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Since the beginning of August, the Japanese Yen has risen almost 35% against the Euro and about ten percent against the dollar.  For Japanese businesses that rely heavily on overseas sales, companies like Sony and Canon, these fluctuations are wreaking havoc on net income as they convert revenues across to their native Yen.  The pain was obvious in Sony’s earnings announcement yesterday.  Today, Nintendo, though on much stronger footing, showed a hint of the same ailment.

In earnings news, Nintendo raised sales targets for the Wii console heading into the holiday period  but simultaneously lowered net profit forecast for the fiscal year ending in March by 16% (about 65,000m Yen).  

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Ubisoft CEO  Yves Guillemot said in July that he thought “the future of [the gaming] industry depends on [studios] ability to create brands that captivate audiences and to extend those brands to other forms of entertainment.”  He’s not alone in that view.  With common visual techniques, shared audience demographics and similar story telling narratives the convergence of gaming and movie making is an increasingly common theme.  That’s especially apparent at Electronic Arts.

In July, to hasten development of Hollywood relationships, EA signed a deal with talent agency United Artists.  At the end of September, EA signed a game development deal with the 300’s director,  Zack Snyder.  Now, EA is moving ahead with a film deal built around their mercenary themed title, Army of Two.

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Following August’s surprise shortfall, September was set to be a litmus test for measuring the health of the gaming industry in the U.S; a chance to spot test if softness in consumer spending would have impact or if the industry’s record setting pace would resume.  Thursday, the data came out.  NPD released the results of their retail sales survey for the month of September.  The results were, well, mixed. 

Overall, sales fell seven percent year over year to $1.27b in September.    It was the second month in a row, after a streak of 27 months, that sales failed to yield a double digit growth rate.  It was also the first decline since March 2006.

On the face of it, that decline may look troublesome.  Beneath the surface, however, it’s a little more complex. Click to Read More

Nintendo’s sold more than 14 million Wii consoles in the U.S and dominated the monthly U.S. sales charts for months, but leading into Thursday’s Nintendo media day in San Francisco, the palpable buzz was centered not so much on what Nintendo has in the market now (nor what Nintendo had to announce today) but instead on what the company might reveal in the next few years. 

The trigger for the rumor mill’s rapid heart rate was a report published September 30th on parent-centric game site “What They Play.”  Click to Read More

When Warner Brothers released the 300 in 2007, the views of critics and fans varied widely.  Some, like Richard Roeper, loved it.  He went so far as to call it "the "’Citizen Kane’ of graphic novels.’  Others like the Wall Street Journal’s Joe Morgenstern, or the New York Time’s A.O Scott, found the film almost utterly unredeeming; too violent and undeveloped.  The common ground, amongst a majority of views, was the visual effects.   That point wasn’t lost on the gaming industry.

In July, Ubisoft acquired Hybride Technologies, the special effects shop behind the film (and also Sin City).  Now, EA is tapping the 300’s director  Zack Snyder with a three game development deal.

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Digital Rights Management (“DRM”), and the assorted encryption techniques that fall under its moniker, has become industries’ primary preventative weapon for thwarting rampant content piracy.  It’s been their canon, their go-to machine.  Unfortunately, like any weapon if improperly used it has the ability to blow up in its user’s face.  Sony learned that lesson the hard way in 2005.   Now, the use of a different Sony developed technology called SecuROM, along with a questionable disclosure policy, has put video game publisher Electronic Arts (EA) in the crosshairs. A lawsuit’s already been filed.

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The video game industry has been on fire.  For twenty seven months, a streak almost unfathomable in electronics retail, the U.S. marketplace returned double digit year over year percentage growth (via NPD).  Every month had yielded a more than 10% gross sales improvement, every month until now.  The August NPD retail report came out this week and it showed a surprise slowdown.  In August, the industry grew only 9% year over year in the U.S.  Many are questioning what happened and if it’s cause for concern.

Gaming is one of those entertainment industries that is often called “Recession Resistant.”  In tougher times, the theory goes, people need their escapism and fun more than ever.  Even as they watch their spending, they’ll pay for a  movie ticket, or a DVD, or a new game to suspend reality. But most anyone who has ever owned a water resistant watch will tell you, water resistance isn’t the same as waterproof.  If you take that watch down deep enough underwater, it will let the water in. Recession Resistant is the same thing. It’s a reasonable safety zone but not a guarantee.

That fact has some analysts asking: did the gaming industry finally spring a leak?

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