Video Game Industry Suffers

Despite the fact that 2008 was a landmark year in the gaming industry, 2009 is showing signs of trouble ahead. On Tuesday the world’s largest video game developer, Electronic Arts, announced that it will close twelve facilities and lay off over 1,000 employees to prepare for uncertainty in the economy. The company plans to cut their operating expenses by $500 million.

When Microsoft announced over five thousand layoffs, their gaming department suffered a large portion of the loss. Another prominent developer in the gaming industry, Avalanche Studios, was forced to cut almost have of it’s staff last last year.

To counteract the poor economy, gaming companies are focusing their efforts on “sure things.” It’s estimated that this year we will see the release of numerous sequels for games, lots of new titles for Nintendo’s Wii and new takes on old ideas. It costs a substantial amount of money to create a new video game from scratch, and in this market no one is willing to take such a gamble.

Since Nintendo’s Wii dominates such a large portion of the market, its likely that many third party developers will start to create games that are compatible with the system. After Electronic Arts announced it’s quarterly earnings, their CEO told reporters that the company will “devote half [its] emphasis” to Wii in 2009, because “Nintendo is the leader.”

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