Amazingly, sometimes we still hear serious people say the gaming industry is ‘recession-proof.’
But let’s review: Electronic Arts (ERTS) is struggling, laying off 1100 and slimming its product line. Take-Two (TTWO) slashed guidance. THQ (THQI) is a mess — profits are down 30% from last year. Midway (MWY) has only a few more days to live. Eidos saw what was once a sure thing in Lara Croft flop.
And then there’s the golden child, Activision Blizzard (ATVI). The company saw the biggest launch of the year in World of Warcraft: Lich King, and has a beloved (albeit cooling) franchise in Guitar Hero.
The company will report earnings at 4:30pm ET today. If Activision hits, or even exceeds expectations, we can write off the problems plaguing everyone else in the industry as the normal give-and-take of business in a highly competitive and hit-driven market. But if Activision misses too, that could portend a very bleak 2009 for video games.