Sales of video games such as Electronic Arts Inc.'s (ERTS) perennially popular "Madden NFL 07" helped push U.S. game sales up 29 percent to $446 million in September, the market research group NPD said on Friday.

Overall industry sales were up 38 percent to $777 million, led by sales of Nintendo Co. Ltd's DS, a dual-screened handheld player that sold more than 400,000 units in the United States in September.

Year-to-date sales are up 11 percent from a year ago, with all signs pointing to a record-breaking year for the industry, NPD analyst Anita Frazier said.

"If anyone in the industry still doubts that the video-games market has recovered from its downturn earlier this year, this month's results should lay that concern to rest," Frazier said of the September results.

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Earlier this year, large U.S. video game publishers were forecasting industry sales that were flat to down 5 percent from a year ago as the industry grappled with the release of new video game consoles and an accompanying downturn in sales.

Microsoft Corp.'s (MSFT) released its new Xbox 360 console last November and expects to have 10 million units in the market by year end.

Incumbent console leader Sony Corp. (SNE) and Nintendo will debut their new machines, the PlayStation 3 and Wii, next month.

Video-game sales tend to fall around console transitions as audiences on the new machines rebuild.

Analysts said this year's sales have been helped by continued strength in sales of games for the PlayStation 2 console, which is far and away the dominant system, with 106 million units sold so far.

'SAINTS' AND LEGOS

Other top-selling games included THQ Inc.'s (THQI) "Saints Row" for the Xbox 360, "Lego Star Wars II: The Original Trilogy" for most video game devices, and Nintendo's "Pokemon Mystery Dungeon" for its own DS and Game Boy Advance handhelds, Wedbush Morgan analyst Michael Pachter said in a Friday note on the NPD findings.

Pachter said the September results beat his estimate calling for game sales of $415 million. He added that individual publishers were generally in line with his forecasts, except for EA and Take-Two Interactive Software Inc. (TTWO), which both exceeded expectations.

Deutsche Bank analyst Jeetil Patel said in a client note that the video game industry faced an easy year-over-year comparison since September 2005 sales were down 24 percent, and that last month's sales were down 3 percent from September 2004.

Patel expects publishers to beat his fiscal second-quarter estimates, but said that "more than the good news has already been priced in."

He noted that EA's "NBA Live 07" basketball game sell-through fell 10 percent, while Take-Two's 2K Sports' competing "NBA 2K7" game sell-through doubled off a much smaller base.

Patel noted that EA, the world's biggest video game publisher known for its sports franchises, has seen its September basketball market share fall to 64 percent from 86 percent a year ago.

In a recent interview with Reuters, EA Chief Executive Larry Probst addressed concerns about the company's high-profile basketball game: "We will make some changes so we can bring a higher quality product and improve it next year."

Shares of EA were up nearly 2 percent to $57 in midday trade on the Nasdaq.

In other action, Activision Inc. (ATVI), the second-largest U.S. game maker, rose 4.6 percent to $16.

Take-Two shares were up 2.1 percent to $15.72 and THQ's stock was also higher, gaining almost 2 percent to $31.75.