Analyst: economic crisis bad for small studios, console life cycles might extend

I know analysts tend to have a bad rep with most of you guys, but hear this guy out. No “well gee, Mr. Obvious, thanks for the duh” moments here. Analyst Colin Sebastian talks about how the economic crisis will affect game studios and the life cycle of consoles, something you guys might be concerned with.

I know analysts tend to have a bad rep with most of you guys, but hear this guy out.

Analyst Colin Sebastian talks about how the economic crisis will affect game studios and the life cycle of consoles, something you guys might be concerned with. No “well gee, Mr. Obvious, thanks for the duh” moments here.

Looking at launch sales, Sebastian observes that games still sell strong at first but drops off rapidly, suggesting that the economic crisis hasn’t affected core gamers’ taste for games, but has left casual and mass market gamers more cautious with their cash.

Going with this line of thought, it suggests that smaller studios are in trouble, while major publishers will benefit because the market will have greater demand for blockbuster titles:

Naturally those titles selling particularly well will receive reorders. In contrast, there will be incremental pressure on smaller publishers as well as moderate or weaker-selling software.

Like Michael Pachter though, he is optimistic that the video game industry will remain strong, noting that console sales remain steady despite being more expensive than other forms of entertainment gadgets out there.

Talking about consoles, Sebastian says that it’s very fortunate that the economic problems came while in the middle of the current consoles’ life cycles, although this may mean we won’t see a new generation pop up in a while:

We are midway through the current cycle, and even if the industry feels the consumer pinch, a prolonged economic downturn could ultimately extend the length of the cycle as hardware manufacturers become less inclined to spend heavily on expensive new platform development.

If that’s true, we might not see rumors of the Wii 2 and Xbox 720 come true anytime soon.

Via Gamasutra