Analysts are monitoring sales as the industry heads into the holiday season, which accounts for roughly half of its revenue. "We do not believe that recent weakness will persist, and expect a sales rebound in November and December," said Wedbush Morgan Securities analyst Michael Pachter.

UBS analyst Michael Wallace is betting that game sales will decline slightly in 2005, and backed his estimate calling for a 1 percent year-over-year decline in U.S. video game sales. For the 10 months ended October 31, video game sales were up 1 percent from the same period in 2004 to $3.7 billion.

Many game publishers have reported soft sales amid a transition to next-generation consoles. Many video game enthusiasts are putting off purchases until the new machines are released. Microsoft will be the first to market with a new console when its when its Xbox 360 comes out on November 22.