Year-on-year growth drops from 28% to 9%

The videogame biz remained a beacon of double digital growth during the recession in 2008, but slowing holiday sales indicate that it’s quickly coming down to Earth.

Market research firm NPD released its 2008 sales data on Thursday, revealing that total vidgame industry revenue soared 19% to $21.3 billion. Though impressive during such a tough year, it’s down significantly from 2007’s 28% growth, which brought in almost $18 billion. By December, the most important month for holiday-dependent vidgame companies, the year-on-year growth had plunged from 28% to 9%.

Leading the downward trend was Sony, which for the second month in a row saw sales for its flagship Playstation 3 console and its sibling PSP decline from the previous year, the only consoles to do so. Japanese electronics giant sold 726,000 PS3’s in the month and 410,000 PSPs. By every measure — December sales, 2008 sales and lifetime sales — the PS3, is a distant third behind Microsoft’s Xbox 360 and Nintendo’s Wii and has virtually no chance of catching up.

While Sony struggled, Nintendo continued to almost single handedly prop up the biz, proving that its focus on low-cost, family-friendly gaming is paying off big in the current climate. Defying all economic trends, Nintendo saw sales for its Wii and DS consoles surge 59% and 23%, respectively, in December, and 62% and 17% for all of 2008. The Wii broke NPD’s record for the most consoles sold in a year, exceeding 10 million. DS was just a hair behind at 9.95 million.

Nintendo’s hardware strength was mirrored on the game sales charts, where titles for its consoles took six of the top 10 spots in December and five of the top 10 for all of 2008. “Wii Play” was the No. 1 game for both the month and year, though most analysts attribute that to the inclusion of a free controller with the mini-game collection. Other huge sellers for Nintendo include racing title “Mario Kart Wii,” innovative exercise instructor “Wii Fit” and retro fighting game “Super Smash Bros. Brawl.”

Particularly notable for Nintendo is how much staying power its titles are demonstrating. While every game from competing publishers in December’s top 10 chart was released in October or November, Nintendo had two games released in the spring, one in 2007 and another, “Mario Kart DS,” which launched in November of 2005.

“Grand Theft Auto IV” was the year’s top game not from Nintendo, selling 5.2 million units. However publisher Take-Two Interactive recently admitted that after a huge launch in April, holiday sales have been slower than expected. Activision Blizzard’s “Call of Duty: World at War” was also a strong seller, moving more than 4 million units.

Microsoft ended up with a mixed 2008. Though it remains far ahead of the PS3, Xbox 360 sales grew only 2% for the year to 4.7 million. Device remained the system of choice for hardcore gamers who spend the most, boasting four of the top ten games for the year and total lifetime spending on hardware and games combined greater than both the Wii and PS3. Company’s 360 exclusive “Gears of War 2″ finished the year with a solid 2.3 million units sold

Total sales to date in the U.S. for the Wii are 16.6 million, followed by 13.3 million units for the 360 (which launched a year earlier than its competitors) and 6.8 million PS3s. On the portable side, Nintendo’s DS has sold a boffo 26.6 million units according to NPD, almost double the 14.2 million for Sony’s PSP.

Nintendo’s huge growth is not only boosting industry numbers, but masking the hard times felt by many competitors, including Sony, Electronic Arts, and Midway. “This is not a case of the rising tide lifting all boats,” noted NPD analyst Anita Frazier. “The increases are not being enjoyed equally by all manufacturers and publishers.”

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