Panic was my first reaction to the headline, "Electronic Arts Warns of Weak Holiday Sales." Forget about failing banks, automakers, mortgage lenders, homebuilders and all those horrible retail sales numbers. If the videogame industry is starting to tank, then it's time to put away the Great Depression comparisons and start invoking the Day of Judgement.
But a closer look reveals that not all videogame companies are in trouble.
The Wall Street Journal:
Other games companies like Japan's Nintendo Co. and Activision Blizzard Inc. still appear to be doing well with a collection of products that include music games like Guitar Hero and Wii Music.
"People are buying games," said Wedbush Morgan Securities analyst Michael Pachter. "They're just not buying EA's games."
I can testify to this with some first-hand observation. During his allotted daily "screen-time," if my 11-year-old isn't hunched over his Nintendo DS-Lite, he's deep into Blizzard's "World of Warcraft." Meanwhile, his grandmother has invested in the Wii. Neither are at all interested, however, in EA's premier game, "Madden Football."
So if you're looking for companies that can resist a bad recession, just follow the grandmothers and the eleven-year-old boys. The games they play are the keepers.
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