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the recession (Terdiman, 2008). Even the video game industry will have to take steps to minimize their expenditure and take to business tactics to maximize their sales to the limit in order to achieve maximum returns for the shareholders.

The economic downturn also affected the video game industry and its shareholders. The NASDAQ and Dow Jones crash also took toll on the share prices of these video game developing giants' like EA, Take-Two, Ubisoft etc. When the Dow dropped about 28.16% in the period of September 2, 2008 to November 2, 2008, and in the same time period NASDAQ lost 36.91%, six video game giants namely EA, Take -Two, Activision, THQ, GameStop and Nintendo jointly recorded an average fall of 52.53% in their share prices (Terdiman, 2008). As a result it can be said that even the video game industry, taking into consideration it's record sales and the nature of business, also saw its business and sales affected in the recession.

In the figure above, it can be seen that 3 out of 5 companies has either suffered a loss or a decrease in returns in 2008 as compared to 2007. Looking at EA, one of the biggest developer/publisher in the industry, we can see that its losses have increased in 2008 as compared to 2007 by $(634) million and at the same time THQ, another huge developer/publisher in the market has suffered a loss of $431.112 million in 2008 as compared to $35.337 in 2007. The only exception is the growth buy Activision which recorded a profit of $344.83 million in 2008.

This leads to a question about the reasons behind the huge losses made by EA and THQ compared to the profit's recorded by Activision.

Chapter - 3

Research Methodology

In the recent times of recession in the US economy where every company is struggling to survive to the end of the recession and see better times, the companies have to walk a fine line. Companies are incurring losses that amount to hundreds of million dollars even while they are breaking all sales records. This calls for a descriptive research looking for the reasons why a company can make a profit of hundreds of millions of dollars and at the same time, a company in the same industry performing at the same level of efficiency and magnitude of the business can end up registering a loss of millions of dollars. This research is undertaken so as to look for possible reasons for a company to make a loss even when its video game software's are in demand and what could be the possible solutions that can help the company to turn around its business and once again be the profit making machines they were in the past.

The recessionary atmosphere that is prevalent in the world right now is very dangerous for the companies and they have to be extra smart and cautious when they devise the plan for operation so that they could survive through the recession. This current study is devised to look for the possible flaws in the operations of these video gaming giants and to make suggestions for possible ways that can help the in making profit.

Research Method

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