October game sales down 24 percent

It was a good month for bad sales as the shadow of the hugely successful back half of 2004 once again looms over 2005.

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If the gaming industry were a bad teen melodrama, this is about the point when the neglected younger brother that is 2005 would run to its room, sobbing and screaming, "I'm not 2004 and I never will be!"

October 2004 saw one of the best-selling games of all time, Grand Theft Auto: San Andreas, hit the market. On the other hand, October 2005 lacked any semblance of a dominant hit, a fact reflected in NPD Funworld's US retail sales data report for the month. Sales were down 24 percent from the hefty numbers during the same period a year ago, pulling in $365 million in contrast to last October's $479 million. Take GTA out of the equation, though, and sales fell only 4 percent year-on-year for the month.

The PlayStation 2 took eight of the top 10 spots on the sales charts, with the tactical-shooter SOCOM 3 leading all games in sales, followed by Electronic Arts' NBA Live 06 and Grand Theft Auto: Liberty City Stories on the PSP in third place. Madden NFL 06 and Dragon Ball Z: Budokai Tenkaichi round out the top five. Pokémon XD: Gale of Darkness was the best-selling game on a non-Sony platform, coming in sixth place overall.

However, there is hope among analysts that just like the neglected younger brother in the aforementioned analogy, 2005 will redeem itself in the end and prove its worth on its own merits. Most analysts expect the industry to post higher numbers for December sales than in 2004 (when sales actually shrank 1 percent from the year before), but some think the growth could happen this month as well.

Colin Sebastian with Thomas Weisel Partners expects the numbers to ramp up significantly for the rest of the year and is comfortable that sales for the holiday period will be "flat to slightly higher," a welcome departure from two straight months of 24 percent sales drops. Wedbush Morgan analysts Michael Pachter and Edward Woo think the November numbers might show growth as well due to ramped-up PSP demand and Xbox 360 launch sales.

As rough as the last two months have been on the industry in terms of measuring up to last year's numbers, Pachter and Woo see it as a one-time setback rather than the start of a worrying trend. "We note that 2005 monthly sales have been higher than 2003 monthly sales in every month," Pachter and Woo wrote in their latest note to investors. "This suggests to us that 2004 was an anomaly, with a slew of wildly popular games triggering shifts in release dates during the year, and skewing monthly results. We think that 2005 and 2003 are more 'normal' years, implying sales growth in the key month of December."

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