Activision Scores With 'Call of Duty 4'

Video-games publisher Activision(ATVI Quote - Cramer on ATVI - Stock Picks) remained firmly in the saddle as the leading video games publisher in January for the third consecutive month.

The video game publisher enjoyed solid sales from its monster hit, Call of Duty 4. Meanwhile Sony's(SNE Quote - Cramer on SNE - Stock Picks) hardware console PlayStation 3 moved ahead of the Xbox 360 and closed the gap against the Wii.

Activision and Sony's performance stood out in the overall video-games industry, which saw growth shrink last month compared with the same period a year ago.

Industry sales, including hardware, software and accessories, were down 6% in January to $1.18 billion, compared with $1.25 billion a year ago.

Hardware sales slumped 25% to $377.8 million in January compared with $504.6 million a year ago.

However, sales of video game software rose 11% to $610.6 million last month vs. $549.5 million the year before.

The decline was partly because there were four weeks in January compared to five weeks for the same month a year ago, but also because of likely inventory shortages in hardware consoles.

The best selling title of the month, Activision's Call of Duty 4 for Microsoft's(MSFT Quote - Cramer on MSFT - Stock Picks) Xbox 360 console, sold about 331,000 copies last month and put Activision at the top of the pack.

Nintendo's Wii Play game took second with sales of about 298,000 units, according to monthly video games sales data from The NPD Group.

The Wii and Xbox 360 versions of Activision's Guitar Hero III grabbed third and fifth places respectively.

Rock Band, the game published by Viacom's MTV Networks and distributed by Electronic Arts(ERTS Quote - Cramer on ERTS - Stock Picks), rocked the charts in fourth place with 183,300 copies sold in January.

EA's game Burnout Paradise for the Xbox 360 (144,100 copies sold) was seventh, followed by the PS3 version of Call of Duty 4 version in eighth.

Among game consoles, Nintendo's Wii remained the bestseller, with 274,000 devices sold last month. Sony's PlayStation 3 closed the gap, moving into second, with 269,000 systems sold.

Sales of Microsoft Xbox 360 were disappointing with 230,000 boxes sold in January as they trailed the sales of rival portable console, Nintendo DS.

"In-unit sales on an equal-week basis, hardware sales are down less than 2% while the average retail price has fallen by 5% from last year," said Anita Frazier, an analyst with the NPD Group. "Given the huge number of hardware systems sold in December, inventory shortages could be the biggest contributor to the softer-than- expected sales."

Microsoft blamed the shortages for its performance last month. The company said not enough Xbox 360 consoles were available to customers who wanted it.

"It was an issue of us not forecasting and not building enough units," said David Dennis, a spokesperson for Microsoft. "The supply constraint is likely to last through February but we have dialed up the manufacturing and are doing everything to get those boxes on shelves."