefer spending money on a video games what means cash for the video gaming industry.

Enablers:

Different forces enable the growth of the gaming market:

  • Heavy competition between Microsoft, Sony and Nintendo force them cut down the prices of the consules. The low price induce consumers to buy a consule. The sales of consules are a crucial factor because sales of consules means automatically sales of games.
  • The primary target for video games were male. Now a change is visible towards female gamers. Their spendings constitute a big part of the total revenue for this industry.
  • The Internet makes online gaming possible. Consumers do not buy a game to play it alone but together with friends nowadays. This implies that those friends also need the video game in order to play it.

Inhibitors:

Several factors inhibit the growth of the gaming industry:

  • Scientific evidence has proven that violence in video games has a negative effect on the behavior.
  • Goverments can reject video games. In countries like China certain video games are forbidden to play.
  • Illegal copies of video games means a lost of revenues.

Paradigms:

Video games were seen as a toy for computer freaks who play a video game day and night. This view has been replaced that video games is meant for everyone regardless the gender and the age. Everyone can use them as a form of entertainment

Experts:

Timing:

  • 2001: worldwide recession, most industries have declining revenues but the video gaming industry generated revenues exceeding revenues of previous years
  • 2004: weak dollor, economy Europe grows hardly, but video gaming industry generated revenues of over $25 billion.
  • 2005: Japan suffers a recession but more than a half million Nintendo DS are sold within four days.

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