VentureBeat

As the E3 video game industry media show comes to a close today, the game industry got some very good news. In spite of the recession, video game sales are still roaring.

June sales of video game hardware, software and accessories grew 53 percent to $1.69 billion, according to market researcher NPD Group. Hardware sales grew 54 percent, software grew 61 percent, and accessories were up 25 percent.

Nintendo came up on top. No surprise there, as the company sold 666,700 units of its Wii game console and 783,000 units of its DS handheld gamer layer. But Sony managed to outsell Microsoft by a wide margin, thanks in part to the debut of the marquee PlayStation 3 game, “Metal Gear Solid 4.” (Pictured above). The stealth fighting game from Konami sold more than 774,000 copies, making it the top game of the month. Worldwide, Sony said MGS4 sold more than 2.4 million units.

MGS4, which I have been playing and am thoroughly enjoying, has stunning graphics quality and a story that unfolds with long, movie-like scenes. It’s the kind of game that shows off the processing power of the PlayStation 3 and it has been bundled with the PS 3’s more expensive $499 version since its debut. But Nintendo is still cleaning up with the larger market, thanks to more accessible games that appeal to non-gamers, such as its recently introduced “Wii Fit” exercise game, which was fourth on the list of June’s best-selling games. Nintendo’s Wii, which sells for just $249, is also enticing players who are intrigued with its unique, motion-sensitive game controller, which players use by waving it around like a wand. Nintendo had six of the top ten games during June.

Sony sold 405,500 PlayStation 3 consoles, up 311 percent from a year earlier. Microsoft, by contrast, sold only 219,800 Xbox 360 consoles in June. Sony sold 337,400 PlayStation Portable handhelds and 188,800 PlayStation 2 consoles.

Going forward, both Microsoft and Sony are going to have to think hard about their pricing as consumers face $5 a gallon gas prices. Microsoft introduced a new model and discounted its models with smaller hard drives on Sunday, while Sony announced a plan on Tuesday to rejigger its own PS 3 offering. Nintendo, meanwhile, is selling out its machines still and has no plans to prices, said Cammie Dunaway, head of sales and marketing at Nintendo of America.

But the big news is that the recession has had no effect on gamers and that all three companies continue to prosper from strong demand. Consumers are staying in their homes and deciding that games offer a good value for their entertainment dollar, said Anita Fraizer, an analyst at NPD. According to the Entertainment Software Association, which sponsors the E3 show, about 38 percent of households now have game consoles and roughly 65 percent of homes play either console games or PC games.

Even if growth stalls later this year, Frazier predicted sales would top $22 billion, compared to $18.8 billion in 2007. With 10.9 million units sold in the U.S., the Wii has now overtaken the Xbox 360 as the top selling game console.

It’s a little late from the point of view of its rivals, but Paramount Pictures has finally decided to take a plunge into video games.

The Hollywood studio is expanding its video game division with a slate of games that will start coming out later this year, according to Variety.

Most movie studios have seen why this makes financial sense. A movie might cost $90 million to make and gross $100 million. But a video game costs $30 million at the most and can still generate $100 million. For a few years now, video game console hardware and software sales have trumped movie box office receipts. (Yes, we know that games cost $50 or $60, and movies about $10).

Warner Bros. has expanded its presence in games under well-known developer Jason Hall and Disney is spending hundreds of millions of dollars on its own video game expansion. Sony, of course, has had both a motion picture and video game business for years.

Variety says that Paramount wants to invest in all types of games but is particularly interested in casual, handheld and mobile games. As we’ve reported, these are some of the hottest areas for start-ups these days. The rest of Viacom, which owns Paramount, is also active in video games. The MTV division owns Harmonix, creator of the hit game Rock Band. MTV also has a deal with famous Hollywood producer Jerry Bruckheimer to make a series of video games. Viacom chief Sumner Redstone has also had an investment in Midway Games, which recently named a new CEO, for some time.

What else could Paramount be working on? Well, this reminds me of Star Trek Online, a massively multiplayer online game that has been in the works for a while. Read the rest of this entry »

Management changes don’t happen often at the big video game consolemakers. But when somebody shakes the trees, the apples fall out. On Monday, one of Sony’s princes, Phil Harrison, resigned as head of Sony’s worldwide game studios, precipitating uncertainty in the games development community. Harrison, pictured below, was a 15-year Sony veteran.

Small and large game developers and publishers will view these developments with a combination of alarm and reassurance. Competitors will no doubt delight in the uncertainty the changes will create for Sony, which is losing its throne as the dominant force of the video game industry.

There’s no replacement for Harrison, other than his boss, Kaz Hirai, who runs the overall Sony Computer Entertainment business. Hirai, Harrison, Andrew House, the current chief marketing officer of Sony, and current Sony U.S. games chief Jack Tretton were the four horsemen who ran roughshod over Nintendo in the U.S. market for a decade. Read the rest of this entry »