In a sea of economic woes, the U.S. video game industry is thriving. Every record analysts track seems to have been broken in 2007 as consumers flocked to new systems from Nintendo (NTDOY), Microsoft (MSFT), and Sony (SNE). Overall sales—of hardware as well as games and accessories—ballooned to nearly $18 billion last year, a 43% increase from 2006 according to industry analyst NPD Group.
Game companies will continue to bulk up to compete, while game designers try to make the most of new technology and a broader base of players
Even an economic downturn that promises to dampen consumer spending has done little to temper forecasters’ expectations. “Sales typically track more to the life cycles of the hardware systems, not macroeconomic trends,” says Michael Pachter, an analyst with Wedbush Morgan Securities. Microsoft, Nintendo, and Sony released their newest systems relatively recently (Xbox in 2005, Wii, and PS3 in 2006). In other words, interest and demand remain high. So far this year sales have outpaced 2007 by 28%, notes Anita Frazier, an analyst with NPD.