After promising sales in April the video game industry was brought back to reality in May.  Console software sales are 10% lower than May 2005.  The drop has alarmed many analysts even though overall sales, hardware and software combined, show a rise from last May.  One major reason for the decreased sales is that the video game industry is in a transition to next generation consoles.  This transition has gamers waiting to purchase next-gen titles, couple this with only 2 new Xbox 360 games in May and lackluster sales are more easily explained.

Michael Pachter, an analyst from Wedbush Morgan Securities, summed up the situation, saying “We think that this trend foreshadows continuing weak sales until the holidays, as we expect continued monthly year-over-year declines of 30 - 40% for current generation software sales, with next generation software sales growth failing to offset these declines. We do not expect next generation software sales to offset the decline in current generation software sales until the fall, when a strong lineup of Xbox 360 games is anticipated and launches of the PS3 and Wii are scheduled.”

My own predictions call for decreased Xbox 360 software sales over the next months with increased Nintendo DS hardware and software sales due to the release of the Nintendo DS Lite.  I am curious if Xbox Live Marketplace content is counted into the overall software sales for the Xbox 360 since there are currently more releases on the Marketplace than in retail stores.

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