No Recession in this Castle

November broke some economic records, like the biggest drop in same-store sales, the largest decline in home values, and the longest decline in purchases since record keeping began. A record that probably drew less attention, though, was the one-day sales record for a computer game. In a month when, despite holiday shopping, retail sales actually fell 1.8 percent, Blizzard sold 2.8 million copies of their new World of Warcraft expansion, “Wrath of the Lich King,” at $40 a pop and in just one day.

Times are so bad that troubles at finance and banking companies are pushing economics concentrators into Teach for America interviews. Yet video games are not only beating the market but booming. In 2008, game sales broke records despite the biggest economic downturn since the industry began. U.S. game sales have risen to $2.91 billion. Nintendo Wii sales doubled in November to reach 2 million.

How can this be, especially for such a non-essential product like video games? A music teacher told me once that in a recession, entertainment is the first thing to go. He was probably right for his line of work, since households will look to cut back on high-price entertainment like concerts.

But during a recession, cheap entertainment remains popular. Take Hollywood: While stories of soaring attendance during the Great Depression are probably false, movie attendance did increase in five of the last seven recessions. The explanation is simple: Movies provide a dose of high-quality entertainment, which is more in demand during a recession not only because people have more free time but because they have a greater need for escape from their problems. More importantly, movies are a pretty cheap way to spend an evening, and they appeal to a consumer who faces economic uncertainty.

The same logic applies to video games. The game Renaissance 2 costs six times the price of seeing the movie Madagascar 2, but games are actually cheaper if you measure their cost by the hour. If we say that movies cost $10, and assume that the typical movie lasts 2 hours, then a moviegoer spends $5 per hour of entertainment. Most games last much longer. A triple-A video game title like Fallout 3, for instance, is priced at $60, but reviews have claimed anywhere between 50 and 100 hours of playtime. Even using the conservative estimate of 20 hours of gameplay, the consumer only pays $3 per hour. True, gamers need to buy the console too, but many people buy games to play on a computer they already own for work or school. Furthermore, most gamers only need to buy a new console every five years, and they save both on gas costs and expensive snacks and drinks versus going to a movie.

Also, focusing only on big-budget games sold at high prices ignores the rest of the game market, which might be an even better value. Casual games often cost less than a dollar and are an expanding market on new platforms like the Apple iPhone. Power gamers are unlikely to cancel monthly subscriptions to persistent-world online games (like World of Warcraft), because the 60 or more hours many admit to playing each week makes the cost per hour infinitesimally small. Recently, “microtransaction” online games, which are free to play but charge players small amounts for in-game items and upgrades, like the Korean games Cabal Online or MapleStory, have been making inroads into western markets, and are relatively recession-friendly in that players can choose exactly how much to spend.

Video games aren’t completely recession-proof. The North American market almost collapsed due to oversaturation after 1983. But the industry is certainly in a much better position than Hollywood, which faces a unique problem in this recession because it has become far too easy to get access to content for free online. Fewer people will continue to pay for cable when they can watch TV shows online for free, which has become widely available legally. With games, illegal downloading is a non-issue, since most titles are far too complex to stream.

Suggestions that the game industry may be unable to continue strong sales have so far proven to be false alarms. Sales were lower this September relative to 2007, but the trend disappears if you take the blockbuster Halo 3 out of the equation. Electronic Arts plans to cut jobs after failing to meet profit projections, but the company is in transition to a new strategy of focusing on innovation and making fewer, higher-quality games rather than the yearly editions of sports games and Sims expansion packs that have been its bread and butter. There are signs that stores are focusing more on stocking the shelves with hits rather than a broad range, but this is not necessarily bad news for the industry’s overall bottom line.

Are video games becoming America’s pastime? Perhaps. The New York Times now has a staff video-game reviewer, which could be a bellwether of the medium’s cultural acceptance. I prefer to let the numbers speak for themselves: With all this money flying around, Mario and friends aren’t going away any time soon.


Adam R. Gold ’11, a Crimson editorial writer, lives in Adams House. His column appears on alternate Mondays.