While retailers chew their nervous fingers down to the knuckles and economists slug it out over how disposable the consumer's disposable income will be in the weeks to come, one sector's got the holiday spirit in the bag: video games.

Last night, leading specialty retailer Gamestop(NYSE: GME) reported fiscal third-quarter comps came in 30.3% higher than last year's showing. Same-store sales at these gaming boutiques are up by nearly a third.

This morning, Japanese gamers were treated to a welcome nugget -- Sony(NYSE: SNE) plans to drop the price of the PlayStation2 console in Japan. As the market leader with more than 40 million systems in place worldwide, the move now raises the stakes for rivals Nintendo and Microsoft(Nasdaq: MSFT) to follow suit. With hardware margins slim to negative, it's a razor-and-blades decision in which the console makers hope to make up the margin shortfall on cheaper systems through increased game maker royalties from the publishers.

It's no wonder software companies like Activision(Nasdaq: ATVI) and Electronic Arts(Nasdaq: ERTS) giddily raised fiscal 2003 outlooks last month. Folks are buying the consoles, feeding them the latest software titles, and dissing traditional playthings.

Last month, Hasbro(NYSE: HAS) reported an 8% slide in quarterly revenue, while Mattel(NYSE: MAT) fared better with a 6% uptick in worldwide sales. It may make you nostalgic for simpler times, when Mr. Potato Head and Barbie were the low-tech way to a child's heart, but those days are gone; the video game sector overpowers the toy dollar right now. Wanna play?