With the recent announcement of a fall in mortgage applications, it has been widely reported that the global economy is bracing itself for a recession. Share prices of publicly listed companies have been taking a battering as investors attempt to withdraw cash from equity markets and place surplus funds in more secure, low risk investment portfolios. Yet, to the surprise of many industry analysts, the rather turbulent online gaming sector appears to be coping rather well to the uncertainty and turbulence facing the markets.
This has led many industry experts and investors to boldly declare that this sector is recession proof. But is this bravado based on a false confidence, or is there some substance to their rather bold declarations?
The online gaming sector has had a difficult coupe of years following the passing of the UIEGA, which effectively made online gaming illegal overnight in the United States. Share prices for a number of online gaming companies have been hit hard, but 2008 has seen a number of the listed companies return to profitability levels they experienced prior sbobet to the passing of the UIEGA legislation back in October 2006.
There is some substance to analyst’s predictions that the gaming sector is recession proof. With the tightening of consumer money belts, it is likely that consumers are going to spend a lot more leisure time at home. Online gaming, particularly online poker sites such as PKR.com Poker represent leisure pursuits that can provide hours of entertainment, and could be classified by many consumers as providing value for money. With broadband connectivity becoming cheaper and more accessible, many believe that the recession may provide new opportunities to acquire new players.
This argument has some substance. However, the tightening of consumer spending is likely to hit leisure activities such as online gaming immediately. Existing online gaming players are likely to reduce their gaming expenditure, or even stop altogether.
Analyst’s predictions therefore appear overly positive. Whilst they may proclaim the gaming industry to be recession proof, it’s more likely that gaming expenditure will be top of the list for most consumers when it comes to reassessing their disposable income. Industry analysts appear to be taking a gamble when the odds are staked against them.