I don't understand why a strong october could be a proof of anything. It seems Pachter is saying people don't stop buying games even when the economy is facing a recession. This might be true, but at the moment the recession arrives (and it already arrived here in europe) jobs will be cut, people will get unemployed, salaries will go down, etc.
This is the moment when people will start thinking about buying lesser games, not the months before the recession.

Christian, I think that's more or less what they state at the end of the article when they say that November will be an even greater test of the trends.

However, the fact remains that the entertainment industry in general and electronic gaming in particlular are more recession-proof than many other industries. The caveat to this historical trend is that it is relative rather than absolute. Also, the entertainment industry tends to be contract-driven rather than steady, salary-driven. In this respect, it's probably more analogous to the construction industry or professional athletics, although the latter is still related to entertainment (but we're really talking about the people working in the industry, after all).

I think the analysts are simply explaining and restating their oft-observed viewpoint that even when consumers spend less, games and other entertainment tend to be at the bottom of the "cut" list due to the overall cost-to-value ration.

We will see, all the studio closings and job cuttings of the last weeks don't leave me to optimistic.

Christian,

Those are definitely worrying, but they seem to be more the result of problems internal to the various publishers, not because of external economic factors. I think we'd be seeing those same layoffs and closings right now regardless of the state of the larger economy; a lot of these publishers have had it coming for a while now.

There are different parts to the video game industry. ERTS and ATVI are susceptible to the success of their games relative to other games, and other consoles--ie, the Wii. Year over year, the video game industry is growing, and Gamestop, for example, is poised to take advantage of the increase in console and game sales.

It seems to me that most analysts have so far only commented on how consumer spending will affect the video game market, and that's fairly predictable. But what about the overall health of major corporations, mostly publishers? What happens when their investments hurt? What happens when investor confidence affects their ability to secure huge sums of money? This economic crisis is huge (this ain't no "downturn"), and it's not just consumers who will cause changes in the markets -- it's banks and corporations, too.

Another factor is the time it takes for a game to reach market. Games currently on the market or due out soon will be at the mercy of consumer spending, but other titles still in development could have their budgets slashed or could be canned completely.

As a child of the 80’s who lived through a recession – and a Bush presidency as well (hmm) – this report comes as no surprise. The demand for entertainment/escapism will always prevail, as music, movies, and TV have done. At the same time, the “traditional” game publishing industry, as we’ve seen with print media, is going to shrink. The downside is that studios will close and titles will get cancelled due to a publisher’s “refocus.” The upside is that the people from those studios will find their outlet in digital distribution, and we consumers will still be able to get our content. For those who grew up during the 80’s, although you may look back on it with some regret (or disgust), some of the greatest, most innovative music, movies, and TV shows of all time came from that decade.

History will repeat itself, as it is already beginning to show.