Year in review: Games as big business

If you hadn't already cottoned to the idea that video games are truly a big business, 2007 might finally have convinced you of the notion.

Dollar figures thrown around during the year paint the picture: Halo 3, the latest iteration of Microsoft's smash hit franchise, did $170 million in sales on its first day, becoming, the company said, the biggest opening in entertainment history.

Video: Midnight launch in NY
Completing the Halo trilogy, Halo 3 launches. CNET talks to fervent fans in midtown Manhattan.

Not to be (totally) outdone, Activision saw its own blockbuster, Guitar Hero III, net $115 million in first-week sales. It then went even further by potentially becoming the world's biggest video game company when it was bought by Vivendi. The new entity will be called Activision Blizzard, in deference to Vivendi's Blizzard Entertainment, which produces the monster hit and billion-dollar franchise World of Warcraft.

Other big-name companies got in on the action, as well. Electronic Arts ponied up $860 million to buy BioWare and Pandemic Studios. And Nintendo, for its part, simply could not keep up with the voracious consumer hunger for its surprise success, the Wii, with shortages throughout the year and a second holiday season as the No. 1 most sought-after gift.

For their parts, both Sony and Microsoft lowered prices on their next-generation consoles, the PlayStation 3 and Xbox 360, respectively. Microsoft's move was advisable as a way to drive more sales. Sony's was a desperation move, needed as a way to stave off the disastrous sales numbers that likely led the electronics giant to send PlayStation inventor and visionary Ken Kutaragi out to pasture.

It was also a very big year for virtual worlds. World of Warcraft continued to grow, and its first major update, Burning Crusade, sold millions of copies. But Second Life still maintained the vast majority of media mindshare. The year began with excitement over the large numbers of Fortune 500 companies opening up shop in SL, but as 2007 wore on, a substantial backlash against the site developed as many began to question to value of virtual worlds to large corporations. At the same time, some leveled charges that SL's population was a mere fraction of what was advertised.

Still, a consortium of major technology companies got together to talk about interoperability standards between virtual worlds, even as estimates began to circulate that there had been as much as $1 billion invested in virtual worlds and online games.

Further demonstrating that these environments need to be taken seriously, one popular online game, Gaia Online, grabbed headlines by hiring a world-renowned economist to oversee its virtual economy.

The year was not without its setbacks, however.

Users of many virtual worlds and online games, for instance, felt the sting of eBay's ban on the sale of those games' virtual assets.

And video games remained on the hit list for critics who charge that the medium promotes and engenders violence. Joining the parade this year was Pope Benedict. Meanwhile, retailer Target caved to pressure by banning sales of the game Manhunt 2, despite keeping many other bloody titles on its shelves.