The UK computer games market reached an all-time high last year, with sales totalling £1.6 billion.
Demand for software and consoles increased by 36% on the previous year, according to figures from the European Leisure Software Publishers Association (ELSPA).
The UK is now the third largest market in the world for computer games, after the USA and Japan, and spends more on leisure software than on renting videos or going to the cinema.
There is also a thriving home-grown software industry, with exports exceeding those for both British film and television, according to ELSPA.
Roger Bennett, director general of ELSPA, said: "The leisure software market has just seen its most successful Christmas ever, boosted by the launch of new consoles and fantastic games to go with them.
"The dramatic uptrend in sales values confounds some analysts who thought the market had reached the end of rapid growth."
According to ELSPA, the most popular computer game last year was WWF Smackdown, followed by Who Wants to be a Millionaire? and The Sims.
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