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Video game industry shows signs of slowing

Sales of video game software and hardware in the U.S. rose 9 percent in August, the smallest monthly increase in more than two years, according to new research.

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Sales of video game software and hardware in the U.S. rose 9 percent in August to $1.08 billion, the smallest monthly increase in more than two years, according to data released Thursday by market researcher NPD Group.

Hardware sales were up 3 percent to $395 million, led by handheld Nintendo DS, which sold 518,300 units. Nintendo's Wii came in second with 453,000 unit sales, and Microsoft's Xbox 360 claimed the third spot with 195,200 unit sales.

Software sales were up 13 percent to nearly $551 million, led by Electronic Arts' Madden NFL 09 and Nintendo's Wii Fit and Mario Kart. Sales of accessories rose 13 percent to $137 million.

The video game industry has weathered the economic downturn better than most industries, but August's sales increase is the first rise below 10 percent in 27 months, NPD analyst Anita Frazier said. However, she said projections for 2008 are still looking strong overall.

"Despite smaller growth this month, the industry is up 32 percent year-to-date and remains on target to achieve annual revenues in the range of $22 billion to $24 billion," Frazier said in a statement.