Video game sales up 8 percent in 2004

Holiday hits "Grand Theft Auto: San Andreas" and "Halo 2" lead way as game makers sell close to $10 billion in software and hardware.

U.S. sales of video games in 2004 kept pace with the previous year, according to a report released Tuesday, even though aging game consoles have yet to be replaced by their successors.

Total U.S. sales of video game hardware, software and accessories last year hit $9.9 billion, according to researcher The NPD Group, compared with $10 billion in 2003.

Software accounted for the bulk of the spending--$6.2 billion--with holiday hits leading the way. The top-selling games were "Grand Theft Auto: San Andreas," with sales of 5.1 million units, and "Halo 2," with sales of 4.2 million. Both pulled well ahead of last year's No. 1 seller, "Madden NFL 2004."

"The top titles this year really set a new benchmark," NPD analyst Anita Frazier said during a teleconference detailing the survey results.

Total game software spending--excluding PC games--was $5.8 billion in 2004, representing a growth of 8 percent.

Doug Lowenstein, president of trade group the Entertainment Software Association, said the software sales are particularly notable given that they're for consoles released more than four years ago and about to be replaced by new models.

"This growth is occurring in the twilight of the hardware cycle," Lowenstein said. "This demonstrates the resiliency and the maturity of the market....This is the only entertainment sector that has shown sustained, really nonstop growth over the last decade."

NPD's game sales rankings show Microsoft's Xbox console solidifying its No. 2 spot in the North American market. Six of the top 10 games overall were for Sony's market-leading PlayStation 2, while three were for the Xbox and one for Nintendo's GameBoy Advance portable player.

Hardware sales were down 27 percent for the year, according to NPD, due to across-the-board price cuts and widespread inventory shortages during the critical holiday shopping season.

Sales of portable game hardware and software showed respective growth of 9 percent and 13 percent, however, thanks in part to a strong launch of Nintendo's new DS player.

Frazier said the handheld category is likely to continue to grow this year, as Sony introduces its PlayStation Portable to the rest of the world. "We're going to be watching the handheld market very carefully," she said.

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