Despite forecasts that predicted a massive sales slide in 2006 as the industry began the transition to next-gen console systems such as the Xbox 360 and the forthcoming PS3, video games sales are booming.

For the first five months of the year, it looked as though the projected falling off was right on track. According to industry tracker The NPD Group sales dropped roughly 10% each month compared to 2005 figures. In June, however, the industry suddenly jolted back to life, racking up US$844.5 million in video game sales – a 25% jump from the US$674.5 million brought in during June 2005.

NPD analyst Anita Frazier attributes the rebound to a few factors. For one, Xbox 360 sales continue to be strong. Microsoft finally resolved supply-chain issues that were plaguing sales and moved 277,000 units in June. Nintendo’s DS Lite launch that same month is another reason. Nintendo has sold DS portable players have been selling at a worldwide rate of two units per second since its November, 2004 launch – that’s 21 million players so far. And the less expensive, more compact DS Lite sold 525,000 units in North America in June alone.

Finally, the Disney/Pixar CGI toon Cars is fuelling sales. The Cars videogame was released on seven platforms this past spring and gameco THQ has shipped more tha two million copies since its June retail debut.

Right now, it looks like the sales surge could continue well into the fall. ‘There is a lot of momentum heading into the critical fourth quarter,’ Frazier says. ‘And with two new hardware introductions on the horizon, the picture for the industry as a whole is quite bright.’