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MMO Money Magazine

Writings on the business of fun: Virtual Worlds and Real Money Makes Online Gaming a Big Business. My economic view on the world of online games - without the hype.

Author: Inktomi

Video Games are the Rescue and Recovery of the U.S. Economy.

Posted by Inktomi Sunday May 17 2009 at 11:37PM
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          I totally believe it to be true and my point is that even though things may be tough all over, consumers like us are the driving force of our economy. Eventually, we will buy and play our way to a better economy, even though the job market is our weakest link, increased consumer spending creates jobs that will put America back on it’s financial feet again.

             Am I an economist, please no. I am a stockbroker that has worked on Wall for long enough to know when the handwriting is on the wall. I saw it in 2007 when many of my customers were selling entire portfolios to buy overpriced real estate. Noone listened then and most likely no one is going to listen now. So I love my games, it is my jump off from a long day of being the “SERIOUS ADULT”, I get to go online and have some laughs while connecting with my younger nephew. It’s what makes life, alive.

             Along my travels I started to really look into the toy industry and the electronic part of the entertainment market. In short I realized that games and the “internetz is serious business”, even though that is a running joke online; unfortunately it is true.

The Big Fish in the Small Pond.

               The depression of the 1930’s saw the boom of the movie industry, people were so upset about the state of the country and the war that they spent their days in theatre watching silent films. It took them away from their sad lives and gave them a short term reprieve to the daily grind, it helped Hollywood become what it was today. I believe the same thing is happening now with video games, instead of the big players being MGM, RKO and United Artists. Instead the big players are Electronic Arts, Activision Blizzard and Ubisoft to name a few. I recently stumbled upon a website that details the top 100 most successful game studios , click on seeing it in Issuu for the full effect. It’s really nice.

               In a blog for CNET news written by Dan Tierdham he quotes a member from the Hollywood Interactive Group, "There are a couple of reasons," said Ron Meiners, director of community for the Hollywood Interactive Group. "One is the traditional value of entertainment during tough economic times. Like the great fantastic musicals in the 30s. Movies did great, because they took people's mind off of the troubles they were facing. (And) video games have great value as entertainment. The number of hours of solid entertainment that comes from a video game purchase is much greater than a movie, for example, for very comparable cost."

Big deal…

    Yes, you are right. How does that effect me, I am just some ____ that wants to play games?  Well, these companies know that and it is there business to A) keep you playing and B) keep you playing their games, that’s why you see the same people crank out titles rocksteady month after month. I believe that video games, the MMORPG market to be more specific is in a booming market right now. You can read all the way back to October 2008 that sales of VG were basically shrugging off a crappy economy environment. That continued until January ’09, but Christmas sales are always a boom time for VG sales. People are still buying up games like crazy in February, so this strength and growth continues all the way until recently that April that things are starting to slow down and sales are slipping (reported by Reuters News). That is the plateau and will not last for long, maybe things will slow down a bit in the summer but we have a huge Fall schedule in store for us that will rock all the way into next year. This can also be part of the fact that this year’s sales is going up against last years that contained GTA IV and Mario Kart for the Wii.

The Barometer

            Is us, it’s our spending habits, our cash reserves and our money. Gamers or the “Game Consumer Community” can make or break any game company if we (as a collective) decide that “this game suckzors”. How many companies have you seen basically fall off the map for no rhyme or reason, many times it happens before the game is even published; take into effect what’s going on over at Cheyenne MT./Firesky the group that’s making the Stargate Worlds MMO. The worst part is everyone found out through his wifes blog, that is a problem you can only see in the internet age, lol.

I dun’ care, STFU and GTFO!

               Yes, I know. But some of us do, like Douglas McIntyre’s article in TIME magazine "Why Video Games Are an Excellent Economic Indicator", he states:

               Video games... [are] inexpensive enough so that they should be a reasonable proxy for consumer discretionary spending.
           The signals from the video game industry in April were troubling. Sales of games dropped 23% and game console sales were down over 40%... The slide in console sales is so extreme that it is a clear sign that sales of consumer electronics are in a flat spin. When people cannot spend $300 on a console or $50 on a game which can be used for hours and played over and over again, the money for discretionary spending has dried up. –
Gamepolitics.com

  I personally disagree with Doug for the reason is that the MMO market it booming and you can see this from MMOChart.com, which goes in-depth to describe how many subscribers for almost all the main stream and substream MMO’s. 

               You should look at the other games that also are rated and charted by number of subscribers.
The World of Warcraft brought in over $500 Billion in sales for 2007 and continues to break records with the release of the Wrath expansion. Not to mention the other games that they have in their pipeline such as Diablo 3, all three issues of Starcraft 2 and the new MMORPG they are working on. Also to see some realtime numbers of VG sales go to the VGsaleswiki, they have a wiki for everything now. 


How do I come into this?


