Gaming Stories of '07

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6. EA Acquires BioWare and Pandemic

In October leading publisher Electronic Arts stunned us with the huge announcement that they were acquiring independent developers BioWare and Pandemic in a deal worth around $860 million. The acquisition provides EA with numerous valuable IPs and two developers that are simply loaded with talented people. The deal also gives EA a leg up in a genre where their presence hasn't really been felt much before: role-playing games. BioWare's expertise in crafting 'AAA' RPGs will no doubt be a huge asset, especially if the rumored Star Wars Knights of the Old Republic MMO allows EA to excel in the online space to better compete with Activision Blizzard.

The deal also emphasized the importance of John Riccitiello's return to EA. Because of his ties to Elevation Partners (which owned the merged 'super developer' BioWare/Pandemic), Riccitiello gave EA an edge in pulling off one of the best acquisitions they've ever made. Some concerns remain about how the EA purchase might affect game quality or the studios' autonomy, but BioWare and Pandemic sure don't seem the least bit worried.

5. Nintendo DS Becomes Best Selling Platform in 2007

Nintendo of America recently announced that its DS handheld has sold more than six million units in the U.S. through November and it was projected to be the number one selling video game platform of the year. As successful as the Wii has been, the DS just goes about its business selling like hotcakes, not just in the U.S. but across the world. The DS sold an incredible 1.5 million units in November alone and in many months it beat out all console sales as well.

The dominance of the DS is also a sign of the importance of the portable market, which has grown tremendously in the last few years due to the DS and Sony's PSP, which has also seen improved sales since the introduction of the PSP slim model. When budgets for console games can range from $10 million to $30 million, developing for a portable like the DS can be a very attractive option. Needless to say, consumers like the cheaper software prices too, which typically are in the range of $30 to $40, as opposed to $60 or more for 'next-gen' games.

4. Microsoft Loses $1 Billion to Xbox 360 Repairs

The Xbox 360 is a wonderful console…when it works. That's the complaint Microsoft was getting from thousands of gamers. The "red ring of death" became an absolute plague and tarnished the Xbox 360's (and Microsoft's) reputation. Finally, back in July after an "unacceptable number" of repairs had been logged, Microsoft decided to address the issue by extending the warranty to three years. It cost the company a billion dollars to issue the warranty and make repairs, but it had to be done – and hardly any other company could afford to just throw a billion dollars at something to fix it.

To this day we still hear from colleagues and readers who are experiencing Xbox 360 hardware breakdowns, but at least now they're covered. Microsoft never was willing to explicitly state what was causing the majority of the failures, but the consensus seems to be that it had to deal with inadequate heat management, leading to components on the circuit board to loosen. It's just a shame that Microsoft couldn't build a more reliable console from the start. But they are a software giant after all, so perhaps it's naive to expect expertly engineered hardware.

3. Activision Merges with Vivendi Games to Create Activision Blizzard

One of the biggest stories of '07, if not the last decade, is undoubtedly the recent merger of Activision Blizzard. The monumental deal valued at almost $19 billion instantly created another video game superpower that can compete with EA. Activision was already on a tremendous growth path without the Vivendi deal—in fact, through the first 11 months of the year the company has been the top publisher of console and handheld video games in the U.S.—but joining forces with the French conglomerate's games unit takes Activision to a whole new level.

Of course, as the name implies it's the Blizzard component of Vivendi that has the greatest potential. Activision overnight went from practically a nothing to a leader of online gaming, with a very real international and Asian presence. The deal also could lead to a wave of further industry consolidation as game companies try and keep up/compete with the giant. The effects of Activision Blizzard could be felt for years to come.