Breaking: U.S. Video Game Industry Totals $12.5 Billion in 2006

January 11, 2007 | By: James Brightman

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As was predicted, the U.S. gaming industry toppled its old record in 2006. December alone was up almost 28% and on an annual basis the industry grew 19%. Tons of data and exclusive in-depth commentary from NPD analyst Anita Frazier inside. [Update: chart/data adjustment]

The NPD Group has just released its December and year-end totals for 2006, and it's truly stunning. The U.S. video game industry has reached an all-time high at $12.5 billion, easily eclipsing last year's record $10.5 billion. The final month really put the industry over the top, as December total sales hit a whopping $3.7 billion, an increase of 27.8 percent. Software sales for December totaled $1.7 billion, up just 5.4 percent.

It was hardware, however, that saved the day. During December hardware did incredibly well, totaling $1.6 billion (up 59.2 percent). And guess what system put up the highest numbers... that's right, the Nintendo DS. We say it every month, but it's mind boggling how successful the DS has become. The handheld sold 1.6 million units in December and life-to-date stands at 9.2 million. The PSP did fairly well also, selling 953.2 K units (6.7 million life-to-date). Nintendo's GBA came in third among portables with 850.7 K unit sales (35.1 million life-to-date). Overall, though, portable hardware sales were still down 5.7 percent year-over-year in December and essentially flat on an annual basis.

The big winner in the console space was the PS2. Sony's aging console is showing very resilient legs, as it posted 1.4 million units in sales for the month and stands at 37.1 million life-to-date. Following the PS2 was the Xbox 360 with 1.1 million units sold in December (4.5 million life-to-date). The two new systems, Wii and PS3, rounded out the charts with 604.2 K units and 490.7 K units, respectively. NPD's data shows that the Wii install base through December in the U.S. stands at 1.1 million while the PS3 total is just 687.3 K. Keep in mind that SCEA's 1 million shipped number was for all of North America, while NPD data refers to the U.S. only.

Annually, total hardware sales were $4.6 billion, up 42.8 percent. This was driven primarily by console hardware, which came in at $2.9 billion, an increase of 87.5 percent. On the software side, 2006 total sales amounted to $6.5 billion, a 6.4 percent increase. This was broken down into $4.8 billion in console software (up 2.6 percent) and $1.7 billion in portable software (18.8 percent rise). Accessory sales were up 18.9 percent in 2006 as well, totaling $1.5 billion.

Gears of War, which dominated November with 1 million units sold, took top honors in December as well, adding on another 815.7 K units (including the collector's edition). Microsoft's blockbuster for the 360 was closely followed by Guitar Hero II (including the standalone copy of the game with out guitar) and Madden 07 on the PS2. Not surprisingly, EA's Madden was also the best selling game of 2006 with 2.8 million units sold. Complete software and accessories charts are provided below.

[UPDATE] When the NPD supplied us with these charts yesterday, the All Platforms Top 10 for December failed to include Zelda: Twilight Princess, which sold 1.5 million units. The chart has been updated to reflect NPD's correction.

[UPDATE 2/Correction] We've swapped out the all platforms chart again. NPD had accidentally used 2006 total for Zelda. The game's total was actually 1.1 million units for December in the U.S.

Next page: In-depth commentary from NPD's Anita Frazier