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How Will the Web Fair with the Financial Crisis?

With the current state of the world economy, everyone is questioning the future of their market. I don't think that the world economy has entirely collapsed yet, as many people seem to assume. We are no where near Great Depression conditions, but it is still important to expect some financial hardships for most markets in the coming years. How will the Internet fair in the declining economy? Of course, this is a bit hard to predict, but I think that we can at least examine a few factors that shed some light on the future of the Internet.

One interesting bit of information I remember from American History class is that board games were very popular during the Great Depression because they were a cheap form of entertainment. The Internet also offers a lot of similar forms of relatively cheap entertainment. For example, for only $15 a month, someone can play World of Warcraft, a game that basically never ends and is constantly improving and changing. Tools like Facebook and MySpace are free ways to communicate that are much cheaper than cellphones and landlines. The Internet is full of free and cheap forms of entertainment. I think that the Internet will survive (and possibly thrive) simply because it offers so many affordable services and products. In the next few years, I imagine that expensive forms of entertainment will decline, like building pools and going on vacations. Things like watching movies at home, playing video games, and social networking will thrive because they are cheap.

Granted, the ad market might take a hit, which would negatively affect content websites. SitePoint posted a blog entry (external link) about the potential decline in online advertising. A decline in the ad market may eliminate a lot of smaller websites, but I don't think the big players will close down. They may not be as profitable, but I think they'll be able to weather the storm, as long as they are run efficiently.

Kevin Rose even considers this a good time to launch a company (external link) because there will be less competition in the market. There is some validity in his statement because anyone with some free time has the opportunity to make something big. Also, a lot of tech companies with deep pockets (like Apple and Microsoft) will have plenty of cash to invest and to innovate in the cheaper market.

I personally think that the Internet as a whole is going to fair well in the economic slowdown because it is a cheap form of entertainment. Some fat will be trimmed off of the Internet, but I think the Internet will still remain a growing, strong platform. Of course, I'm not a market specialist or a financial analyst, so feel free to share your opinions on this matter in the comments below!

Comments

  • With some luck it means that my current computer will last longer than any computer I've previously owned had the chance to. wink

    Posted by Frans (external link) on Mon 17 Nov 2008 at 15:41