NEW YORK (CNNMoney.com) – Despite a disappointing holiday season, video game sales around the U.S. reached an all time high in 2005.

Fueled by a growing portable gaming market, sales of video game software and hardware topped $10.5 billion, a six percent increased over 2004's $9.9 billion and topping 2002, which held the previous record of $10.2 billion, according to The NPD Group.

Nationwide shortages of Microsoft's (Research) Xbox 360 hurt the home video game field, though. Consumers apparently decided to wait for the next generation rather than buying for the machines they currently own. Software sales for the original Xbox, PlayStation 2 and Nintendo Gamecube were down 12 percent compared to 2004.

"The introduction of the Xbox 360 was a defining moment for the industry in 2005. However, it goes without saying that the full impact of next generation consoles on the consumer market won't unfold until later this year when Sony and Nintendo's video game consoles hit U.S. retail shelves," said Anita Frazier, industry analyst for The NPD Group.

Consumers were excited about their Game Boys, Nintendo DSs and Sony (Research) PSPs, however. Portable software sales hit $1.4 billion – a 42 percent increase over the previous year. Hardware sales, naturally, were strong with the introduction of the new systems, climbing 96 percent. But it was the Game Boy Advance that was the true industry powerhouse, taking in 52 percent of portable software dollar sales.

The Madden franchise once again took the sales crown, with the PS2 version of the title topping all other game sales last year. (The Xbox version came in fourth. Publisher Electronic Arts (Research) was behind five of the 10 top-selling games.) Fittingly, it was a portable game – Pokemon Emerald for the Nintendo Game Boy – that took second place.

Will the PlayStation 3 cost $500? Game developers and analysts think so.