THE NPD GROUP REPORTS ANNUAL 2004 U.S. VIDEO GAME INDUSTRY RETAIL SALES

PORT WASHINGTON, NY, January 18, 2005 - According to leading marketing information provider, The NPD Group, Annual 2004 U.S. retail sales of video games, which includes portable and console hardware, software and accessories, saw sales of over $9.9 billion - a decline of less than one percent when compared to $10 billion in Annual 2003. However, while dollar sales were down slightly, total industry unit sales were up 4 percent over the same period last year.

Sales remained strong, thanks in large part to the console software, portable game software and portable game hardware categories, which saw dollar sales percentage increases of 7 percent, 11 percent and 10 percent, respectively. For the first time ever, sales of portable software titles broke the $1 billion mark. Total software sales also continued to set new records, with sales exceeding $6.2 billion, an increase of 8 percent in overall sales when compared to $5.8 billion in 2003. For 2004, console software, portable game software and portable game hardware also experienced healthy unit sales increases of 8 percent, 13 percent and 9 percent, respectively.

As a result of the widely-publicized hardware inventory shortages over the 2004 holiday season, the console hardware category saw the largest percentage reduction, with a 27 percent decline in dollar volume and a 16 percent decrease in unit volume in 2004. However, portable hardware dollar volume was up 10 percent in 2004 to over $828 million, from $751 million in 2003.

"This year’s positive sales results clearly reveal the increasing appeal of video game playing as a leisure time activity among the largest consumer base in the history of the industry", said Anita Frazier, Entertainment Industry Analyst, The NPD Group. "The successful launches of some of the highest quality and best marketed titles ever produced, drops in price points for hardware, as well as the introduction of new hardware systems all helped make 2004 another stellar year for the video games industry."

"The 2004 sales figures are impressive, especially as we enter the twilight of this hardware cycle, and more significantly, looking ahead, the video game industry shows no signs of slowing down," said Douglas Lowenstein, president of the Entertainment Software Association, the trade association representing U.S. computer and video game publishers.  "No other entertainment industry has posted the sustained growth over the last decade generated by the video game sector, and given the technological and creative advances ahead, all signs point to surging growth and more record sales for many years to come."

About NPD Funworld^®
NPD Funworld, a division of The NPD Group, provides sales and marketing information for manufacturers and retailers in the toy, video game and PC game industries. NPD Funworld provides the most accurate market intelligence available, including what is selling, where, to whom and why. All of this information is delivered online in a secure, Web-based environment by easy-to-use tools that make information accessible and actionable to a wide range of users from executives to sales and marketing to research. Today a host of market-leading companies in the industry rely on NPD Funworld for the knowledge they need to drive better, more fact-based decision making.