--Videogame sales lowest since October 2006 --Weak slate of new games partly to blame --Top game, Take-Two's "L.A. Noire" By Ian Sherr Of DOW JONES NEWSWIRES SAN FRANCISCO -(Dow Jones)- U.S. videogame industry sales dropped 14% in May as a short list of new titles failed to entice consumers, another setback for an industry struggling to regain momentum in a slow economy. Sales of new videogame hardware, software and accessories fell to $743.1 million from $866.6 million during the same period a year ago, according to NPD Group. The market researcher said a weak slate of new titles following the blockbuster growth in April was to blame. Take-Two Interactive Software Inc.'s (TTWO) crime drama, "L.A. Noire," was the best-selling game for the month. The performance was particularly notable because it wasn't released until May 17. NPD said the rapid growth in online videogame sales could also be responsible for the industry's poor showing, with sales at their lowest levels since October 2006. NPD's data only tracks sales of new items at physical retail sales, and doesn't include digital downloads. The videogame industry is in the middle of a rapid change as sales over the Internet grow. Electronic Arts Inc. (ERTS) recently said roughly 20% of its sales now occur online in some form. Revenue for other companies, such as Zynga Inc., occur almost exclusively over the Internet. The shift also comes as consumers continue to control their spending following deep cuts in household entertainment budgets. Many want to extend the use of games they already own by buying extra maps and levels. They also play cheap and free games on mobile devices such as Apple Inc.'s (AAPL) iPhone or through websites such as Facebook Inc.'s namesake social network. Still, NPD analyst Anita Frazier said brick-and-mortar retail sales will likely pick up in the near future. Next Sunday, for example, Nintendo Co. (NTDOY, 7974.OK) is expected to release the much-anticipated "Zelda: Ocarina of Time 3D" for its 3DS handheld videogame console. The device's sales haven't met Nintendo's expectations despite a strong start. "We will begin to see a slate of strong content come to market for the 3DS, which should help to significantly boost sales of hardware during the remainder of 2011," Frazier said. May's biggest titles included "L.A. Noire," followed by Bethesda Softworks LLC's "Brink" and "Lego Pirates of the Caribbean: The Video Game" by Walt Disney Co.'s (DIS) interactive division. Across the industry, new games sales fell 21% to $400.1 million from $503.8 million during the same period last year. Sales of videogame accessories, such as prepaid cards used to purchase digital content within games, fell 6%, to $114 million from $121.5 million the year before. -By Ian Sherr, Dow Jones Newswires; 415-439-6455; ian.sherr@dowjones.com
