Port Washington, N.Y. - U.S. video game sales were $1.18 billion in January, a 6% drop from a year ago -- attributed primarily to an extra week of sales reporting last year -- with Sony's (NYSE: SNE) PlayStation 3 notably overtaking Microsoft's (NASD: MSFT) Xbox 360 for second place in hardware sales behind Nintendo's Wii. Overall hardware shortages after the holiday shopping rush pushed sales down 25% from a year ago, to $378 million; Nintendo moved 274,000 Wii consoles, while Sony sold 269,000 PS3's and Microsoft 230,000 Xbox 360's.

Microsoft's Xbox marketing chief, Jeff Bell, told Reuters the company had "misjudged" demand, and expected the PS3 to outsell the Xbox in coming weeks as the company readjusted.

Overall game software sales in January were up 11%, to $610 million.

The top-selling title was Activision's "Call of Duty 4" for Xbox 360; others in the top ten included the company's "Guitar Hero 3," and MTV's "Rock Band."

NPD noted that the average retail price of games was up 19% from last January, largely attributable to Guitar Hero and Rock Band, which come bundled with various musical instrument accessories.

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http://tinyurl.com/2f5arw (Reuters)