With two young children I am reacquainting myself with the holiday cartoon classics. One of my favorites is A Charlie Brown Christmas, where Charlie is ridiculed for the half-dead tree with a few scraggly branches that he picks out a for the holiday production.

We are all living the Charlie Brown Christmas this year, and making due with less. Most people are cutting back on their holiday shopping as they adjust to the slowing economy and higher unemployment.

Frankly, it is a nice change of pace. That said, our reduced spending is, in a sad way, making matters worse.

Companies are retreating en masse, with many reducing or eliminating guidance. It's brutal out there.

The latest victim is video game maker Electronic Arts (NASDAQ: ERTS).

Although there is no must-have buy this season, video games were thought to be attractive for those looking for cheap entertainment. Apparently, that's not the case.

Yesterday, ERTS issued a warning to investors. The company said it now expects to miss already reduced guidance for the fiscal year ending in March. Things have gotten so bad that ERTS is not offering any specifics.

The long-awaited Transformers movie premieres tonight. If you're in your late-20s or early 30s, and watched the Transformers cartoons as a kid, you probably have a desire to see this "PG-13" action extravaganza.

But beware: According to Susan Linn, a psychologist who co-founded the Campaign for a Commercial-Free Childhood, Transformers is being marketed towards children. Brooks Barnes of the New York Times said in an article this morning that the live-action film is packed with cars and planes that turn into "blood-thirsty alien robots." In a PG-13 fight between good and evil, do you expect anything less?

The problem, according to Linn, is that Dreamworks and Hasbro, Inc (NYSE: HAS) are going after preschoolers with their "widespread and irresponsible" marketing of the movie. "Movie studios have been using toys to market movies in unfair ways for a long time," says Linn. "But this is a movie that was designed from the beginning to sell toys and that makes this case particularly egregious."

Take Two Interactive's (NASDAQ: TTWO) Rockstar Games was expected to release its latest game, Manhunt 2, on July 10 for Nintendo's (OTC: NTDOY) Wii and Sony Corporation's (NYSE: SNE) PlayStation 2 consoles. However, Britain, America's friendly Democratic neighbor, has banned sales for -- get this -- "unremitting bleakness and callousness of tone."

I think that is how my mother referred to my dress code back in high school.

The banning comes after a 14-year old British schoolboy was murdered by a friend, Warren Leglanc, age 17. The parents of the schoolboy blamed a video game for their son's death. Patric Pakeerah, the father of the murdered boy, welcomed the decision, saying "It's a video instruction on how to murder somebody; it just shows how you kill people and what weapons you use."

I'd hate to see if Mr. Pakeerah ever watched prime-time television. Or the news, for that matter.

Another day, another Wal-Mart merchandising dilemma. This time, a Christian video game has become the latest sword cast into the angry division in this country. On one side, we have the game's manufacturer claiming the game promotes prayer. On the other side of the fence, critics assail that the game carries a message of violent religious intolerance. Here we go again -- let the culture wars become even more fresh. Sigh.

The religious game is set in New York City after millions of Christians have been transported to heaven (fair enough, so far). Then -- and here's where I can see the game becoming an issues with some people -- the game's players are told to recruit and convert an army that will engage in physical and spiritual warfare with the Antichrist and his evil followers. Ok -- who is defined as the "Antichrist" here? That is the single premise that is most likely ruffling feathers of those who choose to view it as an attack on non-Christians. Fair enough again -- everyone can interpret things differently.

In what is standard procedure (but coming from a "religious game?"), a U.S. advocacy group that monitors right-wing religious activities asked global retailer Wal-Mart Stores Inc. (NYSE:WMT) to pull the game from its shelves. Since Wal-Mart generally pulls violent video games from its shelves and other "pieces of entertainment" following outcries from the group-du-jour, this one will probably have the same fate.

Should it? Should Wal-Mart pull games and videos that are seen as too "far left" or too "far right" equally? What do you think? Currently, Wal-Mart plans to continue selling the game online and in stores where it expects demand. In all reality, the free nature of this country should allow all of these games and movies to be on all shelves (with age-appropriate guidelines and safety measures taken into account). Agree? Disagree?

The video game industry is predictably cyclical -- it rises with the release of new consoles and tapers off as the aging technology loses its luster. The major players in console video game development -- Electronic Arts (NASDAQ: ERTS), the maker of the annual Madden football installments; Activision (NASDAQ: ATVI), the maker of the Call of Duty and Tony Hawk games; Take-Two (NASDAQ: TTWO), the maker of the Grand Theft Auto series; and THQ (NASDAQ: THQI), the maker of cartoon themed Scooby Doo and Spongebob Squarepants games -- are primed for another bullish cycle.

On October 26, 2000, Sony (NYSE: SNE) released PlayStation 2. The following year, on November 15, 2001, Microsoft (NASDAQ: MSFT) released the original Xbox. During the two-year period following the release of the PS2 (Nov. 3, 2000 to Nov. 1, 2002), the major video game developers all skyrocketed. Electronic Arts rose 32.48%. Activision rose 112.07%. Take-Two Interactive rose 113.27%. Only THQ Inc. did not see significant gains over the two-year period, losing 10.56%. But the stock was not dead money over that time; it had risen 143% before it came crashing back down.

In the latest cycle, Microsoft's Xbox 360 was released last holiday season. Sony's PlayStation 3 and Nintendo's Wii followed up with their own consoles last month, and retailers can't keep the shelves stocked with them.

Electronic Arts, Activision and THQ all released quarterly financials in early November. (Take-Two has not released a financial report since August, and that was preliminary, but that is a different discussion for a different blog post). The time to get into these stocks is before any more momentum builds, and definitely before these companies report their financials again in February, which will include data from after the launches of PS3 and Wii.