Week 2 EOC: Boston Consulting Group - Video Games

"The tentacles of the recession have reached into the videogame industry, a business that was long
considered downturn-resistant."

January was not kind to the videogame industry. One major publisher was split into pieces. One high profile development studio was shut down and another seems likely to be headed in that direction. And another publisher is trading in the Nasdaq red zone.

--> While consolidation isn't unusual in this industry, this latest round comes right as console games are primed for growth, due to the launch of a new console from Nintendo last November and the expected launch of new systems from Microsoft and Sony later this year. That's got investors wondering if what we're seeing is a cyclical correction or the sign of a bigger crisis in the gaming industry. The highest profile recent failure was the collapse of THQ, which not too long ago was the gaming industry's third-largest publisher. There's less money to support the ecosystem, so that means you're going to have less jobs.