Lipstick and Videogames

Lipstick effect is defined as follows: “During a recession, the tendency for consumers to purchase small, comforting items such as lipstick rather than large luxury items“.

What does this have to do with videogames? Well, videogames seem to be to gamers what lipstick is to ladies trying to look nice… even during hard times! Leaving out of the discussion the very interesting issue of how people, even through economic uncertainty, need a little indulgence, what I want to highlight, is the relevance of this finding for the videogames industry.

Check out these stats: compared to the same period last year, Wii sales increased 178% in March, and PS3 sales went up 120%. And don’t forget that USA is going through a recession!

In a recent blog post I read at GiantRealm about this, the author stated three main reasons that might explain why videogames have this kind of behavior: they are in limited supply, the value for dollar gamers get from videogames is higher than the one they might get from other forms of entertainment, and their immersive power allows people to forget about their troubles while they are playing.

I strongly recommend the article if you want more info and statistics on this topic. It seems recession doesn’t mean game over for the videogames industry!

Published by Reinout te Brake

Reinout is a games investor and strategic business consultant specializing in the games industry. Reinout established his credentials through his own successful investments, start-ups, consulting and (advisory) board positions that led through time to strong bonds with key stakeholders in this fast paced industry. He is known for his outstanding results in the gaming industry. He has worked with many game studios around the globe and is therefore well known in the international gaming industry. Check out his games podcast;

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