NPD Group, which has just released its estimates for the month of July in the US and Canada, predicts that sales of gaming hardware and software will reach $18 billion by the end of 2007.

The gaming industry is on track of surpassing the Hollywood blockbuster industry, according to recent estimates from various sources, including the prominent NPD Group. The latter’s estimates indicate the semi-price cut operated by Sony for its PlayStation 3 console and the strong software package that (unlike other years) accompanied all major gaming platforms in the hottest month of the summer drove sales to record levels, signaling a very “healthy” year for the industry as a whole.

The Canadian territory is the first where the PS3 sold more units than the Xbox 360, with NPD reporting that Sony’s console was bought by around 15,000 people, compared to Microsoft’s which was bought by only 13,000 Canadians.

The king of the show North of the border was the almighty Nintendo though, which outpaced its rivals big time: Wii’s casual gaming fame helped it reach the hearts and hands of more than 36,000 owners last month, while the tiny, two-screened DS (which by the way is a short acronym for Developers’ System, not Dual Screen) managed to sell more than 46,000 units. By comparison, Sony’s PlayStation Portable appealed to only 6,000 Canadians.

Having more options in terms of hardware and software determined Canadians to visit gaming-related shops more often, and that is noticeable in the amount of money they spent on gaming-related items. The entire industry saw revenues soar to C$84 million ($78.9 million) from the C$51.8 million ($48.7 million) registered in the same period last year, an increase of 62%.

This was mainly due to the revenues reaped from console hardware sales, which more than tripled in July 2007 compared to July 2006. Combined sales of portable and fixed consoles reached C$35.8 million ($33.6 million), up 11% from the same period last year.

Having more consoles means that developers and publishers are more likely to work on titles specifically addressed to them (because piracy is far more reduced), and Canadian sales charts stand proof of that: overall software sales were up more than 30 percent, to C$38.2 million ($35.9 million), driven by strong sales of games for fixed consoles (a 43% increase in July 2007 compared to July 2006). Games for portable consoles were also on an ascending trend, but only with an 8 percent gain. However, the most spectacular growth was registered for gaming accessories, which saw a dazzling 78 percent increase in July, exceeding C$10 million ($9.4 million) in sales.

The most popular games North of the border were Activision's Guitar Hero Encore: Rocks the 80s (in the category of new releases, ranked 4th in the July games top), but Wii got the king’s crown with Wii Play. Guitar Hero II for PS2 came second, with Microsoft’s Value Pack (included games vary) Xbox 360 ranking third.

The US figures show significant improvements, NPD reporting record levels for the gaming industry in our area. After Sony’s long expected price-cut, the PS3 finally surpassed the psychological barrier of 100,000 consoles sold in a month, but fell short of beating the Xbox 360 on its own turf. According to NPD, more than 159,000 PlayStation 3 consoles invaded the living-rooms of Americans in July, compared to 170,000 Xbox 360 consoles for the same period. Again, despite its scarcity, it’s the Wii that beat’em all, with more than 425,000 units, surprisingly outpacing the DS, which sold “only” 405K units.

Sony’s PlayStation 2 and PlayStation Portable both faired pretty well, with about 222,000 consoles sold, 214,000 respectively, while Nintendo’s old GameBoy Advance sold about 87,000 units.

Total industry sales were $925.5 million, up 37 percent year-over-year, and through July the industry has already totaled $7 billion in sales (tracking ahead of 2006 by 42.6 percent).

Hardware sales in particular saw much growth, rising 77.4 percent to $380.8 million. Of that total, console hardware dominated with $286 million in sales (a 140 percent jump), while portable hardware actually dipped one percent. 

The software line-up was topped by EA’s NCAA Football, whose combined sales for the PS2, PS3 and Xbox 360 reached 789K copies, followed by Activision's Guitar Hero games and Nintendo's Wii Play, with 339K, 278K respectively.

Gameindustry.com went straight to the source and asked NPD analyst Anita Frazier some questions about price cuts and Guitar Hero’s popularity.

"The Guitar Hero franchise has solidified its position as one of strongest and freshest video games offerings lately. As long as the future versions continue to bring something new to the table and are fun to play, I see no reason why the franchise can't continue to have great-selling new releases going forward," said Frazier. "Everyone who has played Rock Band or seen it demonstrated seems really excited about the game, so I think both of these have hit upon something that is really speaking to consumers, and not just the tried and true video gamer. I don't think there are any of us that haven't daydreamed about being a rock star after all."

Frazier added that Sony’s price cut for the PS3 helped drive sales of gaming hardware to record levels, but the cheap DS and PS2 platforms are also responsible for the positive results.

"Price cuts definitely played a part in hardware sales increases because we know there are price-sensitive consumers out there that were looking for reductions in order to make their purchases. However, the best-selling platforms didn't make any price cuts so hardware acquisition decisions are made by consumers on a variety of motivators. Price is one of them, but certainly not the only one. By far the most significant purchase motivator is the availability of desired content and that will play into hardware sales more than anything else," Frazier explained.

SCEE’s boss David Reeves confirmed that Sony has no intention to go futher with price cuts for the PS3, adding that "[...]we'll probably put out more hard bundles than the Starter Pack ... We're not making any pricing announcements at Games Convention at all. There's none. And we don't have any plans in that regard. We're really happy with the way that things are going for the PAL business. We really are. It's on track."

The positive impact that the PS3 price cut had is also confirmed by sales figures from important retailer GameStop, which reported a two-fold increase in sales over the past month.

Both GameStop officials and Frazier were not concerned about the impact the delay of GTA IV might have on PS3’s behavior on the market, considering that upcoming titles like Lair, Heavenly Sword or Stranglehold are enough to keep customers’ interest high.

"GTA IV was certainly eagerly awaited by fans, but at the most macro-level for the industry, I don't think its postponement will have that big an impact on total industry dollar sales once everything is tallied for the year," Frazier said. "There are other very big games still to come that will really smooth over any hole left from GTA IV moving to 2008. What I really think is that 2008 will benefit from GTA IV because it will be no small task for the industry to measure up to this year's sales."

"The industry is continuing to follow similar patterns as it has for the first half of the year, and really the only question to me now is 'how big can it get?' Based on July year-to-date figures, the industry looks like it will end up realizing somewhere north of $16 billion for the year, perhaps even closer to $18 billion," Frazier told Gameindustry.com.

Daniel DeMatteo (Vice Chairman and COO at GameStop) said that they were initially "disappointed" but "the back half is shaping up very nicely with titles that will fill the void."

David Reeves also said that Sony’s strategy is to offer its customers a perfectly-timed entertainment experience: “[gamers] don't have huge wallets and they can't go out and buy five games at 59 Euros all the time. So we're trying to do pillar titles every month.”

Mariam Sughayer, Analyst Relations Manager at Sony, said on the company’s official blog: “we’re very excited about how great July was for video games. From a PlayStation perspective, coming out of E3 we were really anticipating a good reaction to our new hardware pricing announced on July 9th, and we were obviously very pleased to see that PS3 sales increased with 159K units sold at retail for the month of July, which puts us up 61% over June numbers.”

According to VGChartz.com, Wii has already surpassed Xbox 360 as the next gen console with the largest install base, having sold 10.57 million units in less than a year, compared to 10.51 million units Microsoft’s gaming rig managed to sell in almost two years on the market.

However, considering the upcoming launch of the highly-anticipated Halo 3 (whose pre-orders have already topped 1 million) and with "perfect" titles like BioShock in its back yard, it won't be long until Microsoft gets its crown back.