               Now let’s look at EA’s Warhammer Online, only 300,000 subs and they take a 1 billion loss due to Need for Speed. Now that 300k pay what, 15 bucks a month? That works out to be 4.5 million smackaroos a month in revenue and $54,000,000 a year in subscriptions. Not to mention sales of the box that is a onetime charge of maybe $40-$50 and brings in 15 billion. That’s a lot of potatoes, and how much does it cost to develop and run these online games. I’m sure that a game ompany that published a game that had the words “Dark” and “fall” in it’s name would kill for 300,000 faithful subscribers. (cheapshot)


         That is where the new jobs come in, growth in any industry will take manpower to make it happen. And the growth in the software engineer (commonly known as dev around here) is going to grow 49% this year alone. They also make over $50,000 to start with an U.S. Average Salary of $80,000. Yep, its true! Read it in Payscale.com. And to top it all off all you need is a bachelor’s degree in Computer Science, that 4 years in college and you can work at any of the new or established game software companies. It’s a long road and sometimes you have to eat crow to get your foot in the door, actually Sanya Weathers writes a great article on working in the customer service pit. Hey, it’s a job and a start! Take a look on Gamasutra to what is out there.


The Bottom Line


         Just keep doing what we are doing, playing games, buying games and having a great time doing it. The rest will work out for itself but we can’t forget that someone has got to pay for all this stuff and make it happen. From the girl who spends too much in the cash shop on Runes of Magic, the chronic cheap game buyer who goes to gamestop twice a week and crawls the bargain bin to the diehard Raider in World of Warcraft we are continuously pumping money into the economy. We go to our respective jobs and come home to relax in front of a screen or a console and not knowing that we are really part of a very big picture that is getting bigger every day.

LOL!

Anyway, thanks for reading my drivel, I am going to be busy tmrw and wanted to get something out to you. I'll catch up with you all later.

Have fun and play safe,

Ink

Death1942 writes:

epic epic blog.  I always knew games would be a huge part of the economies in the future.  The statistic that did it for me was when Games overtook Movies (in Aus) as a big earner.  Games trumped movies by a couple of million dollars and (in such a low populated country) it is a big deal.

I'm glad i will be working in such a powerhouse industry and i hope it grows into something as successful at the Movie industry (minus the crappy celebreties).

Mon May 18 2009 7:06AM Report
Amanautor writes:

Awesome blog keep it up.

Mon May 18 2009 8:29AM Report
VuDu_DawL writes:

Great story - great points. The bottom line to any train of thought is the rails of sanity. You cannot stay on them without some pleasant diversion. Gaming is just that. An escape where you can move into another reality of either a game developer's or your own creation (or a blend of the two). That can be just as relaxing as a cruise without the stress and hassle of travel. Entertainment, of SOME form, is a potent relaxant, and a wonderful coping mechanism to blow off steam and ease the stresses of daily life. We literally NEED these kind of relief valves. And personally? Movies suck. I have not been a movie person for years. They involve ONLY someone else imagination. Don't like where the plot is going? Too many flaws in the storyline? Boring? Tough.. a movie is what it is. With City of Heroes/Villains, if I get bored with their stories, I can write my own. I can make my characters and my game unique and enjoyable for ME. It is interactive, requires thought and input, and is SO MUCH more than just camping out on the sofa getting zombie-butt and glassy eyes from watching someone else's creation simply play out before you.

Mon May 18 2009 3:07PM Report
AbeSimpson writes:

great blog!

Mon May 18 2009 5:41PM Report
sonicbrew writes:

I don't ever see this happening, ever. You claim to be a stock brocker then you should know just how bad the economy truly is. My wife is a bank examiner for the OCC (Office of Comptroller Currency/Dept. of Treasury) and there is no way in hell gaming is going to fix this economy. I shared this with her and she did get a good laugh out of it. This economy is in far worse shape then most people even know or care to open their eyes too. We are in store for far more troubles ahead and its not going to get better until it gets a whole lot worse...

Tue May 19 2009 9:21AM Report
Inktomi writes:

@ sonicbrew

I'm sorry you didn't enjoy the article, at least your wife did.

Maybe it won't the US won't singlehandedly play their way to a better economy, however you can't deny the fact that the industry has been impervous to the surrounding factors. I merely wanted to point that out and also that it keeps consumer spending moving that you shoud know has all but stopped. 

Tue May 19 2009 1:59PM Report
just1opinion writes:

Absolutely incredible blog. Great work, great writing, great topic. Kudos! Please keep blogging. It's refreshing to read something of decent QUALITY around here.

Sun May 24 2009 3:56PM Report
Inktomi writes:

Hey girl,

 Thank you for reading my blog and for the positive reinforcement. The MMORPG community has been very good to me so far, I hope you all keep coming back.

Ink

Mon May 25 2009 4:27AM Report
Lateris writes:

 In the 90's the sales of CD's for Nirvana, Sound Garden, and other bands generated millions of tax dollars for the econonmy in the northwest. That money is now gone. Games generate million of tax dollars. But the money they generate is now gone.

The problem is that Washington DC and my democratic party is spending money that is not there due to a war, useless bail outs, and economic bribes and aid to the world. Sad but true.

 

Great blog. 

Mon May 25 2009 12:01PM Report
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