Video games can weather poor economy: Microsoft

By Daisuke Wakabayashi

LOS ANGELES (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) is not seeing any weakness in its Xbox business from the soft U.S. economy and expects the company and the rest of the video game industry to weather downturns in consumer spending, the head of Microsoft's Xbox business told Reuters on Wednesday.

Don Mattrick, a senior vice president at Microsoft's entertainment and device division, said video games remain a bright spot for consumer spending at retailers.

In an interview at the E3 video game industry trade show, Mattrick said the video game industry is fortunate that all the main consoles debuted in 2006 and 2007, which means many consumers do not need to go buy the more expensive hardware.

"That would have been a more challenging dynamic if it was a brand new box shipping for the first time this holiday," said Mattrick, who joined Microsoft a year ago after working at game publisher Electronic Arts Inc (EA) (ERTS.O: Quote, Profile, Research, Stock Buzz) for 15 years.

Some analysts are concerned that a decline in discretionary spending, due to higher prices for gasoline and food, could crimp outlays for video games and other entertainment.

The video game industry, forecast to reach $57 billion in revenues this year, according to research firm DFC Intelligence, appeals to a wide audience since it offers a wide range of titles that provide something for everyone, according to Mattrick.

"Consumer spending is still going to exist, and people are going to prioritize," said Mattrick, once considered a contender for the corner office at EA. "I'm bullish about our growth prospects as an industry and as Microsoft."

Mattrick said video games offer many more hours of entertainment than a two-hour movie, making it less expensive over time.