German video game consumers unfazed by the threat of economic uncertainty look happy to spend their hard-earned euros on the latest new games as a strong economic performance buoys Europe's biggest economy.

Globally worth about $65 billion, the gaming industry has traditionally been a bulwark for the entertainment sector during periods of economic weakness, something that could cushion corporate profits should western economies fall back into a recession.

People yearn for entertainment in the good and bad times and probably more in the bad times so the impact is low, said Uwe Bassendowski, Managing Director for Germany of Sony Computer Entertainment, the division responsible for the PlayStation 3 console.

The gaming industry was unlikely to feel the effects of a possible recession in the United States, he told Reuters on the sidelines of Gamescom, Europe's largest video game trade fair.

We are in a very comfortable situation because consumer confidence is there and the market is developing positively.

IHS Screen Digest analyst Steve Bailey agreed that consumers, some of whom attended the fair costumed like their favorite characters, would not put off their purchases of upcoming new titles like Star Wars: The Old Republic, Batman Arkham City or FIFA 12.

It's not just about depth of escapism, but the perceived value of per-dollar entertainment that a video game can provide.

Sales of PC and video games software and income from online business models rose 1 percent in Germany in the first half to 793 million euros, data from Germany's Federal Association for Interactive Entertainment Software (BIU) shows.

Up to the end of the year we are expecting slight growth in turnover of up to 3 per cent in total, Olaf Wolters, Managing Director of the association, said.

In the first half of 2011 sales of game applications rise 13 percent year-on-year in Germany, BIU data shows.

The economy has recovered now and people are spending more on their hobbies again, BIU spokesman Andreas Leisdon told Reuters.

BULWARK AGAINST RECESSION

Company executives showed little concern that a potential recession in the United States would hit the German gaming market, banking on its economic strength, catchy games and the need for entertainment in bleak times.

We have a momentum that is given by the economic situation in Germany, Oliver Kaltner, General Manager of Consumer and Channel Group at Microsoft Germany, told Reuters, citing falling unemployment and strong economic growth.

He added that the threat of an economic downturn in the United States had not yet dented sales.

So far people don't spend less, but they spend more time in making the right decision before they make a purchase, he said.

The games business is, at least from my experience over the last couple of years, not affected by recessions and not dependent on economic performance, but more dependent on whether there are good games on the market or if there is something new, Bernd Fakesch, Nintendo Germany's General Manager, told Reuters.

An increasing number of freemium games which are free to play but charge players for additional extras, will help shield the industry from a possible recession, Bailey said.

With these service-oriented online games providing such economical entertainment, as well as major packaged franchises finding ways to engage players for longer, it's difficult to argue that games will suffer harshly during a near-future downturn, he said.

Kaltner also said Microsoft was upbeat about Christmas holiday season sales in Germany after upping its local market share in consoles by 9 percentage points over the last 12 months, after introducing the hands-free Kinect gaming system.

It's not all blue skies for the German gaming industry, though. Kaltner said the country's console market was between stagnating and slightly declining and predicted that the trend would continue as the PlayStation 3 and Nintendo Wii reach the end of their life cycles.

But Mark Cerny, President of Cerny Games and an industry consultant, said that a decline in the global core console games business by 10 to 20 percent in the last two years was just a benign market readjustment in the face of competition from the iPhone, iPad, and free to play games.

(Editing by Nicola Leske)

Gaming