Despite last year’s rash of bad economic tidings that included waves of foreclosures, soaring unemployment, a huge spike in gas prices and other unpleasant news, the video game industry kept setting sales records, with $21.3 billion in U.S. sales, according to the market research firm NPD Group. Two consecutive years of huge sales, led by Nintendo’s Wii and DS, have led some analysts to declare the entire industry “recession proof.”
But if you read gaming blogs or the business pages, you’ll know that recent weeks have brought layoffs at Electronic Arts, Sega and Microsoft, which is making cuts in the Entertainment and Devices division responsible for the Xbox 360, Zune music player and other products.
It’s probably too soon to know what all this retrenching will mean for gaming, but don’t be surprised to hear a bit in the coming months about cancellations, delays and new strategies. EA, for example, focused many of its 1,000 eliminated jobs on its Canadian Black Box studio, which makes the “Skate” and “Need for Speed” franchises, the latter of which was recently put on indefinite hiatus.
Sega, which cut 30 jobs, and Microsoft, which will eliminate 5,000 companywide, have offered little detail about the positions eliminated, although this week Microsoft let go Chris Early, the director of the beleaguered Games for Windows Live. The idea of integrating PC and Xbox 360 gaming seemed like it had potential when it launched in 2007, but expecting PC gamers to pay for features they’d been getting for free through services like Xfire and Steam was too much to ask.
Expect other video game companies to follow with consolidations, canceled projects and maybe a merger or two. The Wall Street Journal recently recommended that Disney, whose games business is fairly small compared with its other holdings, buy EA, which makes or distributes the “Madden NFL,” “Rock Band,” “Left 4 Dead” and “Dead Space” franchises, among others.
While it’s tough to know what will happen specifically, it’s safe to say you won’t be lining up to preorder a Wii 2, Xbox 720 or PlayStation 4 anytime soon. When Microsoft released the Xbox 360 just four years after the launch of the Xbox, they bucked the general trend of console hardware cycles lasting around five years. Were they to stick to a four-year lifecycle, we’d see a 360 successor this fall.
But given that Microsoft is actually making some money on this generation, they’re probably not desperate to sink tons of money into research and development for a new console. With the PlayStation 3 struggling, Sony may be a bit more eager to turn the page, but the current console is just over 2 years old and Sony will no doubt try price cuts to jump-start sales.
For its part, Nintendo is raking in cash from sales of the Wii, which has yet to have a single price drop. The company of Mario and Link is fairly conservative when it comes to taking risks, so you can expect them to rest on their laurels while they continue to sell millions of copies of “Wii Play,” “Wii Fit” and “Mario Kart.” For a company dominating industry sales charts, Nintendo has shockingly few big games announced for this year, beyond Wiimakes (pardon the pun) of a couple of GameCube titles.
In other words, 2009 may go down as the year of playing it safe. While you can still expect a few new franchises, such as Tim Schafer’s “Brütal Legend” and Activision’s “Prototype” to hit stores, expect the next wave of titles you hear about this spring and summer to include a lot of existing franchises or proven concepts. Yeah, that means more minigame compilations and casual sports titles on the Wii.