U.S. video game industry growth seen slowing (Reuters)

LAS VEGAS (Reuters) - U.S. video game industry sales growth is expected to slow in 2008 as accelerated demand for software is tempered by a decline in hardware revenue, the Consumer Electronics Association said on Saturday.

Overall U.S. industry sales are seen rising to 17.9 billion in 2008, up 13 percent from an estimated 15.8 billion in 2007, the CEA said. That compares with a 22 percent increase from 2006 to 2007.

The expected decline in growth comes as the industry moves beyond the initial phase of the introduction of new gaming consoles made by rivals Microsoft Corp (MSFT.O), Sony Corp (6758.T) and Nintendo Co Ltd (7974.OS).

Microsofts Xbox 360, launched two years ago, competes against Nintendos Wii and the Sony PlayStation 3 consoles, both on the market for just over one year -- for dominance in a global video game industry thought to have approached 40 billion in revenue in 2007.

Video game industry hardware sales jumped 50 percent to 6.6 billion in 2007, but are anticipated to shrink to 6.4 billion in 2008.

Now that all of the major consoles are established, hardware sales are expected to moderate, while demand for related software is expected to jump, as game owners beef up their libraries of new titles.

"Software (in 2007 had) phenomenal growth, riding the wave of hugely successful title launches such as (Microsofts) Halo 3, (Activision Incs (ATVI.O)) Guitar Hero III and (Electronic Arts Incs) (ERTS.O) Rock Band. In fact, the focus for 2008 will be in the software category, where CEA estimates a 26 percent increase in sales over 2007," said CEA spokeswoman Jennifer Bemisderfer.

Software sales are expected to rise to 11.5 billion in 2008, up from 9.1 billion in 2007. That was a 7.6 percent increase from 2006, the CEA said.

The CEA released the data ahead of the annual Consumer Electronics Show in Las Vegas this weekend, when Microsoft Chairman Bill Gates, Sony Chief Executive Howard Stringer and others are expected to give glimpses into the future of their gaming products.

(Reporting by Franklin Paul; Editing by Peter Cooney)