Video game sales explode in industry's best month ever

After a 2009 dominated by lower year-over-year monthly sales figures, the video game industry turned things around in a huge way just in time for the holidays, recording its best month ever, reported analyst firm The NPD Group on Thursday.

According to NPD, the industry turned in U.S. sales of $5.53 billion in December, up 4 percent from $5.32 billion a year earlier. While it could not have been any more of a relief to the companies in the video games business that they had finally turned in a month of year-over-year growth, the December results were especially impressive given that in December 2008 the industry for the first time surpassed the $5 billion mark for a single month.

But despite the fantastic December, the nine straight previous months of lower sales meant that total 2009 industry sales came in 8 percent below those of 2008, the best year the industry has yet seen.

For 2009, NPD said, the industry posted total sales of $19.66 billion, 8 percent less than the $21.4 billion generated in a record-setting 2008. Software sales were particularly hard-hit for the year, coming in at $10.5 billion, 11 percent lower than the $11.7 billion in sales a year earlier.

"December marks just the fourth month of the year where the industry saw an increase over last year," NPD analyst Anita Frazier said in a statement. "January and February were both up, and since the decline that began in March, only September experienced growth. The big sales this month, particularly on the hardware front, is a positive move for the industry headed into what will hopefully be a recovery year in 2010."

Leading the way last month was hardware, which saw 16 percent growth over the year before. All told, NPD said, the industry sold $2.19 billion worth of hardware versus $1.89 billion in December 2008.

Not surprisingly, the biggest winner in December was Nintendo's Wii, which sold a remarkable 3.1 million consoles. That number was noteworthy given that there had been some rumblings that the Wii had started to lose some of its steam. Even the company's president had recently said that the console "had stalled." But December's stellar Wii numbers eclipsed even the 2.15 million Wiis Nintendo moved a year earlier.

Nintendo also sold 3.31 million DS handheld game machines, for a total of 7.12 million total units sold during December. And five of the top 10 selling titles during the month were Wii games, while a sixth was for the DS. Indeed, the month's three best-selling games, New Super Mario Bros. Wii, Wii Fit Plus, and Wii Sports Resort, were all obviously for Nintendo's console. Those three games sold 2.82 million, 2.41 million and 1.79 million units, respectively.

Also noteworthy was that Sony's PlayStation 3 outsold Microsoft's Xbox 360 in December, although only by the smallest of margins. For the month, Sony moved 1.36 million PS3s while Microsoft sold 1.31 million Xboxes. What's important to note about Sony's second-place finish in December is that the results suggest that there is now solid ongoing demand for the PS3, something Microsoft in particularly had predicted wouldn't be the case. Rather, Microsoft had said that boosts for the PS3 in September--when the console won its first-ever month--and October were due to the release of the PS3 Slim, a lower-priced version of Sony's flagship console and "pent-up demand" for a cheaper PS3.

Still, Microsoft does have some news to boast about. Three of the top 10 best-selling games were for the Xbox, with just one for the PS3. And the game that got the most attention during the holiday season, Activision Blizzard's Call of Duty: Modern Warfare 2--which, it was announced Wednesday, had passed $1 billion in worldwide sales--was far more popular for the Xbox than the PS3. It sold 1.63 million units for Microsoft's console, and just 1.12 million for Sony's.

But Sony certainly had something to be cheerful about during the holiday season. As the company pointed out in a press release, it has seen the PS3's sales nearly double each month since October. In October, it sold 320,600 PS3s, with 710,400 moved in November. December's 1.36 million PS3s sold isn't quite double the previous month's, but Sony is correct that it is close to that.

It remains to be seen whether Sony can sustain the momentum that the PS3 has built up. And it's possible that Microsoft's "pent-up demand" comment about the PS3 could prove true now that the holiday season is over and most consumers who waited to buy one at a cheaper price for Christmas presents got one.

For the time being, however, Sony can be proud that it once again bested Microsoft in head-to-head console sales. Microsoft will always make the case that it worries less about that metric than about the sales of its entire ecosystem, which because of Xbox Live and a broad roster of games tends to outsell Sony. But there's no way for the company to ignore the fact that the PS3 seems to be solidifying its place.

The Wii, however, was the clear holiday champion, and Nintendo has got to be feeling good about things. Unless the console now has a big fall-off, most discussion about it having lost its edge will likely die out. For now.