Casual Games: Recession-Proof?

Last night I attended the WTIA Gaming Panel at the Herban in SoDo, where the discussion focused almost entirely around the recession. The question on every one’s mind: Are casual games recession-proof? In an era where penny pinching is the new norm, can a business that thrives on fun survive?

The panelists, RealNetworks games division COO Harold Zeitz, Big Fish founder Paul Thelen, Wild Tangent CEO and co-founder Alex St. John, and Bungie Studios co-founder and chief of product meteor solutions Pete Parsons, think it’s got a good shot. Moderator Frank Catalano asked questions centered around the concerns of today.

The panelists discussed the biggest challenges gaming companies face during a recession. Zeitz noted that games that require extra accessories that can be expensive may suffer a bit due to cost cutting. Parsons discussed the unfortunate consequence of a tight belt: when money is flowing out, so are the opportunities for excellent games to be created. Bright people are being let go, and that perfect game that may have been created may never come to fruition.

Though we are in a recession, some companies find that they can take advantage of unique circumstances. Thelen finds that the time is good for acquisitions. St. John noted that despite games being a bit cheaper than they were seven or eight years ago, the download conversion rate is three times higher now. People are willing to spend less money a little more frequently. While advertising is being cut from TV, the ad money is still flowing online as the medium becomes significantly more popular. St. John said that the casual game section is “certainly very recession resistant.”

The panelists discussed how Seattle is a hotbed for game development. St. John made the point that no other place on earth has the concentration of game development that Seattle does. Zeitz agreed, stating that the greater Seattle area is top notch for game publishing. Thelen attributes the success of Seattle to Microsoft’s spawning the massive local tech movement. Catalano then asked what needed to be done to ensure Seattle stays atop the games world. Thelen expressed his dislike of the cap on the H1 visa policy, saying it’s a screwed up system. “We educate them and then send them away.” St. John’s biggest gripe was the cost of doing business – including the cost of recruiting and hiring people and the taxes paid to Washington State – which ultimately funnels funds away from developing new and improved games. Zeitz’s biggest concern was access to education- not just the cost. He discussed how major universities are having to cap their acceptance numbers in order to stay within budget. Parsons agreed that education is the most important factor, citing the lack of thought leadership in the current educational system.

Catalano wanted the panelists to discuss Amazon’s entrance into the casual sector. John Cook at TechFlash sums it up nicley, as St. John simply stated, “You’ve got to be kidding.” What about mobile gaming? Again, St. John provided the color when he stated that mobile gaming is a “crappy business.” He even got a few groans from the audience when he expressed his oft-told opinion that consoles will die- this will be the last generation. Parsons noted that what will control the console business is the hardware arms race. This lead to a discussion about games going cross-platform, something that Real’s games team has tinkered with on a few different occasions. Zeitz, clearly a fan of cross-platform functionality cites several reasons to go cross-platform: to sell more games,grow  brand awareness, and to get your games out to a larger audience. Thelen disagreed somewhat with Zeitz here stating that games are not developed equally across different size screens.

The panelists were a great group that provided color, insight, and glimpses of the future in the casual gaming world. Are games recession-proof? Will the console die? Do we owe a big “thank you” to Microsoft for sending the games world into the right direction? What are your thoughts?

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