The headline sounds like good news to the industry, so why would a story with an optimistic headline like "Video game sales up in 2005" contain the following quote:

"You need people to buy more stuff. This is a bad downturn," Pachter said.

Well, because it is a bad downturn. The totals were propped up by sales of PSP and other handhelds.

Console dollar sales were down 3 percent in 2005, while console game dollar sales dropped 12 percent.

I know that you are saying "platform change", I don't think so:

"I think there is another shoe to drop here," said Wallace, who added that while 2006 could be tougher than expected, it would likely mark a bottom for the current console transition.

I think he is right and wrong here. 2006 will be tougher than expected, but it will not be the bottom...not by a longshot.

The generation that grew up playing video games is getting older (i.e. getting a life) and the younger generations are not flocking to video games as much as they used to. I personally think that this is because the games are targeted at older audiences (stupidly violent) and the cost of entry into the hobby is going through the roof. When consoles cost $99, lots of people were willing to give it a try, when they cost $400, not so much...

THE question is: What will the analysts blame 2007 on when all the new consoles are out and the numbers are still bad?