Video Game Sales Hit $10.5 Billion in ’05

Retail sales of video game hardware, software and accessories hit a record $10.5 billion in 2005 as strong demand from portable gaming gadgets offset weakness in console players, the NPD Group research firm reported Friday.

The results surpassed the old record of $10.3 billion set in 2002 and were 6% higher than the $9.9 billion reported in 2004.

Software for portable players such as Nintendo’s Game Boy Advance and Sony’s PlayStation Portable jumped 42% to $1.4 billion in 2005 -- the second straight year with sales above $1 billion. Game Boy Advance programs made up 52% of total sales.

“The real story for 2005 was the incredible expansion of portable gaming,” said Anita Frazier, an NPD analyst. “The GBA continued to realize stellar sales, and the introduction of the [Nintendo] DS and PSP to the market brought older gamers to the portable format.”

The console market faced software delays and hardware shortages. Consumers also held off purchases in anticipation of Microsoft Corp.’s new Xbox 360, which was in short supply after its Nov. 22 U.S. launch, as well as Sony’s and Nintendo’s upcoming consoles.

For 2005, console hardware, software and accessories saw sales declines of 3%, 12% and 8% over 2004.

“It goes without saying that the full impact of next-generation consoles on the consumer market won’t unfold until later this year when Sony and Nintendo’s video game consoles hit U.S. retail shelves,” Frazier said.