Despite record breaking numbers raked in by Activision's "Call of Duty: Modern Warfare 2" this week, a tough economy, a lack of fresh titles, and competition from other gaming options are making this one of the toughest years to date for the industry.

Evidence of the industry's struggles were highlighted this week when Redwood City-based Electronic Arts announced the layoff of 1,500 workers. On that same day, EA also said it was buying London-based Playfish for nearly $300 million to embrace the shift toward social network gaming. EA already owns Pogo.com, which also targets the casual gamer.

"The video game industry has been taking a pounding in recent months, despite having seemed invincible during the early part of the recession," said Steve Smith, a video game attorney at Greenberg Glusker in Los Angeles.

New games and console deals are expected near the end of the season to dampen the blow, but how much of a reprieve the industry expects is yet to be seen.

With consumers trying to stretch their dollar this holiday season, high-priced video games and consoles might not be checked off children's wish lists. Still, console manufactures Sony, Nintendo and Microsoft, as well as game developers, will pull out all the stops to try to add enticement.

"When there is a horrible economy going on, the publishers put even more emphasis into the holidays," Smith said. "In effect, the publishers are holding

Whether people bite is another matter, said Michael Pachter, analyst with Wedbush Morgan.

"A lot of people who would otherwise be buying games don't have a job," he said. "If you don't have a job, it doesn't matter if the Wii is $249 or $200. You're not buying it."

When the final numbers are tallied, Pachter believes the Wii will be the top seller for the season followed by the PlayStation3 and the Xbox 360.

"With the exception of 'Call of Duty,' there is not a lot of excitement in the air here," said Rob Enderle, president of a tech consulting firm. "Right now the industry is really sick and struggling."

"Call of Duty: Modern Warfare 2" broke records, raking in an estimated $310 million in North America and the United Kingdom. The latest installment in the "Call of Duty" action franchise was expected to at least match last year's "Grand Theft Auto IV," which was the most successful video game release in history and at the time may have been the top entertainment launch ever.

The list of other "must have" games this season, however, is very small, Enderle said.

"You've got this never ending line of sequels coming through and people are just getting bored," he said. "Unfortunately, I think it's going to get worse before it gets better."

Console games greatest competition might not be from each other, but from the rise in popularity of online social gaming and mobile gaming. Millions of people are signed up through Facebook for games such as Farmville and Mafia Wars. And games for the iPhone can be downloaded for less than a few dollars. That growing popularity certainly played a role in EA's purchase of Playfish.

"The only way they're going to be able to refresh the game side is to refresh the consoles so they get better games," Enderle said. "I think the industry just needs to go through a cycle, but I think for now it's going to get worse before it gets better."

The Associated Press contributed to this story.