Video games let you escape into an alernative reality-something gaming firms know about at first hand. For as other technology firms face stagnant or shrinking markets, the video-games industry seems to inhabit a parallel universe. It has had a bumper year, maybe the best it ever will. Global sales of games software and hardware will exceed $31 billion this year, says Informa Media, a research firm. This summer, UBS Warburg invested 17% of its model technology portfolio in two games publishers, Electronic Arts and Activision. Gaming, it seems, is recession-proof. The industry is booming because it has its own cycle, as one generation of hardware succeeds another every few years. That cycle, unrelated to the broader economic cycle, is now at or near its peak. Games consoles are flying off the shelves. The current line-up is of Sony's PlayStation 2, the market leader by far, plus Microsoft's Xbox and Nintendo's GameCube, which are fighting for a distant second place.
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