Market turmoil hits video games industry hard

Mike Bantick
Saturday, 04 October 2008 13:33

Opinion and Analysis

The volatile financial market rollercoaster is hitting the big name interactive entertainment industries hard.  Both Activision/Blizzard and Electronic Arts – the industry’s biggest companies - have shed more than US$6 billion in value this past week.  Why?

All of us have been watching the US and global financial markets recently.  Some with dread, some with a gleam of opportunity in their eye and some with only a mild smattering of interest.  Those sitting on the largest pile of nervously discarded finger nails look to be executives from the big video game publishing and development studios.

According to a recent LA Times report, this last quarter of the year, which for video game companies should be the bumper sales season, is instead looking like a time of forced belt tightening.

Since September 26th the US market indicator, the NASDAQ has fallen just on 11 percent.  Meanwhile the big name – and global – game publishing companies have comparatively been hit harder than most.

World of Warcraft and Call of Duty 4: Modern Warfare publisher Activision tops the list, losing US$4 billion in shareholder value – almost 25 percent of the total company value.

Electronic Arts – who have a strangle hold on most of the popular sports video games as well as a bunch of other sales blockbusters (Spore, The Sims, Mass Effect) have not done much better.  EA lost US$2 billion, around 17 percent of market value in the same period.

Nintendo, THQ and Midway Games did better, but all lost more than the NASDAQ during the reports period.  Each dropped around 15 percent market value.

Why is the Video Game Sector being hit so hard? - onto Page 2