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Video game industry sees U.S. sales rise 4% in December

The increase from a year earlier comes on strong sales of Call of Duty: Modern Warfare 2 and New Super Mario Bros. Wii. But the month's results fail to counter an otherwise gloomy 2009.

January 15, 2010|By Alex Pham and Ben Fritz

The video game industry eked out a 4% sales gain in the U.S. last month, rising to $5.32 billion as shoppers snapped up nearly 2.8 million copies each of Call of Duty: Modern Warfare 2 and New Super Mario Bros. Wii.

But the uptick in the crucial holiday shopping month couldn't counter an otherwise bleak 2009, which saw sales of video games, consoles and accessories total $19.66 billion, down 8% from 2008, market research firm NPD Group said.

December capped a stomach-churning year for the game industry, during which retail sales fell in eight of the 12 months, leading several major publishers to cut costs and workers. Electronic Arts Inc. and Ubisoft Entertainment this week lowered their guidance because of softer-than-expected holiday sales.

The genre that took the biggest hit last year was music and dancing games, which plunged 46% as players turned away from titles with peripherals that cost as much as $250 each. It was the biggest decline for any video game genre.

Not even The Beatles: Rock Band, which was unveiled in September with great fanfare, could go against the economic tide. The game sold just over 1.1 million units last year, NPD said. Publisher MTV Games added that with international sales included, it sold more than 1.7 million units.

In contrast, 2008's Rock Band 2, which was significantly less expensive to produce, sold 1.7 million units in the U.S. alone in its first four months.

Scott Guthrie, executive vice president of MTV Games, said he was "pleased" with the holiday sales and the fact that more than 1 million players bought Beatles song downloads, though he acknowledged that some European markets performed below the company's expectations.

He also noted that more people bought the game without pricey instrument controllers, which depressed revenue but raised profit margins.

Activision Blizzard Inc.'s Guitar Hero 5 performed even worse, with just 996,000 units moved from September through December, according to NPD, compared with 3.4 million for Guitar Hero: World Tour a year earlier.

"Thank God this is behind us," analyst Michael Pachter of Wedbush Morgan Securities said of last year's "miserable" music sales.

One bright spot: Enticed by price cuts, shoppers snapped up more consoles in December, boosting sales by 16% to $2.2 billion from $1.9 billion a year earlier. Leading was Nintendo Co.'s Wii, which could be found for as little as $149 during holiday discounting.

Consumers bought 3.8 million Wiis, compared with 1.36 million PlayStation 3 consoles from Sony Corp., and 1.31 million Xbox 360s from Microsoft Corp.

It was the biggest month ever for the PS3, which gained ground on its competitors last year thanks to an aggressive marketing campaign and a new exclusive title, Uncharted 2, which sold nearly 1 million copies and won numerous awards.

Another bit of good news came in the form of Call of Duty: Modern Warfare 2, the latest installment of Santa Monica-based Activision's hugely successful military shooter series. It tallied $1 billion in retail sales worldwide, according to the company, and was the top-selling game of the year in the U.S. After less than two months on shelves, it became the fourth-most-popular game ever in the domestic market, according to NPD.

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