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cod42.jpgMonthly video game sales statistics from the NPD Group show that the video game industry continues to grow in 2008, defying any concerns about the recession and a cyclical slowdown. On top of that, the Sony PlayStation 3’s resurgence is becoming evident as it beat out Microsoft’s Xbox 360 for the second month in a row in unit sales.

The Nintendo Wii is still on top with sales of 432,000 consoles in February in the U.S., while the PS 3 sold 280,800 units and the Xbox 360 came in third with 254,600 units sold. The Nintendo DS sold 587,600 units, widening its lead over the PlayStation Portable which sold 243,100 units. Year over year, Sony’s PS 3 numbers are up 120 percent.

Total video game industry sales were up 34 percent to $1.3 billion, year over year. Hardware was up 19 percent, a strong showing in spite of recent price cuts. Software was up 47 percent and accessories were up 36 percent. Year to date, the industry was up 26 percent.

Anita Frazier, an analyst at NPD, predicts another year of record-breaking sales in spite of the tough economy. That’s surprisingly strong, considering this year will be the fourth year in the next-generation product cycle (at least for Microsoft). The year will likely get a big boost starting April 29 with the launch of Take-Two Interactive’s Grand Theft Auto IV, which analyst Michael Pachter of Wedbush Morgan believes will sell nine million copies.

The PlayStation 2 continues to sell strong with 351,800 consoles sold during the month. That’s a strong indicator that price-conscious mass market consumers are still a big factor in the market. But the Wii is probably capturing more of those consumers, judging by its numbers.

Microsoft said in a statement that it is still in a supply-constrained shortage. It also says that consumers are still spending more dollars on the Xbox 360 than they are on the Nintendo and Sony next-generation platforms. Life to date in the U.S., the Xbox 360 platform now has a U.S. installed base of 9.6 million; the PS3 ha.s 3.8 million, the Wii has 8.1 million. Microsoft has more than 10 million Xbox Live subscribers, compared to 3.3 million for the PlayStation Network. Sony pointed out that if you combine spending on all of its platforms, it is generating the most monthly sales.

It is still disturbing that Microsoft can’t get enough consoles out. That means that the console manufacturing problems, which resulted in a billion-dollar write-off last year, still haven’t been conquered in spite of the fact that Microsoft has moved to new boards and chips. I can’t think of another explanation for a shortage at this stage in the life cycle, unless Microsoft was exceedingly cautious with its inventory planning a few months back. On the positive side, Microsoft had six Xbox 360 titles on the list of the top ten games during Feburary.

Activision had three titles in the top ten best-selling games list in February, including the No. 1-ranked ”
Call of Duty 4: Modern Warfare” title. (I have a Major I rank on multiplayer now). Notably, Electronic Arts had only one title, “Rock Band,” in the top ten.

Start-ups may not care about the console war per se. But good news in the core console market means that VCs will continue to notice the growth and see games as a good investment opportunity. These numbers don’t even include strong growth in areas such as PC massively multiplayer online games, casual games and mobile games.


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