WoW, Sin Stocks, and the Real World Economy

A few of the WoW blogs today have mentioned the Reuter’s article that came out on Monday discussing the growth of the MMORPG market, and WoW specifically, despite the bad ‘Real World’ economy. At the basis of the article is the argument that the online gaming market will continue to grow-and perhaps even thrive-in a bad economy because according to the article, “…people who play them are addicts… Losing their jobs makes them more likely to play because they have more time to play.”

Now I won’t bother to discuss the WoW as addiction part of the article as it has already been discussed extensively elsewhere but I do think that there is something to be noted about the fact that WoW continues to thrive while main street shuts down. I think that WoW as a business continues to profit because, particularly in a bad economy, people seek entertainment that is fun and enriching for minimal cost and also because playing videogames- particularly engrossing ones- are a way for some people to relax and escape the hardships of real life. In this sense I would argue that the WoW business should be considered a sin stock in terms of expected real world financial performance. The term sin or vice stock is used by financial pundits to identify companies in the business of gambling, tobacco and alcohol and other vices that tend to do better in a bad economy. The reasoning behind the success of a sin stock is that people will not discontinue bad habits due to bad economic conditions. If you loose your job you might not go to the movies, you may stop eating out but you won’t likely stop having a beer or three every Saturday night. Some economists argue that sin stocks actually see an increase in performance during what is otherwise a bad economy because people are more likely to turn to their addictions when stress increases, as might happen when a person ponders how to pay the bills. In my opinion I think it is quite realistic to say that both factors are plausible in terms of playing World of Warcraft: it is unlikely that players will cancel their account due to rough financial conditions as this, to them, is a comparatively efficient and inexpensive form of entertainment. And further, when things are more stressful it is certainly feasible that some people will turn to playing the game as an increased source of stress relief.

The irony of this classification of course is that it puts WoW in with a family of other business that are all somehow tied to addiction and compulsive behavior… which kind of brings us full circle on the addiction argument.

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5 Comments

Filed under WoW Economy News

5 responses to “WoW, Sin Stocks, and the Real World Economy

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