The video game industry refuses to be recession-proof

“So how can publishers lose money amid such incredible sales and record growth? The answer is simple: They’re spending more than they’re bringing in. Game development budgets have ballooned, and publishers are reeling because they can’t keep the costs under control.”–www.slate.com

The economy, while dour, isn’t affecting the video game industry the same way it is the rest of the economy. Traditionally, entertainment industries, providing an escape, have done well, or not as badly as other parts of the economy in rough times. People want to forget what’s happening, get away from the reality. What better way than through video games? They can provide quite a bit of time away from reality; just ask my World of Warcraft-addicted room mate. On second thought, don’t bother him. He’s close to leveling up his Warlock Elvin Mage Wizard Thief thing.

It looks like the way forward might be more games like Valve’s Portal, and less games like Rockstar’s Grand Theft Auto. It’ll be interesting to see what adjustments the big guys (like EA, Rockstar and Activision) make, if any at all.

Got an idea for a Game? This dude will fund it.

Alan Kane, former COO and CFO of Midway Games (you know, Mortal Kombat, Ms. Pac-Man, NBA Jam, etc.) has started a Venture Capital firm in Austin planning to invest not in video game development companies but individual games. The new business, Archangel Ventures, comes out of the ashes of Midway’s closing in Austin late last year.

“This industry needs an alternative funding model and I believe I have it,” says Kane.

We love new ideas and we love when a new idea seems to make all the sense in the world - and comes from Central Texas. We’re thinking Frogger meets Grand Theft Auto…

Austin Business Journal has the basics here.

Interview with Kane to fill in the details here.

Official website here.