43% Surge in US Gaming Industry in 2007

The U.S. video games industry soared an astounding 43% in 2007 with record sales in every product category, according to a report released by the NPD group on Thursday.

According to data released by NPD, the gaming industry generated $17.94 billion in U.S. sales last year, a 43% rise over 2006's $12.53 billion, the previous record.

Anita Frazier, an analyst with NPD said, "While hardware sales realized the greatest percentage growth over 2006 due to the closely scrutinized console hardware transition, each category under the video games industry umbrella reached their own 'personal bests' in terms of annual sales."

Not surprisingly, Nintendo Co. was the biggest gainer in 2007, with sold-out sales of its Wii and Nintendo DS hand held consoles. Nintendo of America president, Reggie Fils-Aime said, "With the Wii and DS we are providing innovative experiences to core gaming fans, and we're bringing in new consumers."

According to sales data released by NPD, December saw maximum sales of the Nintendo Wii with holiday shoppers lapping up 1.4 million units of the console. Total US sales of the Wii reached 6.3 million in 2007.

Nintendo’s competitors didn’t fare all that bad either. Microsoft’s Xbox 360 and Sony’s PlayStation 3, also had their best months ever in December. Microsoft sold nearly 1.3 million 360s (bringing total U.S. sales to 8.5 million), while Sony sold about 800,000 PS3s (2.8 million total).

The Nintendo DS was actually the top seller hardware equipment with a total of 8.5 million units sold in 2007 including a whopping 2.47 million in December alone. Rival PlayStation Portable sold 4.82 million units in 2007 including 1.06 million last month.

In the software segment, “Halo 3” emerged as the best selling game of 2007 with sales of 4.8 million copies benefiting sales of Microsoft’s Xbox 360. Commenting on “Halo 3” Frazier said, “This performance certainly puts it among the elite in gaming history with performance similar to that of GTA: Vice City in 2002, and GTA: San Andreas and Halo 2 in 2004."

However, the best selling franchise for 2007 was Guitar Hero which racked up $820 million in U.S. retail sales between its various Guitar Hero 2 and Guitar Hero III games. That's the most any franchise has ever made in one year. Overall, software sales hit $8.64 billion for 2007, a 34% increase over 2006.

Frazier added that "While I wouldn't count on similar growth in 2008, I would expect to see 2008 increase over 2007, with more growth (proportionately) coming from software sales. While we will continue to see strong hardware sales, particularly if prices come down again, the spotlight now turns from hardware to software."