The recession is forcing change on the once-invulnerable video game industry.

Casual games, like those from PopCap, (Bejeweled, Peggle, and Plants vs. Zombies) sell in the millions with comparatively few marketing dollars to help promote them. But they weren't a part of the big show this year. And independently made games for the PlayStation Network and the Xbox Live Arcade prove that a compelling offering can be made for $100,000 with a team of two or three instead of hundreds. The most creative games shown were at the IndieCade, a small area in the L.A. Convention Center that features small projects made by a few people, not the hundreds it takes to make a blockbuster game. Finally, the success of Apple iPhone games are giving the executives who run the handheld consoles divisions (Nintendo DSi and Sony PSP) some real scares.

Hope springs eternal in this video game world. Longtime analyst Billy Pidgeon of Game Changer Research feels that the downturn in the industry is an ephemeral thing caused by a momentary vacuum that will soon be filled by big-selling games. "Everything will probably return to normal by fall," says Pidgeon. "Modern Warfare 2 (a graphically beautiful shooter) will be huge although games that aren't blockbusters will suffer. Beatles Rock Band will be huge, although what they paid for licensing the songs will cut into profits."

By not mentioning the deep worldwide recession during these days in Los Angeles, it looks as through game makers are firmly ensconced in a video game fantasy of their own design, one that is carefully choreographed to show them all as great heroes and masters of the universe. In this world, they have drawn their swords and vanquished their foes, so much so that the economy needs never to be mentioned.