The Wall Street Journal published an article on the positive side of video games, the Brain Workout - In praise of video games. It is delightful to know that video games do not promote violence. Moreover, they are good tools to teach real-life skills.
Both my kids start playing video games since they were one year old. We have the entire evolution of consoles from 8-bit Nintendo, Sega, Nintendo 64, Playstation, Playstation 2, XBOX and individual desktops with uncensored high-bandwidth Internet connections. When they were young, my husband and I set time limits on how much they can play each day. The privileges would be taken away if they did not do well at school. As they grow older, they have learned our values and they use their judgment on how much they play. In our house, our motto is "work hard and play hard".
One thing surprised me is that my kids learn quite a lot of vocabulary words from games like Age of Empire. They are able to focus and persist for long hours on solving problems. There is always a quest for higher score and better performance. It correlates well with their learning behavior at school. Video games are not the center of their life. When they find things that are more interesting than the games, they spend their energy somewhere else, like doing Math.
Video games are no evil and they ought to be treated as an extracurricular activity. It could balance the sometimes really boring school work. They have been an essential part in my boys' childhood. I believe they will carry the fun memory with them for a long time.