The good times will roll until there is a recession. Sales of luxury items will drop. The boutique companies will probably fold under the pressure. I give JJP 50/50 -- depends on how much market share they have gotten when it hits. Right now, one bad game probably kills them and so one bad recession probably does too. Planetary Pinball probably just takes a rest and produces no new games during a downturn. Stern will probably survive, unless the increase in overhead of their new facility crushes them when things go bad -- they would not be the first company killed by the cost of their own new/upgraded facility.

Long-term, a couple companies survive but probably eventually merge.

The Great Recession officially ended June 2009. While the recovery was slow & painful and GDP growth was modest, we have been out of the recession for nearly 8 years. There is some risk of an economic cyclical downturn after such a long period of economic growth. Luxury goods will be affected; I believe history demonstrates that.

I'm a bit confused by this statement since pinball was about dead in 2008 and stern almost went out of business. I bought my first pin at the end of 2007. It was a TAF that I bought for $2500. I suppose you could argue a TAF cost $2500 pre-recession but pinball was struggling mightily to remain relevant as the operator/home buyer mix changed so I think pinball was already in its own recession before the recession. Prices certainly climbed during the economic recovery.

Actually, I think the data shows that the price is elastic: As price increased, volume fell. Now there are some issues with this data -- it is eBay sales only and certainly doesn't represent the whole market for multiples reasons (people shifting to selling through other channels, more dealer sales pushing the price up, etc.). But if you JUST looked at this data, this would clearly demonstrate price elasticity.

3ee5f4634ddd48232b22dfb1d0f29401b107d905.png (resized).jpg

More current chart... but the trend continues.

image002 (resized).png

In case anyone cares and isn't familiar with Price elasticity:

Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.

Inelastic Example:
When I was in banking, banks would charge as much as they could for OverDraft fees -- until the gov't slapped their wrist. Why? Because the people that overdraw their accounts continue to do so whether the fee is $10, $25 or $35. That is a good example of an inelastic price.
Arguably, this is taking advantage of people -- which is why I wasn't surprised that the gov't eventually stepped in from a regulatory standpoint. You see this with drug prices as well -- are you going to pay or die? You pay.

The majority of consumer goods would be price elastic because the consumer makes a conscious purchase decision and will weigh the pro's, con's and alternatives of the purchase --but it is certainly possible for the overall demand to increase and the price to increase at the same time because the products is the new, hot item and dominates it's market space. This is a happy time for a business when they can increase the price and still have demand increase or remain stable. It's nearly impossible for it to last over the long haul though -- competition, economic factors, etc. can all disrupt the good times. At some point, prices stabilize or even decrease and/or the volume starts to take a hit.

PED-graphs (resized).png

If there is a big correction in demand or prices due to economy (most likely cause over the next 5 years) then...

1. Some of the pinball companies will go out of business which will re-balance supply/demand and pricing may stay relatively stable.

2. I won't be making big luxury purchases (in case MY business goes south) so I won't be able to take advantage of price drops that do occur.

Conclusion: Lose-lose.

There would likely be fewer new pin choices, prices might not actually drop that much, and I would probably decide that I'm preserving my emergency cash.

Prices went up during the recovery, not during the recession.

If unemployment doubles, people will go into foreclosure, sell assets, etc. -- more pins would on the market at a time of less demand. The biggest hit to prices would probably be to used games.