While we had an article go up about a week ago talking about the growth of in-game economies for MMO universes, it seems the real world has demonstrated a different trend. Talking about the financial ups and downs of the world market right now, it seems that most retail companies and video game enthusiasts are touting the idea that games are “recession proof”, even going so far as to suggest they would be turned to in times of crisis to avoid playing the game of Watching Your Mutual Funds Fall Rapidly. So, with that idea in mind, how have the video game markets reacted to this decline?

Well, not much differently. Taking a look at the major US stock markets of NASDAQ and the Dow Jones and comparing it over the last year with major companies like Electronic Arts, THQ and GameStop you can see a very strong correlation. While certain companies seem to be outside of this trend, like Activision-Blizzard and Take-Two Interactive, a lot of that is due to mergers and potential mergers that have allow the companies to grow and fall at different rates compared to the current world market. Even Nintendo doesn’t seem immune to the current decline, demonstrating a similar fall over the last year in their stock values.

Of course, the stock prices aren’t necessarily indicative of the company’s value or profit, but that bit of information seems to be getting lost. EA has actually reported a net income loss over the 2008 Fiscal Year, with a 484 million dollar loss reported. THQ has seen similar problems, although not as bad with a net income loss of 35 million dollars. On the retail side, however, GameStop continues to make a whole lot of money, as reported each quarter, and with almost 300 million dollars of net income in 2008, it’s definitely something worth bragging about. Activision-Blizzard has also found a way to make a few million (345) in 2008, very likely by sitting in the conductor’s seat on the money train to Azeroth.

Japanese companies are skirting this problem in comparison to their American counterparts, however. Looking at Capcom, Nintendo and Konami, profits are up in big ways, and in most cases the stocks are rising (besides Nintendo, which we mentioned was hit by the recent drop). A lot of this is due to the strength that the Japanese market still holds, while weakening, doesn’t have the same trends as the US. In Capcom’s latest annual financial report they showed that over 50% of their market is in Japan, but they expect that will shift over to North America in the future. As companies continue to plant their feet into volatile markets, like Nintendo has of recent, they will suffer stock fluctuations that respond very similarly. We are noticing, though, that the more spread out these companies are the less exposed to the fury of changing investment values. For example, Ubisoft, based in Europe, has seen a growth this morning after a large drop in the market yesterday, so signs of bouncing back seem to be evident for them.

So, are video games essentially recession proof? Well, it may not be a great investment to throw your mutual funds into, but the profits for retailers continue to grow despite the economic crisis in the US. All evidence seems to point to that continuing, as well. Stock prices won’t change much, as we can see with the companies in the US exposed to the current market environment suffering investment loss just as heavily as those in the financial sectors. Companies that are based outside of the US don’t seem to be suffering as much or at all right now, but the world markets as a whole are in a state right now that it’s hard to say what the results will be at the end of the day. Video games do seem to have their own bubble right now, but it’s not something companies are ready to relax about. While forecasting within the industry seems positive, it should be considering the current volatility and do not expect that to change anytime soon. For now, though, the only real danger to video game publishers and major companies is how they handle their own investments, and also just how good a line-up they can muster this holiday season.

UPDATE: While this story was being edited, several analysts came out to speak on the subject. The “nothing to see here” tactic seems to be the one employed, and though EA, THQ, Take-Two and Activision-Blizzard took large hits yesterday, they are expected to continue in strong sales through the holiday season. There’s not enough lending, and quite enough product being driven that the lending issues shouldn’t affect the long-term plans of the game companies.