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Grand Theft Auto V shoots video game sales to recovery

Tuesday, 29 Oct 2013 | 7:40 AM ET
Leon Neal | AFP | Getty Images

The U.K. video game market has grown for the first time in five years as blockbuster releases such as Grand Theft Auto V and an increasing number of supermarkets offering games have helped fill the vacuum left by bored Wii users.

While mobile games have been growing in popularity with the increased number of smartphones on offer, traditional gaming on consoles such as Sony's PlayStation and Microsoft's Xbox has been stuck in reverse.

But video game sales in Britain grew 29 percent in the 12 weeks ending September 29, after the market declined year on year, every quarter for the past five years, according to a study by Kantar, the market research group.

This follows news of a recovery in the U.S. video games market where software sales were up 52 percent last month from a year earlier, after rising 23 percent in August, according to the NPD Group.

(Read more: Is the video game industry finally rebounding?)

The rut in the video games market has been caused by an outflow of customers who fell out of love with the Nintendo Wii console, Jules Williams, analyst at Kantar World Panel, told CNBC.

Nintendo's Wii brought a group of non-traditional gamers into the video games market, but could not retain them. Instead of moving over to the Xbox or PlayStation franchises, those consumers left, causing declining sales in the market.

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"The massive influx of people who came to buy Wii hardware and software, were not retained in the market. There was not much encouraging them to buy. There were lots of people attracted to the games market, but as soon as they came in they left," Williams told CNBC.

In 2009, 10 percent of adults surveyed by market research firm Mintel in a poll of 25,000 bought the Wii at the height of its popularity, but support waned quickly with only 2 percent purchasing the console in 2012. This compares with the relatively steady sales of the Xbox and Playstation franchises which remained around 4 percent over the same period.

Meanwhile, supermarket giants gained market share in video game sales as traditional specialist stores like Game and HMV struggled. HMV's market share in 2013 almost halved from 18 percent to 10.6 percent from the same period last year after the company fell into administration in January.

(Read more: 'Grand Theft Auto Online' could crash when launched)

Tesco and Asda are the two fastest growing retailers in the entertainment sector and claim second with 17.1 percent and third with 12.1 percent of the market respectively. But Amazon maintained its position as the top retailer in Britain with a fifth of the market.

GTA became the fastest selling game of all time when it came out last month, making a staggering $800 million on its first day, beating blockbuster war game Call of Duty: Black Ops 2, which earned $500 million upon its debut.

The game, which has attracted controversy for a player's ability to go on violent crime sprees, cost $275 million to make.

(Slideshow: 'Grand Theft Auto': Hookers, violence, and outrage)

The GTA boost could be followed up with some further life in the market as the Xbox One and Playstation 4 are set for release before Christmas. But the winter spike in sales will be softer than previous peaks due to competition from handheld devices.

"There is quite a high interest in smartphones as gaming devices. Now there is a growing ecosystem where you can buy (get?) high quality games for free (?) without ever needing to spend much money on a console," Sam Gee, technology analyst at Mintel, told CNBC.

"That is not saying there isn't going to be a successful atmosphere for the gaming market but it will be less successful than previous years."


—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal

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