Recession is the buzz word of the day and the phenomena that we are we are going to talk about in this article.
Recession is a multifaceted subject that has far-reaching ramifications for people, corporations and countries as a whole. It is a time for everyone to tighten their belts, refraining from frugal expenses and saving as much as possible, because the rainy days - figuratively speaking - are here.
Of all the industries that have been affected, I want to invest some time to talk about a sector that over the past two years was defined as recession-proof. But maybe it is not. That sector is video games entertainment.
Just last month, an article published by PR newswire stated that “video game industry proves once again to be recession-proof”. This was a sort of accepted dogma, which probably originated on Forbes in 2020, with an article titled: “Is gaming Recession Proof?
Record revenue for $160 billion industry with 2.7 billion players”. The article was quoting the Vice President of Unity, Julie Shoemaker as well as a list of publications and developers who believed that video games simply could not face recession.
It was easier to state that during one of the greatest industry booms of all time, when we were all constrained home due to Covid-19 lockdowns. It is much more difficult to proof the same point while the laying off hundreds of employees to cut costs just started.
Chinese video game companies have been put out of business as Chinese government is severely regulating the market for mobile games. Restrictions have been imposed to child access and monetisation, even referring to video games themselves as “spiritual opium”.
And the repercussions are noticeable in all of the top 10 countries for video games revenues. News and media outlets that used to cover e-sport are shutting down entire departments.
According to Upper Echelon Gamers: “Tides have shifted. They (the smaller players) are one of the first to go down (like) ‘Canary in the coal mine’. For those that don't know that phrase, (it) was born when coal miners would bring a caged little canary bird into a coal mine, and if there was a build-up of carbon monoxide or some other dangerous gas, the canary would die first while the miners could then make it out alive.”
China is effectively and deliberately strangling its own video game market which is a revenue source for Western companies and when we realise that China itself is the number one market on Earth for video games mostly as the result of population size we can see that the effect of recession will inevitably go further. Western game developers pulling out of Russia which - at the time of the Ukraine Invasion - was among the top 10th largest video game economy in the world is cited directly as a macroeconomic factor impacting the looming recession.
I play video games too. Although not so frequently, and often limiting myself to a title or two a couple of times a week. I find myself more focused on work these days than wasting time on trivial hobbies.
This change in mindset on a global scale also seems to be one of the root causes for the gaming industry to start feeling the recession.
(The writer is a member of the International Press Association)
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