As noted earlier, individual video games sales fell five percent in 2005. In addition, according to NPD Group, sales of video games continued to drop in 2006, falling eight percent in March 2006. That was the seventh straight monthly decline. (Hardware sales also fell 31 percent during March 2006.)

But why did overall gaming sales increase when individual game sales declined, particularly in the console segment?

The portable game market was spurred by the launch of Sony’s Play Station Portable and Nintendo’s DS.

Portable gaming sales jumped to $1.4 billion, the second time in history that the segment broke the $1 billion mark. Sales of portable hardware rose 96 percent in 2005. However, the launch of PSP and DS was not the only reason why the portable industry had a big year. Nintendo’s Game Boy Advance proved that it still has a big following, generating 62 percent of total sales of portable software, according to NPD Group.

With new portable devices and improving consoles, sales of computer games continued to decline, dropping 14 percent in 2005.

The past year also provided some interesting statistics on who is playing games, why they are playing and how often.

CEA’s 2006 Gaming Technology Study found that roughly one-third of adult gamers spend ten hours or more per week playing console or PC games, compared to just 11 percent of teens. This is more evidence that gaming has becoming more than an activity for kids.

But even within the category of teens, there seems to be an interesting trend. Steve Koenig, CEA’s senior manager of industry analysis, says children between 12 and 14 spend more time playing than those between 15 and 17.

“Older teens simply may not have the free time for extra hours of gaming or they could be gaming on wireless handsets since 81 percent of teens own or use a wireless phone,” Koenig says.

The CEA study also found that adults are more likely to play games on their PCs while teens spend more time using game consoles. Not surprisingly perhaps, portable gaming is more popular with teens than adults. Only 25 percent of adult gamers who own a portable game device have used it in the past six months compared to 77 percent of teens.

Cumulative Sales of Major Game Consoles (at end of 2005)

Sony PlayStation 2 – 101.37 million

Microsoft’s Xbox – 24 million

Nintendo’s Game Cube – 20.6 million

Source: UBS