November 12, 2005

U.S. Video Game Sales Take Hit

LOS ANGELES (Reuters) - U.S. retail sales of video games in October fell to $365 million, down 24 percent from a year earlier, when publishers released a slew of blockbuster titles, analysts said on Friday.

Citing figures from market researchers NPD Group, analysts said October console game sales were around $294 million, while sales of handheld games were about $71 million.

Analysts are closely monitoring sales as the industry heads into the holiday season, which accounts for roughly half of its revenue.

"We do not believe that recent weakness will persist, and expect a sales rebound in November and December," said Wedbush Morgan Securities analyst Michael Pachter.

UBS analyst Michael Wallace is betting that game sales will decline slightly in 2005, and backed his estimate calling for a 1 percent year-over-year decline in U.S. video game sales.

For the 10 months ended October 31, video game sales were up 1 percent from the same period in 2004 to $3.7 billion.

Many game publishers have reported soft sales amid a transition to next-generation consoles. Many video game enthusiasts are putting off purchases until the new machines are released.

Microsoft Corp. will be the first to market with a new console when its when its Xbox 360 comes out on November 22.

NPD Funworld reports U.S. retail sales data based on reporting from about 60 percent of U.S. retailers. It makes projections for the remainder of the market.