The video game industry has done fairly well in light of the economic slowdown — February game sales (both hardware and software) were up 34% y/y. But that hasn’t stopped game studios from dropping like flies: four have have either suspended operations or just closed this year, and its only April.
The most recent: Castaway Entertainment, which made the free Toyota Yaris advergame for Xbox Live last year.
So why is this happening? No matter how well the business is going, small studios live from project to project and losing one or two is enough to cause them to capsize.
Castaway lost the two projects it was developing. The other three studios, Perpetual Entertainment (developing Star Trek MMORPG), Iron Lore Entertainment (credited with co-developing Soulstorm for THQ), and Stormfront Studios (developed The Spiderwich Chronicles game), also lost of one or two projects and ended up shutting down.
The downturn doesn’t mean big companies will stop making games, but they may decide to focus on proven winners from the bigger studios, leaving smaller game makers in the lurch. Any thoughts? Share them in comments.
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