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Game Sales Jump in September

20 Oct, 2006 By: John Gaudiosi

What was supposed to be a flat year in the video game business, as console makers and publishers transition from current-generation to next-generation hardware, has continued to surprise experts.

September video game sales rose 38% compared to last year, led by solid sales of Nintendo DS hardware and software. Total game sales raked in $777 million, compared to $563 million last September.

“Year-to-date software sales (including PC) are up almost 6% compared to last year, and we see no signs that growth will slow over the next three months,” said Michael Pachter, video game analyst for Wedbush Morgan Securities. “We expect double-digit growth over the next six months, as year-over-year comparisons are favorable through March. We now believe that full-year growth could exceed 7%, compared to publisher guidance of flat to minus-5%.”

Hardware sales were up 71% to $244 million, thanks in large part to the sale of 400,000 Nintendo DS systems. Nintendo has a U.S. installed base of 6.3 million Nintendo DS systems, more than 1 million more than Sony's PlayStation Portable. More consumers bought the 6-year-old PlayStation 2 (305,000 units sold) than the new Xbox 360 (260,000 units) in September. Sony sold only 150,000 PSPs in September, ranking fifth overall, behind Nintendo's old Game Boy Advance system, which sold 175,000 units last month.

Total U.S. console software sales for September were $446 million, up 29% compared to last year. Sales of video game accessories were up 21% to $88 million. Current-generation software sales declined $44 million (14%), while next-generation software sales increased by $143 million, to $182 million, more than offsetting the current-generation falloff.

Microsoft has an installed base of 2.7 million Xbox 360s in the United States. Pachter expects Microsoft to sell about 400,000 hardware units in October, between 750,000 and 1 million units in November, and between 1.5 million and 2 million units in December.

“In particular, sales of Xbox 360 software were better than we expected, increasing to $104 million from $89 million in August,” Pachter said.

Pachter said software sales strength through the summer and early fall suggests that consumers have accepted that the Wii and PS3 will be hard to find this holiday season.

“We now believe that the decline in current-generation software will be more modest than we initially expected, with next-generation software sales more than offsetting the decline,” Pachter added.

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