Take-Two Says Games Defy Economic Downturn—Reuters
June, 4 2009
LOS ANGELES (Reuters) - It may take until next spring before U.S. consumers loosen their grip on their wallets, but until then they may splurge on video games, Take-Two Interactive chairman Strauss Zelnick said.
Video games -- even those that cost more than $50 -- are likely to score significant sales in coming months as recession-weary consumers go for cheap entertainment instead of taking vacations or buying big ticket items, Zelnick told Reuters at the E3 video game conference in Los Angeles.
"We've seen some recession resistance," he said in an interview of the game software industry, which some experts peg at about $29 billion, bigger than the movie business.
Certain forms of entertainment, particularly movies and video games, tend to thrive during tough economic times, as consumers stay close to home. Many games deliver more than 20 hours of play-time, making them a bargain, he argued
"We'd all be happier if the consumer economy were more robust," he added. "That said, we (the video game industry) are pretty well-positioned, even if the consumer economy continues to be troubled."
Even with all the talk of "green shoots" and data showing the worst of the economic downturn may be over, Zelnick says overall consumer sentiment will take a while to blossom.
"The financial markets are turning around, but it's not clear that the consumer economy is turning," he said from the floor of the gaming convention. "The consumer is not going to show up for another 9-10 months minimally, because we are still seeing meaningful unemployment rolls."
"People hold their own for a few months after they lose their jobs, but then eventually they have to stop spending, and their psychology changes."
Take-Two, best known for its violent "Grand Theft Auto" franchise, kept a low profile at E3, hosting only private meetings and an analyst gathering, shunning the flashy showcases of rivals such as Electronic Arts and France's UbiSoft.
At the meetings, it showed off upcoming titles including cult-hit shooter "BioShock 2" and a new version of the sports game "The Bigs", as well as a sneak peek of "Agent," which is being developed by by the creators of "Grand Theft Auto".
Take-Two's conservative profile comes as the show itself reaches for a bigger splash this year -- after downsizing in the past two years. Zelnick noted that for a company "focused on efficiency," its money was better spent elsewhere.
Big showcases at E3 were "a good thing because it creates excitement. But frankly, its expensive," he said. "You can spend a lot of money on one of these shows. We'd rather put the money into the games."