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Video games see 2003 slump
Software sales were on the rise, but game machine sales suffer.
January 26, 2004: 11:24 AM EST
By Chris Morris, CNN/Money staff writer

NEW YORK (CNN/Money) – Aging game machines and the lack of a substantial price cut took their toll on the video game industry in 2003 as sales slipped 4 percent from 2002 totals to $11.2 billion.

PC games took the biggest hit, according to The NPD Group, which tracks the industry's sales. Stung by the delay of key titles such as "Half-Life 2" and "Doom 3", 2003 sales came in at $1.2 billion, a 14 percent drop from 2002's figures. Software for home video game consoles climbed 14 percent.

While software sales were slightly higher, consumers shied away from buying Sony's (SNE: Research, Estimates) PlayStation 2 and Microsoft's (MSFT: Research, Estimates) Xbox, as both companies stuck by their higher price points through the holiday season. (Nintendo, which lowered prices on its GameCube, saw a sales spike toward the end of the year.) Console hardware overall sales were down 27 percent.

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Nintendo scored big with its popular Game Boy handheld system, however. NPD reported portable hardware volume was up 54 percent from $490 million in 2002 to $750 million in 2003. A good deal of that increase can be credited to the company's introduction of the GBA sp, which offered a long-demanded internal light to the system. 2004 will likely see another sizable increase in this category as Sony unveils its portablePSP system in May.

Though Sony and Microsoft are expected to announce price cuts before the end of May, NPD analysts said they do not expect 2004 sales to be as strong as 2003.

"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," said Richard Ow, senior video games analyst for The NPD Group. "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."  Top of page




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