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Games Continue Record Sales Pace in July

28 Aug, 2007 By: John Gaudiosi

July software and hardware game sales were up 37% over sales for the same month last year, hitting $925.5 million, according to The NPD Group.

Year-to-date sales through July are up 42.6%, topping $7 billion in sales.

Anita Frazier, video game analyst for The NPD Group, said overall game sales could reach a record $18 billion by the end of this year.

The industry continues to grow on hardware sales, which totalled $380.8 million in July, up 77.4% compared to the same month last year. Consoles sales, in particular — led by Nintendo's one-two punch of Wii (425,000 units sold) and Nintendo DS (405,000 units sold) — saw a 140% jump from July 2006 to July 2007, reaching $286 million. Nintendo said Wii reached a weekly high in July that matched its December 2006 sales.

Microsoft sold 170,000 Xbox 360s and Sony sold a record 159,000 PS3s. PS3 July sales jumped 61% from June sales thanks to the new, lower prices. Sony's PS2 sold 222,000 units and its PSP 214,000 units.

While recent next-gen price cuts did help sales, the top-selling hardware units were already the most affordable game consoles on the market.

Still, Frazier said that while price is a key motivator in a hardware purchase, the availability of desired content is the driving force. Wii, Nintendo DS and PS2 are all consoles with games that people want, she noted.

Software sales were lead by EA Sports' NCAA Football 08 on Xbox 360 and PS2 (835,000 units sold) and a pair of Activision “Guitar Hero” PS2 games (Guitar Hero Encore Rocks the 80s and Guitar Hero 2).

Total software sales were up 11%, to $419.2 million in July, compared to the same month last year, with the bulk of sales coming from console games ($313.2 million). Year-to-date software sales are already up 22.4% from the same time last year, with a $3.3 billion take.

Xbox 360 software sales grew 24.4%, while PS2 game sales declined 22.5% year-over-year in July. Handheld software sales were mixed, with DS game sales up 42% year-over-year and PSP game sales declining 3%.

“Next-generation software sales were $283 million, while current generation software sales were $136 million,” said Michael Pachter, video game analyst, Wedbush Morgan Securities. “Overall growth this month was lower than expected, and most of the upside came from Nintendo first-party software sales. However, overall hardware and software sales remain strong and should alleviate some concerns about slowing industry sales.”

With the recent launches of powerhouse games such as Madden NFL 08 and BioShock in August, and the upcoming big fall months of September, October and November, hardware and software sales should remain strong, according to analysts.

Key movers for Sony will be the new slimmer PSP coming out in September, which is backed by new exclusive games. PS3 sales should get a boost from exclusive games such as Warhawk (Aug. 28), Lair (Sept. 4), Heavenly Sword (Sept. 12), and Ratchet & Clank Future: Tools of Destruction (Oct 23). Microsoft and Nintendo also have strong game lineups for the fall, including Halo 3 (Sept. 25), Mass Effect (Nov. 1) and Project Gotham Racing 4 (Oct. 2) for the Xbox 360 and Metroid Prime 3 (out now), Super Mario Galaxy (Nov. 12) and Super Smash Bros. (Dec. 3) for the Wii.

Overall, it's been a solid summer for Hollywood video games, thanks to strong sales of games like Transformers, Shrek the Third and Spider-Man 3. But not all Hollywood movies have translated to gaming gold.

“We continue to be somewhat concerned about the poor performance of the big Pixar movie game this year, Ratatouille, which has sold only 332,000 units across all platforms since its launch in June,” said Ben Schachter, video game analyst, UBS Securities.

The NFL license also has not proven to be a major draw, as 2K Sports' All-Pro Football 2K8, which featured retired players, was a bust on PS3 and Xbox 360, selling only 94,000 units combined.

The top 10 best sellers (by units) for July:

1. NCAA Football 08 — 360 — EA — 397K
2. Guitar Hero Encore Rocks the 80s — PS2 — Activision — 339K
3. Wii Play w/remote — Wii — Nintendo — 278K
4. NCAA Football 08 — PS2 — EA — 236K
5. Mario Party 8 — Wii — Nintendo — 177K
6. NCAA Football 08 — PS3 — EA — 156K
7. Pokemon Diamond — DS — Nintendo — 144K
8. Transformers: The Game — PS2 — Activision — 143K
9. Guitar Hero II w/guitar — PS2 — Activision — 138K
10. Guitar Hero II w/guitar — 360 — Activision — 108K

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