Sunday, October 19, 2008

Video Game Sales to Avoid Economic Slowdown?

The general investment thesis behind video games is as follows (no particular order);

1) More gamers due to multiple generations of people that have played video games. Really since Atari in the 80s the number of "gamers" has been growing. As you start to think about Chinese/World Youth you understand that there are HUGE growth opportunities in the next 10-20 years in this segment.

2) TIME. I cannot empasize this enough. In the video below, the mom's explanation is what it is all bout. She buys a video game vs. taking her kids to a movie because a movie only lasts 2 hours and then it is done. The kids will be entertained for days so the cost per hour of entertainment is LESS with video games.



3) Dropping console prices = more units sold.



4) More games are being produced, which will stimulate demand. Now that the game developers have an idea what consoles consumers like, and the associated demographics/development costs/sales expectations with each console, they will make their investments accordingly.

My Take: I think this segment of the economy will be LESS impacted than other sectors this Christmas season. I think the consumer is REALLY pulling back the reins right now and that overall sales data will come out in early November. People think it will be bad but I think it will be WORSE than they think. I hate being pessimistic :( I think patience is the name of the game when it comes to investing right now. Cash is king


Dan Ross
http://www.BetterBizIdeas.com/

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