The entrenched mantra that tends to be rolled out from videogame industry commentators during times of economic turmoil is one of general positivity concerning the resilience of the games market to such conditions. And this viewpoint is held for some very good reasons.

Consumers tend to stay in more for their entertainment during a downturn, and generally view games as offering good entertainment value for the outlay compared to, say, buying a new-release DVD, going to the cinema, football or a live show. The traditional console gamer – 18-35 years old and male – has fewer financial responsibilities, has a higher disposable income, and is often an enthusiast who views games as less of a discretionary luxury and more of a necessity.

Underpinning the spending motives of the traditional gamer is the powerful force of device adoption. For these gamers, the availability of new hardware and associated content is generally enough to overpower the impact of economic woe.

While the traditional gamer is historically resilient to an economic downturn, can the same be said of the new breed of console gamer that has been introduced to the market at the tail-end of the PS2 lifecycle and now more markedly during the life of the DS and Wii?

There remains a firm question mark over the resilience of these new, non-enthusiast and more mainstream console gamers who view Wii and DS as experimental and often discretionary luxuries. With regard to software sales, this could arguably have a bigger impact on Nintendo devices than the other platforms. But nothing is set in stone. Each consumer has his or her own individual and often complex motives for purchasing devices and content from Nintendo.

While a consumer may decide against buying a Wii and Wii Sports during a recession, deeming it an unnecessary luxury, that same consumer may be prompted to save money on going to the gym by buying a Wii and Wii Fit. Indeed, it is not a simple case of arguing that these mainstream consumers are less likely to spend money on Nintendo products since many bits of current software from the company, as we know, are lifestyle products and not really games in the traditional sense.

One might suggest that the multitude of minigame compilations may be affected more, while certain lifestyle products are well positioned to show resilience. It is true, though, that all consumers, even traditional gamers, become more price sensitive during a recession. From a hardware perspective, based on price alone, Sony’s PS3 is arguably more likely to be vulnerable to the impact of recession compared to the cheaper competition. However, brand allegiance in the games market, PS3’s Blu-ray capability and its core customer base mean that even this is less exposed to weakening consumer spending compared to other electronic devices.

In a recent investor release on October 23, Sony downgraded its sales forecasts for video cameras, digital cameras and LCD TVs – a reflection of the weakening consumer spending environment and the fear of global recession – yet tellingly left its PS3 sales guidance unchanged.

With Sony’s video cameras, digital cameras and LCD TV sales being downgraded by between six to ten percent compared to previous guidance, any impact on demand for PS3 from reduced consumer spending must be considered to be at the lower end of this downgrade spectrum or, more likely, even less. Even a drop in demand of as much as ten per cent for PS3 during the next two financial quarters before a likely price reduction around April next year is unlikely to be too damaging for Sony.

While Sony may lose some sales to the competition due to the difference in price, the main impact on the company could be a delayed adoption curve for the PS3 as consumers hold on to their money and wait for the price to come down. The potential global recession is but one element of a larger financial challenge facing the industry.

The credit crunch which sparked the financial meltdown is still in full effect, and from an industry viewpoint this could have some long-lasting ramifications. Those publishers that are heavily exposed to bank credit will, like all companies, have to adjust their financial policies as raising capital becomes harder and more expensive.

This may affect the volume of game production in the medium term. Likewise, developers that have used loans to create prototypes of new game ideas are less likely to be able to borrow in the future, and certainly not at the cheap rates of the past.

During this stage of the console lifecycle, having invested massively in new technology and game IP for new platforms, publishers commonly streamline their content production and cut staff numbers to ramp up profitability. The current financial climate means that these staff cuts and cancelling of titles deemed less financially viable may be deeper and more widespread than expected.

Under this climate of heavy cost-cutting and more risk-averse business practices, new and original IP projects that are difficult to measure with regard to potential return on investment and which are considered risky are less likely to be made. This suggests that gamers may see fewer games based on new and original IP this console generation than would be expected.

Piers Harding-Rolls is Screen Digest's Senior Games Analyst.