U.S. Video Game Sales up in 2005, Masking Risks

U.S. retail sales of video game consoles, hand-held devices, games and accessories were up 6 percent to $10.5 billion in 2005, market researchers NPD Group said on Friday.

NPD attributed the year-on-year growth to the growing popularity of newer portable gaming devices such as Sony's PlayStation Portable and Nintendo's DS, which helped mask declines in the industry's much larger console business.

Console dollar sales were down 3 percent in 2005, while console game dollar sales dropped 12 percent.

Combined console and portable game sales fell from $6.2 billion in 2004 to $6.1 billion in 2005, when $1.4 billion came from portable title sales, said NPD, which measures roughly two-thirds of retail sales in the United States and makes projections for the remainder of the year.

The NPD results issued on Friday do not include sales of games for personal computers. The 2005 result beat a previous high of $10.3 billion in 2002. But an analyst said it does not reflect the volatility spawned by the industry's move to new console technology, which is dampening sales as consumers wait and save for next-generation machines and games.

Combined unit sales of Sony's PlayStation 2, Microsoft Corp.'s original Xbox and Nintendo's GameCube current-generation consoles fell more than 19 percent to 33.5 million in 2005, Wedbush Morgan Securities analyst Michael Pachter told Reuters.

He added that total console and hand-held game unit sales were 190.3 million in the United States in 2005, down 6.3 percent.

"You need people to buy more stuff. This is a bad downturn," Pachter said.

Supplies of Microsoft's new Xbox 360 console, released November 22 in North America, have fallen short of expectations and are hard to find in stores. Game publishers have said the shortage contributed to weaker-than-expected sales during the key holiday season when they traditionally reap about half of their annual revenue.

Competing next-generation units from Sony and Nintendo are due later this year.