The source of it all can really be traced back to a single statistic: $125 million in 24 hours.

The year is 2004, and Halo 2 is making headlines. Long headlines with wild, catchy claims and assertions. Headlines that say things like, "It's boom time for an industry now even bigger than Hollywood." Headlines that stir a community into joyous celebration.

These headlines eventually trickle down into pools of collective knowledge, seeping into the porous sponge of the internet social consciousness, to the point where informed gamers repeat them without a thought. When the debate arises, there are usually a couple numbers tossed about, but few serious attempts at a comprehensive report. In some ways it's more attractive to think of video games as a serious challenger to movies, and any kind of investigation that could shatter that dream is an ugly one.

People love an underdog. We're only a few short years into the 21st century, and video games--only a decade prior thought of as childish toys on the level of LEGO--have eclipsed the movie industry as the dominant mode of entertainment in America. Movies had their time, but video games can now do everything a motion picture can--and sometimes they have multiplayer, too. Big-time filmmakers like Peter Jackson and Steven Spielberg are beginning to cross over and see the light. In the theater, you have to sit and listen to noisy animals on their cell phones. At home, you can tell them off over Xbox Live--and then hit the "mute" button. We have truly evolved.

But how accurate is that portrait? Has Silicon Valley actually surpassed Tinsel Town in hard numbers?

Two years post-Halo 2, games did record business. Despite coming to the end of a console cycle, strong sales from the stalwart PlayStation 2, the innovative Nintendo DS, and Microsoft's home-grown Xbox 360 helped the industry accumulate some $13.5 billion sales of hardware and software in North America. An impressive number to be sure, and one that did best Hollywood--from a certain point of view.

Film box office sales were also up in 2006, with over 60 movies grossing $50+ million in theaters. Even with this strong performance, the overall yearly ticket take was a mere $9.49 billion--$4 billion shy of gaming's total. This would appear to show a sizable gap in the two fields.

Of course, anybody who has a "friend" that owns the Special 6-disc Director's Cut Trilogy Edition of The Fast and the Furious Saga knows that DVDs are big business. Not only is home video a double dip into the audience pool, it's also incredibly profitable. That 300 DVD you just bought for $20 means anywhere between 50-60% pure profit for the big wigs at the movie studios. At last count, 1.6 billion DVDs were shipped to Americans in 2006, which added up to $16.6 billion in revenue. Subtracting television DVDs, which account for around $3 billion in sales, we're up to $21+ billion for Hollywood. And this is only in North America--we haven't even counted worldwide numbers yet.

Sure, DVDs are a big deal, but you have to take the bloated used games market into account, right? Not to mention rentals. Who actually buys games these days, anyway?

People still buy games these days, but on the next page I take a look at the resale market, rentals, and the financial future of games and movies.