The videogame sector is looking for a resurgence this year through casual users and programs for mobile phones, themes that will be underscored this week at one of the industry's most closely watched events.
Because videogames cost less than $50 but provide hours of entertainment, analysts and industry executives expect them to show strength even in a severe economic slump that has punished the entire consumer technology sector.
They say videogames are expanding their reach beyond a traditional base of young males to a wider audience of casual users through products like Nintendo's blockbuster Wii console and mobile games on such devices as Apple's iPhone.
This week's Game Developers Conference -- which has 300 exhibitors and bills itself as the industry's largest professionals-only event in the world -- will again attract independent developers showcasing cutting-edge technologies in console, PC, mobile and online games.
Organizers say the show, which kicks off on Monday, lured 18,000 attendees last year and has provided a platform for the launch of what became the Wii, now the world's best-selling console.
The phenomenon that's driving sales this year is that a big chunk of sales are to a much, much more casual audience than we have historically seen, said Wedbush Morgan analyst Michael Pachter.
U.S. sales of videogame hardware, software and accessories are up 11 percent so far in 2009, according to researcher NPD.
We're in a hot category that's growing, said Michael Howse, chief executive of privately held Bigfoot Networks, which is launching the next generation of its gaming network card this week.
Our general view is that we're certainly impacted on the consumer spending side, he said, but for some reason, consumers have a few extra dollars in their pocket to play games.
Some game publishers have struggled as retailers cut inventory, forcing job cuts and delayed releases. Electronic Arts, which expects a loss in 2009, is eliminating 1,100 positions -- 11 percent of its workforce -- and closing 12 facilities.
But gaming shares have fared better this year than last, with Electronic Arts, Activision Blizzard, Take-Two Interactive and game retailer GameStop all in positive territory.
CASUALLY DOES IT
Casual consumers continue to flock to titles like Wii Fit and Activision Blizzard's Guitar Hero, even as traditional demand from hardcore fans of games like Capcom's Street Fighter IV holds up.
A videogame is still a great value for the money, and it's also got a nice social aspect to it now, said GDC event director Meggan Scavio. A casual game is almost like the new board game; it's really expanded the market.
There is plenty of buzz this year around a Wednesday keynote address by Nintendo President Satoru Iwata. The last time he spoke at the event, in 2005, Iwata discussed a new console code-named Revolution -- which turned out to be the Wii when it was released in 2006.
As of December, Nintendo had shipped nearly 45 million Wii units, outselling Microsoft's Xbox 360 and Sony's PlayStation 3.
Nintendo will release its latest handheld device, the DSi, in the United States on April 5.
Mobile gaming's rise is also set to be a key topic at the conference. The popularity of games for the iPhone and the iPod Touch has created a cottage industry for developers. According to one estimate, more than 6,000 games are now available for download from Apple's Apps store.
Ngmoco, a prominent developer that makes games exclusively for the iPhone and iPod Touch, has 26 employees as well as about three dozen independent contractors working for it at any given time.
Consumers have installed 7 million copies of ngmoco's games, according to Chief Executive Neil Young.
We underestimated just how voracious the appetite was for customers who were purchasing games, he said. They're starting to spend money on a run-rate that looks like it matches or exceeds the type of spending for traditional consoles.
(Editing by Edwin Chan and Lisa Von Ahn)