Video-Gaming Sales Set to Top $12.5 Billion

New Consoles, Strong November Could Power Industry to Best Year in Recent History

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YORK, Pa. (AdAge.com) -- Early video-gaming-industry sales data put 2006 on pace to be the best year in recent history.
Console sales led the November upswing, rocketing up 103% in sales over last year, thanks to the introduction of Nintendo's Wii and Sony's PlayStation 3.
Console sales led the November upswing, rocketing up 103% in sales over last year, thanks to the introduction of Nintendo's Wii and Sony's PlayStation 3.

So far almost $9 billion in hardware, software and accessories have been sold this year, led by a strong November that saw sales of hardware jump 69% over November 2005 and software and accessories rise 7% and 10%, respectively, according to a new report from NPD Group. NPD analyst Anita Frazier predicted total 2006 U.S. sales will top $12.5 billion, a boost of 16% over last year's $10.3 billion.

Console sales lead upswing
Console sales led the November upswing, rocketing up 103% in sales over last year, thanks to the introduction of Nintendo's Wii and Sony's PlayStation 3 at the end of November -- despite widespread product shortages. "The demand for Wii and PS3 far outstripped the supply," Ms. Frazier said. "So the numbers there don't really speak to supply or sales as much as they speak to how much retailers had in stock."

Nintendo sold 476,000 Wii consoles, while Sony sold 197,000 PS3s, according to NPD. Nintendo has said it has shipped 600,000 devices and plans several million by the end of the year. Sony continues to be beset by delays and has stopped commenting on the current season, but reiterated that it plans to have six million PS3s worldwide by the end of March 2007.

The Wii was edged out in November sales, however, by the Xbox 360, by a slight margin of 36,000 units. Ms. Frazier attributed the Xbox surge to the November debut of the Xbox-only game "Gears of War," versus the idea that consumer bought 360s as a second choice when they couldn't find Wiis or PS3s.

Highly anticipated title
The highly anticipated "Gears of War" was the also top software title in November and posted sales of more than 1 million units, generating some $61.5 million. (The title was also Microsoft's first attempt to sell games at $60; it previously priced its next-generation games at $50.)

"I'm a firm believer that content is what sells hardware, and Xbox 360 had a huge title out with 'Gears of War,'" Ms. Frazier said, adding that the game's high sales were "not a big surprise, but what a great performance."

There were also a few older-generation surprises in the report, and some good news for Sony. Sales of Sony PS2 consoles and Nintendo Game Boy Advance handheld devices were strong, as were multiple software titles for both. Ms. Frazier pointed out those sales likely are price-based, since the older systems are much less expensive. But it may also indicate more first-time gamers entering the market as well.

"The entire industry is really rallying around that mantra of expanding the gaming audience," Ms. Frazier said.

The big question
But the big question remains: When the holiday is over, who will be the big gaming winner? No one's ready to predict, and with the biggest sales month of December yet to be tallied, it could be too soon.

However, Nintendo, and in particular its Wii system, looks to be a sure winner, if not the top winner, this season. In NPD's November data, the Nintendo DS sold 917,000 units to top the hardware rankings; the Wii game "Legend of Zelda: Twilight Princess" was third behind "Gears of War" and PS2's "Final Fantasy" in software sales; and the Wii remote led all accessory sales, with 270,000 sold.

Still, if November sales are any indication, the whole industry will have something to celebrate in the new year.
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