Analyst: Game Companies That Attribute Layoffs to Recession are "looking for excuses"

Guest Post: Clinton Ma

Canadian Business Online recently published an article about the financial state of the video games industry. While it offered very few surprises, reporter Bryan Borzykowski encapsulated all the major events that have shaped the gaming world in the last 2-3 months.

The record-breaking sales of the past holiday season were trumpeted once again, further supporting the widespread notion that the video games are at least a recession-resistant, if not a recession-proof industry. Sales in Canada showed remarkable growth, with combined hardware and software sales through last November totalling over $1.6 billion, easily outsripping 2007 totals by roughly $500 million.

Vancouver-based games analyst, Steve Boscka and research analyst, Mike Hickey from Colorado were tapped for their opinions. Both analysts remained bullish on the growth potential for the industry during this recession, citing the high value proposition of video games and the dominant Nintendo Wii's mainstream cachet as strong determining factors. This is in spite of the fact that Microsoft, Sony, EA and numerous smaller companies have announced staff reductions and spending cuts in the final quarter of 2008.

Those grim realities barely fazed the analysts and their prognostications as both men offered sobering arguments to support their claims:

"The industry is seeing great sales right now," says Vancouver-based gaming industry analyst Steve Boscka. "Any company that's attributing layoffs to the economic downturn is looking for excuses, because the numbers don't back it up."
Hickey notes:

"...a lot of companies are making games that suck. Regardless of how good the market is, if you have bad games, sales are going to be limited."
While even the most powerful companies are feeling the pinch and reining in their goals to more realistic levels, running a tighter ship can only increase the likelihood of seeing some higher quality releases, even if the overall output drops in the next couple of years. Sloppy management may have flown during headier times but they won't past muster in a depressed economy, regardless of which sector you're working in. As consumers, we can at least rest assured that the cream will always rise to the top.

On a personal note, I'm gladdened to find such a thorough and balanced story about the video games by a non-enthusiast source. It's also nice to see other analysts give Michael Pachter a break from "playing Nostradamus" now and again (and prophesying some good news for a change).