Here is an answer from Bret (an expert on social games):

Warren Buffett says that the economy in a recession. When it comes to the economy, I believe Warren Buffet. Recession is a scary word. But if you’re a social games company (or thinking about starting one), a recession may actually be a good thing.

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When it comes to a recession, the common wisdom is that home entertainment surges, because people feeling the pinch opt for staying home rather then the more expensive option of going out. If that holds true during this recession, then online games are certain to benefit. After all, no one is giving up their Internet connection. And if you’re a free online game, then…well, I mean is there any better entertainment deal for a consumer then a free game?

Of course, the problem as always with free services on the internet, is that we rely on advertisers for our revenue stream. Fortunately, the digital goods model removes that dependency, making it even more attractive in the face of an advertising downturn. It’s still an open question whether people will buy virtual goods with a thinner wallet.

This is an aside, but I’d suggest that virtual goods can offer an excellent substitute for purchasing more expensive real goods. The desire to shop does not go away just because a consumer has less money. That desire to buy real items, such as clothes, shoes, and accessories is easily transferred to vanity virtual goods. Goods that come at a fraction of the cost of a real item, and therefore attractive even when you have a thinner wallet.

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And if you need further convincing, the biggest games company in the world, EA, started in a recession.

Read the full article: Starting a Games Company in a Recession