German gaming industry shrugs off economic worries

Fri Aug 19, 2011 9:50am EDT

* Sales of PC, video games seen up 3 pct in 2011

* Game application sales up 13 pct in H1

* Strong German economic growth benefiting the sector

By Michelle Martin

COLOGNE, Germany, Aug 19 (Reuters) - German video game consumers appear unfazed by global economic uncertainty and are boosting spending on the latest new games.

"People yearn for entertainment in the good and bad times and probably more in the bad times so the impact is low," said Uwe Bassendowski, Managing Director for Germany of Sony Computer Entertainment , the division responsible for the PlayStation 3 console.

Sales of PC and video games software and income from online business models rose 1 percent in Germany in the first half of the year to 793 million euros, according to Germany's Federal Association for Interactive Entertainment Software (BIU).

"Up to the end of the year we are expecting slight growth in turnover of up to 3 per cent in total," said BIU managing director Olaf Wolters.

In the first half of 2011 sales of game applications rose 13 percent year-on-year in Germany, the BIU said.

The German gaming industry was unlikely to be affected by a possible recession in the United States, Sony's Bassendowski told Reuters on the sidelines of Gamescom, Europe's largest video game trade fair.

"We are in a very comfortable situation because consumer confidence is there and the market is developing positively."

IHS Screen Digest analyst Steve Bailey agreed that consumers would not put off purchasing upcoming new titles like Star Wars: The Old Republic, Batman Arkham City or FIFA 12.

"It's not just about depth of escapism, but the perceived value of per-dollar entertainment that a video game can provide," he said.

"We have a momentum that is given by the economic situation in Germany," Oliver Kaltner, General Manager of Consumer and Channel Group at Microsoft Germany, told Reuter s, citing falling unemployment and strong economic growth.

He added that the threat of an economic downturn in the United States had not yet dented sales.

"So far people don't spend less, but they spend more time in making the right decision before they make a purchase," he said.

"The games business is...not affected by recessions and not dependent on economic performance, but more dependent on whether there are good games on the market or if there is something new," Bernd Fakesch, Nintendo Germany's General Manager, told Reuters.

An increasing number of "freemium" games which are free to play but charge players for additional extras, will help shield the industry from a possible recession, Bailey said.

"With these service-oriented online games providing such economical entertainment, as well as major packaged franchises finding ways to engage players for longer, it's difficult to argue that games will suffer harshly during a near-future downturn," he said.

Kaltner also said Microsoft was upbeat about Christmas holiday season sales in Germany after upping its local market share in consoles by 9 percentage points over the last 12 months, after introducing the hands-free Kinect gaming system.

It's not all blue skies for the German gaming industry, though. Kaltner said the country's console market was "between stagnating and slightly declining" and predicted that the trend would continue as the PlayStation 3 and Nintendo Wii reach the end of their life cycles.

But Mark Cerny, President of Cerny Games and an industry consultant, said that a decline in the global core console games business by 10 to 20 percent in the last two years was just "a benign market readjustment in the face of competition from the iPhone, iPad, and free to play games".

(Editing by Nicola Leske and David Cowell)

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