Is the video game business still OK?

There has been a lot of speculation that the recession, which has hit holiday spending, would stop one of the hottest-selling retail items right in its tracks. That would be video games. Numbers from Mastercard (NYSE: MA), which came out earlier this month, showed that spending on consumer electronics was way down. That would support the notion that game consoles where losing some of their mojo.

Not so say research firm NPD and Microsoft (NASDAQ: MSFT), maker of the Xbox. According to the FT, "US industry sales are up 25 per cent so far this year, according to the NPD research firm. Game sales in October rose 35 per cent on 2007's total. The rises are in spite of a strong 2007. " Microsoft said both American and European sales of its device were strong.

So, what's going on? It could be one of two things. The first is that purchases for children and teenagers are not falling as fast as other retail items and parents are hitting stores early before items like the Nintendo Wii run low like they did last year.

Perhaps a more probable theory is that video games and consoles are relatively inexpensive. Some are as cheap as $200. The games that play on them go for $50 or $60.

Of course, December could bring bad news for the Xbox and Wii. The recession is biting harder now than it was two months ago. But, there may still be a couple of bright spots this season. Gaming may be one of them

Douglas A. McIntyre is an editor at 247wallst.com.