Everyone is in quite a bind with the Inflation on our backs and with the fear of an impending Recession waiting for us. This might be worse just like way back in 2008’s “Great Recession” where we saw a severe meltdown in the economy and the financial system.

Many sectors have been hit with huge losses but the Gaming industry came out unharmed and gained top place with ATH revenues and increased consumers. So, is gaming industry “Recession proof?”

No, I think not! So, let’s see what this is all about starting with…

What is a Recession?

Recession is a period of significant decline in economic activity that is spread across the economy and lasts more than a few months. It is a phase in which the economic activities of a country become stagnant, leading to a disturbance in the business cycle and affecting the overall supply-demand balance.

What happens during a Recession?

A Recession is an inevitable part of the business cycle, which is likely and should arise once in a while to help economics halt the unnecessary expenditure. During a Recession, many countries witness huge disturbance in the economic cycle, including deterioration in the sales figure, increased unemployment rate and diminishing economic output.

Major effects include :

• Increased unemployment.

• Reduced purchasing power.

• Business bankruptcy.

• Short-term interest rates fall.

• Credit availability criteria becomes stricter.

• Causes a decrease in consumption rates and reduces Inflation, resulting in Deflation.

  (Now don’t go thinking that Deflation is a good thing. This goes both ways. Like Inflation is beneficial for producers/sellers and Deflation is beneficial for consumers.)

Causes of Recession :

There are multiple factors responsible and these are mostly interrelated. Like a product with high demand may cause an increase in prices of commodities. This causes lack of supply-demand balance which leads to Inflation. This may get severe overtime.

Most common causes include :

• Demand-Supply imbalance
• Inflation rates
• Sudden shocks (like COVID-19)
• Reduced confidence (continuous fluctuations of prices may reduce consumer confidence)
• Fear of recession (Fear causes all! Psychological factors play a key role too..)

Recession and Gaming :

Many say that a Recession is inevitable, but during these times of economic uncertainty, entertainment sector is mostly standard and Video game sector successfully withheld its value. Most even say that “Video games are Recession proof.“ Well this is because most spend time at home during this downturn and tend to enjoy video games rather than movies, sports or concerts because with the release of most F2P games in the market, games are considered to be most in-expensive form of entertainment. (Well, you just need your mobile phone to play endlessly.)

Looking back from the last Great Recession, during 2007-2009, gamers considered increasing their playtime with an average time spending 15 hours a week playing has increased by 1 hour each year to 18 hours playtime a week. Now this seems to be an inversely correlated relationship between player engagement and tougher market conditions.

Also, the revenue stream of gaming constantly increased during that period by introducing some of the notable casual games like Angry Birds, which is the most downloaded freemium game at that time and another great freemium game League of Legends, which revolutionized MOBA and E-sports.

So now begs the question…

Is Gaming Recession Proof?

According to Video game market analysis expert NewZoo, it is estimated that by 2022, the gaming industry revenue is set to reach a record of $203.1 billion generated by the end of the year with an expected total of 3.09 billion people playing these Videogames.

At this point, the estimated highest revenue will be 45% from Mobile gaming, 32% from Console gaming and 23% from PC gaming. By these numbers, anyone might consider that Gaming is really recession proof!

But is it really?

Seriously, the word “Recession proof“ was a misnomer. It is not that the gaming business was immune to the effects of recession, but rather that it was growing so fast that even recession couldn’t off-set enough growth to push it into negative figures. New consumers/players were pulled in by online and mobile games, especially in the smartphone market which was woefully mishandled by most major publishers.

The industry is still growing but the core markets that most major publishers address are not seeing anything like the pace of growth that would allow them to shrug off the elements of Recession. Many companies frustrated by the growing difficulty of further expanding their audience and resources have instead resulted in deploying business models that would squeeze more money out of their existing players. This would only result in existing customers cutting back their spending or worse, completely abandoning the game.

The downside of these F2P games is that most of these games are freemium games and mostly rely on big spenders. Now will those players keep spending during a recession?

What if those consumers thought to go on a vacation or prefer a movie instead of spending for some game? Now this could be a huge blow to the very ability to survive budget cuts.

Now what does this mean for Blockchain gaming?

Now this begs the most important question as Blockchain gaming acquired a never seen traction just after the 2020 recession (Yes, there’s a recession in 2020 due to the Covid-19 pandemic and this well lasted for a short duration of just 2 months so, yeah there’s that)

The introduction of P2E changed the demography of gaming industry and laid a foundation for many games which not only provided entertainment but also acted as a source of income for many players in many countries. Gaming Guilds too played a key role by recruiting players to provide income sources by lending NFT assets for those players to play and earn through the game and share the spoils afterwards.

But as the market conditions worsened, as many games came up with shitty ponzinomics which took off with quick money and this hit hard on the morale of the existing gamers many who became bearish on Crypto gaming.

But on the bright side, this filters away the bad players from the scene and the ones who stay and build rigorously in this economic recession will come up strong and are going to succeed in providing the ever-required gaming experience for their consumers.

Also, a lot of changes have happened in the Gaming industry compared to the previous economic recession of 2008 :

It is required to acknowledge how much the gaming industry has evolved since the last cycle. There are some of the core advancements that might fundamentally change the way we experience a downturn.

• Mobile Gaming : From handhelds, consoles and PCs, gaming found a way into compact mobile phones and became a massive drive to increased gaming adoption. This not only increased the accessibility of games but also erased the requirement of purchasing separate hardware (you can just play on your phones.) There are approximately 2.1 billion mobile gamers, 1.1 billion PC gamers and 700 million console gamers. Unlike 2008, the mass adoption of mobile gaming is going to be a key driver for gaming’s continued success in the current recession.
• F2P Domination : During the last recession almost every game had a premium model with fixed upfront purchases. Since then, many games switched to F2P model which mainly depends upon advertisements and in app purchases for revenue generation. This will act as a factor to onboard most gamers even in the time of recession.
• Streaming, Viewership and E-sports : Streaming and Viewership has become a more positive way for gamers to participate in the game communities and find a way to monetize. Content creation has been a part of gaming for quite sometime and that content can be accessible to view or spectate for majority of audience through platforms like Twitch, YouTube and Facebook gaming.

The evolution of E-sports also had a huge hand in the evolution of streaming and viewership. This means that even non-players and non-spenders are becoming more valuable for the ecosystem as a whole.

Conclusion :

As we’re now living in a new era of economy and gaming has become one of the key aspects of entertainment and by understanding how gaming has reacted to prior economic downturns, we can generally estimate that gaming is not really what you call “Recession-proof “ and it is affected by the economic recession based on many factors we discussed above. But “Recession-resistant “ may be the exact deduction as the gaming industry strives to withhold its value by providing equal value and entertainment to its consumers.

Generally, many people might choose to play a game which would give them atleast 15 to 20 hours of entertainment for a considerable price (or better free..) rather than a 2-hour long movie while they’ve got nothing else to do. A game will provide much more value compared to any form of entertainment. Taking account from the historical references and present conditions of gaming, either traditional or Web3 have a positioned in such a way so that they can perform well throughout this current macro-economic turbulence.

Now all we have to do is sit back and play games and everything will be fine...

Haha Right…! 😂