The massage therapy market seems to be doing just fine in the recession, at least if you believe a google search on the topic. I’ve previously posted about how well the social games market has done growing up during the recession, and in some ways I think social games are a lot like massages. Think about it:
You can’t satisfy demand for them in just one purchase: There’s a reason you don’t see advertisements for 10 hour massages, and you can’t beat a social game in one sitting like you could a console game. The good is structured in a way that demand is fulfilled by experiencing the good in small intervals, with the goal of addicting you so that you come back later. Compare to something like chocolate: If I was offered 10 pieces of chocolate for $5, or 20 pieces for $5, I’d be economically irrational not to take the latter offer. But with massages, I’d take a 2 hour massage for $20, but probably wouldn’t want a 10 hour massage even for the same price. Similarly, I might want to play Mafia Wars for 20 minutes, but probably wouldn’t want to for an hour straight even if the value proposition of a normal good would suggest that to be irrational. (Turns out I won’t play Mafia Wars even with my developer friend begging me to play it, because the game isn’t much fun, but you get my point.)
Both goods defy the typical definition of a luxury good, apparently: Luxury goods are typically understood as goods with a high elasticity of demand; the more money people have, the more they want to buy, and vice versa. Apparently social games and massages aren’t really luxury goods, even though most of us would think of them as superfluous to our existence (rightly so, I’d say). My cursory google research has me believing that the massage/spa industry is doing quite well even during the country’s economic turmoil, and there were no such things as social games 2 years ago.
Maybe both goods are… replacement goods?: If they aren’t luxury goods, though, this raises an interesting question for social games: will the market continue to grow as the economy recovers? Social games might actually be a replacement good – I can’t afford a console game, so I spent 20 bucks on Farmville Frontierville Cityville. Hear that sound? That’s the sound of this post getting to it’s point – Maybe we should be realistic about the potential market for social games as the general economy recovers. Obviously it will grow, as it’s a young industry, and there’s only been one killer app on iphone/ipad (Angry Birds, which isn’t really even social). And the markets are somewhat different: Farmville was built on middle age women. But if social games are a replacement good rather than a luxury good, we might consider the possibility that at least some gamers will go back to console games, and at least some middle age women will go back to whatever middle age women used to entertain themselves with.
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