Christmas Cheer

Christmas Cheer

It's the most wonderful time of the year, at least according to the crooning tones which haunt anyone brave enough to go shopping on the high street at the moment. For the videogames business, there's no doubting the truth of the statement - Christmas is the annual spike on the sales chart for both hardware and software, with more money passing through the tills at retail in these few short weeks than at any other time of the year.

For many other businesses, this Christmas is a bit of a nail-biting moment. The disastrous collapse of complex derivatives from the US sub-prime mortgage market has precipitated a crunch in the banking credit market; almost every financial institution in the world is feeling the pinch, and the UK has seen its first run on a major bank in a century.

Nobody is quite sure just how badly the jitters in corporate finance are affecting consumers at grass roots level at this point, but there's no doubt that the crisis is biting home at street level to some extent now - and that it'll bite even harder later on. House prices even in London's overheated market stumbled in November; retailers are deeply concerned that with headlines like that, consumers will decide to cut back on the extravagance this Christmas.

No such concerns dog the games industry. As yet, in its history, this industry has never been touched by recession. So strong is its underlying growth factor - new consumers entering the market, and existing consumers increasing their spend - that it has surged forward even when the markets themselves have collapsed.

Videogame revenues have grown through two Iraq wars and the dot.com crash; at some point, of course, the market will reach a point of maturity where outside financial factors affect it like every other business, but that day is not today. Videogames will grow through the sub-prime crisis, and may well be undaunted by any recession that follows.

Hard data from Chart-Track this week supports the view that whatever happens to retail overall this Christmas, games are still going from strength to strength. Software sales in the UK are going to hit an astonishing 78 million units this year - more than one game sold for every man, woman and child in the country. Revenues in the third quarter alone are projected to hit GBP 332.6 million - up 36 per cent on last year's figure.

That's astonishing growth in anyone's books. Of course, it's helped by the fact that the next-gen is finally coming into its own - but don't be surprised if 2008 repeats similar growth. After all, the Xbox 360 may have stunned in late 2007 with a brilliant line-up, but it's had two years on the market - the PS3, and perhaps the Wii, can be fully expected to enjoy similar success next year.

In acknowledging and celebrating the wonderful success of the market in 2007, it would be remiss not to mention that the driving force behind much of that success was Nintendo. Microsoft's Xbox 360 has been a wonderful console for hardcore gamers this year, but the immense upturn we've witnessed in the market overall can largely be attributed to the ongoing push which the DS and Wii are making into previously untapped demographics.

The figures speak for themselves - the Nintendo DS, selling 200,000 units in a single week in the UK. The Wii, selling 100,000 units. Both of those, we suspect, represents a complete clear-out of the entire weekly shipment. Had Nintendo shipped more units, they would have sold more - but with the same picture being repeated elsewhere in the world, there simply aren't any more units to sell.

The stage is set for an extremely interesting - and very successful - 2008. Nintendo's installed base of both DS and Wii is a force to be reckoned with, and 2008 will be the make or break year for third parties on those platforms. If they can make a profitable business out of publishing Wii titles (and it has to be noted that despite Microsoft's sneering at this side of the Wii's success, some third parties are rolling it in on the platform), then Nintendo's dominance will be hard to touch.

If, on the other hand, the third parties can't make the Wii work for them... Well, if they can't, it remains to be seen whether Nintendo will lose out. It could be that the Wii continues to sell on the basis of first-party, and third parties simply miss the boat - an uncomfortable, but not entirely unlikely, prospect.

We're certainly looking forward to next year, and we're confident that whatever happens to the global economy overall, the good news stories from the world of videogames will continue. 2007 has been a remarkable year - both critically and commercially, it has represented a new pinnacle for the medium and for the industry. Starting in January, we get to find out how 2008 plans to top that act - and in the meanwhile, I hope all of GamesIndustry.biz' readers have a well-deserved and enjoyable break. We'll see you all again in the New Year.