SALES UP, BUT PRICES DOWN, ON VIDEO GAMES.

Byline: Greg Hernandez Staff Writer

Fueled by an especially robust fourth quarter, sales of video games rose in 2003, but overall industry revenue declined by 4 percent to $11.2 billion, according to year-end figures released The NPD Group, which tracks industry sales.

``The sales results are still quite impressive when you look at the overall industry performance during 2003,'' said Richard Ow, senior video games analyst for 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.''

The NPD Group reported that a dramatic drop in video game console hardware revenue was mainly responsible for the 4 percent dip from 2002's total of $11.7 billion.

Revenue from console hardware such as Nintendo's GameCube declined by a dramatic 27 percent, the biggest percentage drop in revenue of any category. This was due to price cuts with competition among manufacturers growing ever more fierce.

Despite the price cuts, console and portable game software sales reached a record-breaking $5.8 billion last year, up 5.4 percent from 2002. Those sales were led by the year's most popular console video game title, ``Madden NFL 2004,'' published by Electronic Arts and released in August. Other big sellers included Nintendo of America's ``Pokemon Ruby'' and ``Pokemon Sapphire'' and Electronic Arts' ``Need Speed: Underground.''

``There was a real nice set of high-quality titles released in November that were really strong for the holidays,'' said Brian Lucas, spokesman for the 600-store Best Buy chain. ``Overall, it was an extremely strong year for quality, and there were titles that brought a lot of enthusiasm and expectation to the category.''

Top-selling PC video games were mainly Electronic Arts titles, including ``The Sims: Superstar Expansion Pack, ``The Sims Deluxe,'' and ``Command & Conquer: Generals.''

According to Ow, the industry is well positioned to have another strong year, but further price cuts will likely put a drag on overall revenue.

``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,'' he said. ``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.

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com

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Source: NPD Group

Jon Gerung/Staff Artist