"[in 2004]...the continued price gouging of both hardware and software categories, the industry’s sales will be hard pressed to surpass 2003 through the remainder of the current hardware platform’s life cycles."
Richard Ow, senior video games analyst, The NPD Group

According to marketing information provider, The NPD Group, retail sales of U.S. video games, which includes portable and console hardware, software and accessories, remained largely unchanged over the previous year’s record-breaking performance. The console industry saw sales figures fall 2.7 percent to $10 billion in 2003 compared to $10.3 billion in 2002.

The PC game software industry showed signs of slowing down, with revenues from retail sales down 14 percent, topping $1.2 billion in sales in 2003 versus $1.4 billion in 2002. The total console, portable and PC game industry was $11.2 billion, just 4 percent off the record $11.7 billion in 2002.

The driving force in sales was led by the console software and portable game software categories, which saw a record breaking $5.8 billion, an increase of 5.4 percent in overall sales when compared to $5.5 billion in 2002. Including PC games, total industry software sales were up 1.5 percent to $7 billion, from $6.9 billion in 2002. For 2003, console software, portable game hardware and portable game software saw unit sales increases of 14 percent, 15 percent and 19 percent, respectively.

The console hardware category saw the largest percentage reduction, with a 27 percent decline in dollar volume in 2003. However, portable hardware dollar volume was up 54 percent in 2003 to $750 million, from $490 million in 2002. Besides portable game accessories, which declined 11 percent in 2003, all other industry categories showed a markedly high increase in unit figures.

"The sales results are still quite impressive when you look at the overall industry performance during 2003," said Richard Ow, senior video games analyst, The NPD Group. "The market has seen price cuts from console manufacturers as well as declines in retail software prices. With manufacturers and software publishers dropping prices to vie for consumer dollars, $10 billion in sales for the year is far from disappointing."

According to Ow, the strong, diversified software titles introduced in the fourth quarter provided the market with the sales needed to break yet another industry record.

"Since a majority of the industry’s growth comes from software sales, and because there are plenty of highly anticipated software titles across all platforms in 2004, we are expecting to see impressive sales figures," said Ow. "However, with the continued price gouging of both hardware and software categories, the industry’s sales will be hard pressed to surpass 2003 through the remainder of the current hardware platform’s life cycles."