Nintendo Wii sales down

All told, Pachter believes that year-over-year hardware sales were down 13 percent in January. He also estimates that software sales were down 11 percent during the month with Nintendo leading the way with $180 million in total sales. However, that figure is down 19 percent, compared to January 2010. Only Microsoft's Xbox 360 saw stronger software sales in Pachter's calculations with a 4 percent gain to $165 million.

The video game industry was hit quite hard by slow sales in January, and Nintendo and Sony might have felt the biggest impact of that, one analyst says.

Wedbush analyst Michael Pachter estimates that Microsoft sold 380,000 Xbox 360 units in January, besting the rest of the market and rising 14 percent over its January 2010 sales. Pachter said he believes Nintendo tallied 320,000 unit sales in January, down 31 percent year over year. Sony once again came in third place in Pachter's January estimate with 240,000 PlayStation 3 units sold on the month. That figure is down 13 percent compared to January 2010.

On the portable side, Pachter believes Nintendo sold 350,000 DS units, representing a steep 17 percent decline year over year. Sony's PSP likely only saw 80,000 unit sales on the month, down 20 percent from January 2010.

Pachter contends that blaming declining sales on any single factor isn't enough to fully illustrate the state of the gaming industry right now.

"We believe that the declines were a result of a poor economy, dramatic growth in 2007 and 2008, lower software attach rates for the Wii, the virtual disintegration of interest in the music category, and stubbornly high price points for the major consoles," Pachter wrote in a note to investors.

But that doesn't mean that Pachter sees another down year in 2011. He noted that the video game industry is poised for "a rebound" this year with sales starting to pick up in late March with the launch of Nintendo's 3DS, a portable that allows gamers to play titles in 3D without glasses.

Pachter also believes that the top three hardware makers--Microsoft, Nintendo, and Sony--will be dropping the price of their consoles this year. He said that if the three companies drop their pricing by $50, the industry could see 5 percent growth in software sales, as well as a jump in demand for hardware.

Market research firm NPD is expected to release the official January industry sales on Thursday.Don Reisinger--news.cnet.com