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Strong December Catapults 2007 Video Game Sales to Record High

18 Jan, 2008 By: John Gaudiosi

Although sales of videogame hardware, software and accessories had been strong throughout the year, thanks in large part to the hard-to-find Nintendo Wii and the strong-selling Nintendo DS, December sales generated $4.82 billion — up 28% over December 2006, according to videogame tracking firm The NPD Group.

That catapulted total 2007 game sales (not including PC games) to $17.94 billion, which is a 43% jump over 2006's total.

“The U.S. videogames industry rose an astounding 43% in 2007, bolstered by strong performance in every product category, to achieve a record-shattering $17.9 billion in sales,” said Anita Frazier, videogame analyst, The NPD Group. “While hardware sales realized the greatest percentage growth over 2006, due to the closely scrutinized console hardware transition, each category under the video games industry umbrella reached its own personal best in terms of annual sales.”

For 2007, overall hardware sales totaled $7.04 billion, which represented a 54% increase over 2006. In particular, console hardware sales drove these sales as they were up 73% to $5.12 billion for the year. Nintendo sold 6.29 million Wiis in 2007 and could have easily sold more if production problems hadn't hampered the company throughout the year. Microsoft sold 4.62 million Xbox 360s and Sony sold 2.56 million PlayStation 3s and 3.97 million PlayStation 2s. The total U.S. installed base for those systems is 41.12 million PS2s, 9.15 million Xbox 360s, 7.38 million Wiis and 3.25 million PS3s.

“I've been asked a lot if PS3 and Xbox 360 hardware sales were likely to benefit from the scarce supply of Wiis at retail (relative to demand),” said Frazier. “Since hardware sales are most influenced by the kinds of games a consumer wants to play, it would appear that the PS2 was a more likely ‘substitute choice' in that scenario.

“Given the breadth of available content and the price point of the PS2, it's a mass market friendly choice and will continue to be an important part of the games ecosystem for several years.”

Portable game sales were up 19% for the year to $1.92 billion, as Nintendo sold 8.5 million Nintendo DS units and Sony sold 3.82 million PSPs. The total U.S. installed base for Nintendo DS is now 17.65 million and 10.47 million for Sony's PSP.

Even game accessories saw a 52% increase to $2.26 billion thanks in large part to Wii controllers. Microsoft has sold 316,000 HD DVD drive peripherals life-to-date, which represents a 3.5 attach rate to hardware sales.

“All those hardware sales greatly helped the accessories category to realize a 52% increase over last year's sales,” said Frazier. ”The Wii remote and the Wii Nunchuk combined for over 8.5 million in units sales last year, capturing the top two spots in accessories sales.”

Three of the Top 10 selling games of 2007 were for PS2, which continues to have strong legs. Activision's Guitar Hero III for PS2 sold 2.72 million units, EA Sports Madden NFL 08 for PS2 sold 1.9 million units and Activision's Guitar Hero II for PS2 sold 1.89 million units. Nintendo had a strong year with both Wii and Nintendo DS games. Wii Play sold 4.12 million copies, Super Mario Galaxy sold 2.52 million units, Nintendo DS' Pokemon Diamond sold 2.48 million units and Mario Party 8 sold 1.82 million copies.

For 2007, Halo 3 captured the top-spot in single-game sales for the year, selling 4.8 million units at retail. Frazier said this performance certainly puts it among the elite in gaming history with performance similar to that of GTA: Vice City in 2002, and GTA: San Andreas and Halo 2 in 2004. Other Top 10 Xbox 360 titles including Activision's Call of Duty 4, which sold 3.04 million copies, and Ubisoft's Assassin's Creed, which sold 1.87 million units.

“If Halo 3 was the game of the year [in terms of sales], one has to recognize the tremendous success of the Guitar Hero franchise,” said Frazier. “Guitar Hero games sold over $820 million at U.S. retail, which is a record for any single franchise in any one year.

“In a year of records, we'd be remiss not to talk about Mario. Mario was the second-best selling video games property for the year and remains the historically best-selling property in the video games industry.”

Looking ahead to 2008, Frazier said she wouldn't count on similar growth in all game categories for this year, but there should be more growth proportionately coming from software sales.

“While we will continue to see strong hardware sales, particularly if prices come down again, the spotlight now turns from hardware to software,” said Frazier.

Top Selling Games, 2007

1. Halo 3 [Xbox 360] – 4.8m
2. Wii Play [Wii] – 4.1m
3. Call of Duty 4 [Xbox 360] – 3.0m
4. Guitar Hero III [PS2] – 2.7m
5. Super Mario Galaxy [Wii] – 2.5m
6. Pokemon Diamond [DS] – 2.5m
7. Madden NFL ‘08 [PS2] – 1.9m
8. Guitar Hero 2 [PS2] – 1.9m
9. Assassin's Creed [Xbox 360] – 1.8m
10. Mario Party 8 [Wii] – 1.8m

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