Video Games Survive Recession, But At What Cost?S

Despite the recession and a drop in video game sales last year, December was the biggest month in the history of video games.

A combination of console price cuts, a holiday rich in spending and the recent release of several chart-busting titles helped the game industry pull in $5.53 billion in December alone, according to the NPD Group.

But December was one of only four months to see an increase in sales compared to 2008, leading to a drop in annual sales of eight percent in an industry once described as recession proof.

"Clearly, 2009 was tough year for consumers and the national economy. However, the bigger picture is one that underscores the industry's strength; 2009 and 2008 were the highest grossing years in our industry's history," said Michael D. Gallagher, president and CEO of the Entertainment Software Association, the U.S. association representing computer and video game publishers. "That said, our industry's structure is solid, and I anticipate a strong 2010 with a pipeline full of highly-anticipated titles."

Much of 2009's sales came from Nintendo, which had seven of the ten top selling console and portable games of the year and record breaking hardware sales.

Nintendo's DS sold more than 11.2 million in 2009, a U.S. calendar-year sales record, and the Wii finished the year with 9.6 million sold, with nearly one-fifth of Wii consoles sold since its 2006 launch happening in November and December of last year.

"Wii, Nintendo DS Lite and Nintendo DSi combined to sell more than 7 million units in the month of December alone," said Cammie Dunaway, Nintendo of America's executive vice president of Sales & Marketing. "Clearly there is overwhelming consumer demand for fun games, motion controls and value. This remarkable hardware sales surge presents a tremendous software opportunity for Nintendo and its third-party partners as we head into 2010."

And Nintendo isn't the only company excited about 2010, Wedbush Securities analyst Michael Pachter writes in his monthly report on the video game industry that it is a "relief to finally put 2009 behind us" adding that 2010 is going to be a big year.

This year starts out with a bang, rolling out an unprecedented number of big titles. Many of these possible blockbusters were initially set to hit stores last holiday, but were pushed back into early this year, creating the potential for a second big run of game purchases.

Among the standouts are Dark Void, Bayonetta, Mass Effect 2, Darksiders, MAG and Army of Two. February and March also have a share of big games hitting, leading many to speculate that 2010 could show not just a rebound of the game industry, but a surge in sales.

Pachter calls the release schedule for the first half of this year "one of the strongest in history".

While it looks like the industry as a whole has weathered the economic storm, that doesn't mean it was left unchanged. Diving down into the numbers shows that a bulk of the industry's revenue was generated by a handful of the biggest publishers, companies like Electronic Arts, Activision and Nintendo. Smaller studios were absorbed or shut down.

This consolidation of development power will likely have a lasting impact on video game innovation and creativity. Only time will tell whether it will be a positive one.

Well Played is a weekly news and opinion column about the big stories of the week in the gaming industry and its bigger impact on things to come. Feel free to join in the discussion.