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Jeanette Kozlowski

Traffic in Times of Crisis

23 October 2008

As the tune in the United States abruptly changed from potential recession to financial crisis in mid September, the expression "recession-proof" no doubt made its way into several conversations at the 2008 European i-Gaming Congress and Expo. One of those conversations happened onstage during the industry leaders' debate.

When Sue Schneider, panel moderator, brought up the hot-button issue, Gigi Levy, chief executive of 888 Holdings, turned to her and laughed: "You're seriously asking?"

"We hope that the recession would not be too deep, and we hope that people will continue to enjoy our services as much as we think they do," Mr. Levy said. "If they won't have anything to eat -- which is what some investors ask me -- no, they will not play."

Mr. Levy went on to say that during hard times, customers will go out less; therefore, they will spend less money and more time at home. He pointed out that even though customers would like to spend less in general, online entertainment was not necessarily where they'd cut.

"And we know from companies like Yahoo and Google is that there is actually more Web traffic in such times," he continued. "So, Web traffic for free definitely grows because people are not out. Web traffic for money . . . is it going to grow? Is it going to be stable? That all depends on the numbers. But amongst all the leisure industries, we're probably in the best place."

But does Web traffic increase during an economic downturn? And if so, how might the I-gaming industry reap the benefits? IGamingNews turned to Andrew Lipsman, senior industry analyst with comScore Inc., an Internet information provider that investigates consumer behavior online, for some insight.

Mr. Lipsman noted that financial categories saw a 9 percent rise in traffic during September’s crisis. Page views went up 16 percent and total time spent viewing financial information skyrocketed by 29 percent.

But what about a spike in Web traffic overall?

"It's possible that it might happen," he said. "I don't know if we'd see (an increase) that quickly."

In fact, total Web traffic only grew by 1 percent from August to September, according to Mr. Lipsman. However, he said it's best not to jump to conclusions and attribute this to the financial crisis. The uptick in traffic is not unusual, he continued, since it’s going from a summer month to a back-to-reality month.

“I guess at the end of the day, I'd say it'll be interesting to take a look in a few months and see if there's been any sort of impact,” Mr. Lipsman added. “We are definitely seeing it with financial news and research, but I suspect that is not incremental online traffic but more people spending more time on that content as opposed to other content.”

Even though there’s no quantifiable evidence of a traffic surge, Simon J. Holliday, director of H2 Gambling Capital, is expecting to see more Internet traffic in upcoming months. “Whether this can be translated to gambling, we are not sure,” he said.

He noted that even if traffic does increase, there’s no way to tell if it will affect gambling sectors. As an example, he pointed out that Yahoo Inc. is shedding 10 percent of its staff due to a dip in advertising revenue. “We have to remember that the vast majority of people spend their time surfing and communicating online rather than consuming,” Mr. Holliday explained.

He said traffic is only one industry worry and cited other concerns -- pressures on costs like bonuses, affiliates and credit card balances.

“My guess is that online gaming is more resilient than most industries, has the advantage of reaching different markets where economies might be at different states and is less mature than its land-based counterparts,” Mr. Holliday added. “However, to assume it is completely bulletproof would be dangerous.”

As recession doom and gloom gathers, those under the most stress could use the Internet as a coping method. Marla Gal Vannucci, director of clinical services at Chicago School of Professional Psychology, told IGN some people might go online as a temporary “escape” from events in the world and in their personal lives or to seek interaction via online communities like gaming and social networks.

“These communities may see more activity as people want to know what others think about the economy, comparing notes on financial strategies and getting and receiving emotional support,” she said.

Dr. Vannucci gave an example of an avoidant Internet user who would become immersed in entertainment news or gaming to avoid the reality of a bank account or a job search. “The procrastination and denial can, of course, make things worse,” she said.

Identifiable trends will likely surface during the next few months, she said, especially with the upcoming holiday season.

“Already we see decreased spending,” she said. “That may become more of a long-term trend.”

Traffic in Times of Crisis is republished from
Jeanette Kozlowski
Jeanette Kozlowski