Video game makers saw sales slump dramatically in October, but analysts still expect the industry to end the year with record-breaking sales after the busy holiday season, according to market research firm NPD Group.

Including accessories, sales for the overall video game industry dropped by 16 percent in October to $556.1 million from $662.8 million a year ago. But the industry usually generates almost half of its annual sales during the holiday quarter.

For October, U.S. sales of just gaming devices increased 5.6 percent to $132.5 million from $125.5 million the previous year. But gaming software sales dragged the industry, taking a significant dive of nearly 24 percent to $364.9 million from $478.9 million last year.

NPD entertainment industry analyst Anita Frazier attributed part of the decline to the phenomenal sales last year of the hit game "Grand Theft Auto: San Andreas," which alone generated $100 million in sales within its first month of release in October 2004.

Weaker sales were also likely affected by a general economic malaise, some burnout from annual versions of franchise games, and holdouts in anticipation of Microsoft Corp.'s Xbox 360 console, due to hit store shelves on Nov. 22, Frazier said.

In addition, the marketplace is getting crowded with multiple options of consoles and handheld gadgets aimed at satisfying the game-playing public.

The number of people owning more than one game device is rising, Frazier said. However, each purchase of a piece of hardware is no longer necessarily from a new gaming customer, but likely from someone who already owns a bunch of games that work on a different device, thus potentially thinning software sales.

Still, Frazier expects the video game industry to end the year with record sales overall, compared to the peak of $10.3 billion in 2002. The industry usually generates almost half of its annual sales during the holiday quarter, and sales from January through October rose nearly 9 percent, at $6.3 billion, compared to $5.8 billion during the same period last year, Frazier said.