Publishers Versus The Economy

When the first signs of a recession hit the game business in 2008, many publishers were bullish about the industry's ability to weather the storm. Games are better value for money than other forms of entertainment, they argued; the consumer may cut back on taking chances, but they'll still buy the blockbusters. That was the rhetoric from the big box business, as it confidently predicted being able to stand its ground and sell while consumers cut back on non-essential spending.

The middle ground thinned out, with independent and internal studios closed, downsized, right-sized and shuttered. Even now, the situation is still difficult to gauge: were publishers using the economy as an excuse to reshape their businesses and show investors they were taking action, or did they really bite the bullet, admit they were hurting and take appropriate measures? Either way, the industry changed during 2009, as free-to-play, mobile and browser games began to find their place, spurred on by lower barriers to entry and consumers looking to spend pennies, not pounds.

Now, in 2011, with a double dip recession a distinct possibility - or a long period of slow growth at the very least - the industry is facing the same challenges it did in 2008. How exactly are developers and publishers preparing for another long, lean period, and what lessons were learned from the last downturn?

If we can generate revenue on a worldwide basis, the GDP on a worldwide basis is actually growing.

Yves Guillemot, Ubisoft

Rather than scaling back, publishers like Bethesda and Activision are focusing on going bigger - spending more on AAA titles that offer better value to the consumer. French publisher Ubisoft is still spending, but it's diversifying, moving into television and film with Ubisoft Motion Pictures, expanding casual brands like the Imagine range, and acquiring talent in the free-to-play space.

"It's important to only do quality, because I think what will suffer is the games that are average or not well positioned," says Alain Corre, executive director of EMEA for Ubisoft. "These ones will suffer the most. But the creme de la creme will be profitable."

Yves Guillemot, CEO of Ubisoft, believes that the recession isn't such an issue if a company thinks globally, and he is currently seeking to expand the company's presence in as many regions as possible.

"I think all companies have to be adaptive to recessions, but we have also to cover the world. If we can generate revenue on a worldwide basis, the GDP on a worldwide basis is actually growing. The rule of our companies is to make sure we can touch all the markets, so we adapt to different countries and we adapt the content."

He also believes the UK economy has the capacity to bounce back after harder times. "In England the advantage is that it goes down quickly but it goes up fast, so what I see is that there's a period where things will be more difficult in the UK, but very quickly when it goes up again it will be fast."

In 2009, EA's John Riccitiello called the recession a "blessing in disguise" as it forced the company to trim the fat acquired during times of plenty. However, in 2011, the publisher's European boss Jens Uwe Intat is reluctant to even speculate whether another crunch is on the horizon. In fact, he doesn't believe it's an issue.

"If I knew whether there was a recession coming or not, there are a lot of people with a much better education in that field who are trying to figure it out," he says.

"I don't even need to know, because the impact of recession on our industry is totally unclear. There are people who say that, in a recession, people still need to have some fun, right?"

I don't think EA as a company believes we're about to go into a double dip recession

Peter Moore, EA

Intat believes that consoles and games have an bigger effect on the industry's economy than the recession, and argued against looking at past downturns for clues to the arrival of another.

"If you look at what happened in recessions in the past and try to correlate, I would actually try to warn you against trying to make a conclusion, because you never know what might have happened without a recession."

"If you have a total recession it might have an impact on people actually buying new consoles. But there are so many other devices out there that people can play on that I'm not actually really sure whether a recession would be a good or a bad thing. I don't know."