“Recession Proof” Game Stocks Tank Just Like Everyone Else

If you have so much as walked past a television that had the news running in the past month, I’m sure you’re aware that our economy is in shambles. The best way to gauge America’s economic strength is by looking at our stock market, since it essentially showcases the value of American business. Well, the auto industry is down, the housing market is down and oil companies are down. Hell, even gold is down. But many analysts believed that the video game industry wouldn’t take a particularly large hit in a recession, to the point of being “recession proof.” It turns out that game stocks are only recession-resistant.

Analysts said “recession proof” because hardcore gamers don’t care about bull or bear markets, their priorities will always go to the games. Beyond that, other demographics that usually spend large portions of money on vacations or expensive leisure pursuits would look towards cheaper home entertainment, such as video games. If I may make an off-beat analogy: the Timex Ironman watch is water resistant to depths of 100 meters. You can wear it in the pool without difficulty and even take it snorkeling. The moment you try to do some deep sea scuba-diving however, you’re going to have a busted watch on your hands. Well, it turns out our stock market has decided to try and study the ocean floor and, as a result, our lovely recession-resistant game stocks have been crushed under the tremendous pressure.

Here are a couple quick looks at what I’m talking about:

At the height of EA’s takeover bid of Take Two Interactive, Take Two’s stock was worth roughly $26 per share. After the GTA IV honeymoon was over, though, their stock dwindled slowly and then plummeted last week when the DOW and NASDAQ tanked. As I write this, their stock is sitting at $12.46 per share and is steadily dropping. In the short time between writing and publishing, it could easily be below ten dollars. (Editor’s note: It has only dropped to $12.30 so far.)

Meanwhile, their bitter rival EA is suffering as well. Earlier this year, their stock was well over $60 per share, but now they are worth less than half that. As of this writing: $27.59 and again, steadily dropping.

Btw, red is bad.

So what does this mean for you? It means your favorite development house might not be getting the funding they need. If publishers are going under, they have fewer assets to distribute to developers who are the creative minds behind the games. Worst case scenario: studios could go out of business for lack of funding or projects will have to be put on hold or canceled due to lack of funds. While the games industry is still probably going to rebound better than say, the auto industry, it doesn’t mean game makers won’t have to start addressing these financial issues. Hopefully this crisis will be resolved soon, before Monkeys with Guns 3 gets canceled in production.