When newscasters aren’t reporting on the dangers of the swine flu, they’re speculating on the recession, namely when we can expect to be out of it. As things worsened the video games industry grew despite declining currency values, rising unemployment rates and general low-level panic. Yet recently things have started to go the other way for the industry, with analyst Douglas McIntyre saying that this is an extremely bad sign, pointing to lower console and game sales than last year as a suggestion that most people’s discretionary income has dried up.

Don’t panic people, because there’s a rational explanation for all this. When Mr. McIntyre suggests that video games are a reflection of how much consumers have to spend, he’s correct, but he fails to account for the fact that unlike other discretionary spending such as food or apparel, the video game market fluctuates depending on what’s available. There’s a near continual trickle of video games released year round but the titles that really spur sales are fewer and often clustered around certain periods of time. In April 2008 both GTA IV and Mario Kart Wii were released, two powerhouse titles that gobbled up cash, while this year April didn’t have much to compete.

Falling console sales can simply be attributed as much to market saturation as low cash flow. In 2008 the Wii and PS3 had been out for around a year and a half. Now they’ve been available for two and a half, with the Xbox 360 having been on the shelf even longer. No matter how powerful, intuitive or flashy a console is eventually it’s going to hit the point where the number of people hoping to buy one drops off.

Right now fans are holding out for the big titles. E3 is on the horizon, meaning that many developers are holding back their big guns to debut at the event, thus achieving the maximum publicity. Games aren’t struggling, you’ve just got a lot of gamers playing through old favorites while they wait for the next big game instead of picking up less impressive titles.