Peter Kafka

Recent Posts by Peter Kafka

The Mystery of the Vanishing Videogame Boom Solved: Gamers Reduce, Reuse, Recycle

pacmanAs we lurched into the recession a year ago, pundits predicted that the videogame business would do fine during the collapse. When times are tough, they argued, people might not go out to see movies, but  gamers would huddle in their basements and play Grand Theft Auto over and over and over.

But game sales have been weak in 2009, even as movie theaters set box office records. What gives?

I’ll let someone else try to explain the movie side of the ledger (although those box office numbers aren’t always what they seem to be). But it turns out that there’s a simple explanation for game slump: It’s that gamers are huddled in their basements playing Grand Theft Auto over and over and over.

Gamers are indeed spending more time playing videogames, say new data from Nielsen. It’s just that gamers aren’t spending more money on games. Instead, they’re playing the games they have, buying used games, and increasingly turning to game subscription services.

Here’s the argument in chart form–you can get a summary here or download the full report here (PDF). Click on the charts to enlarge:

Hours played:

hoursplayed

Used games purchased:

usedgames

Subscription rate:

subscription-rate

All of which explains why Best Buy (BBY) and Wal-Mart (WMT) are both getting into the used game business and why Blockbuster (BBI) and GameFly are expanding their game rental business. Now, if you’ll excuse me, I’ve got to get back to my game of Hover Kart.


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik