By Scott Hillis

SAN FRANCISCO (Reuters) - U.S. sales of video game hardware and software rose 28 percent in December from a year earlier as holiday shoppers snapped up new consoles like Nintendo Co Ltd's top-selling Wii, market research firm NPD said on Thursday.

But after setting a 43 percent pace for all of 2007, growth is expected to cool off this year as attention moves away from the transition to a new generation of hardware and more toward games.

"While I wouldn't count on similar growth in 2008, I would expect to see ... more growth proportionately coming from software sales," NPD analyst Anita Frazier said in written commentary on the data.

"While we will continue to see strong hardware sales, particularly if prices come down again, the spotlight now turns from hardware to software."

Sales were $4.82 billion in December and nearly $18 billion for all of 2007, NPD said in its latest monthly report.

Nintendo sold 1.35 million Wiis, bringing its total U.S. user base to 7.4 million, NPD said. The Wii's success has been fueled by its motion-sensing controller and simpler games that have won over consumers outside the traditional gaming audience of young men.

Microsoft Corp sold 1.26 million of its Xbox 360 machines, boosted by games such as Activision Inc's "Call of Duty 4," which topped the December charts with 1.47 million copies sold.

While much of the attention for the holidays was focused on shortages of the Wii, Microsoft spokesman David Dennis said the company had seen tight supplies of the Xbox 360 as well.

"We were hearing from retailers ... that if they had more units they could have sold them easily," Dennis said.

The top-selling game of 2007 for a single console was Microsoft's own "Halo 3," which sold more than 4.8 million copies since its launch in late September, NPD said.

The Xbox 360 had the biggest base of U.S. users at the end of 2007, having sold nearly 9.2 million units since it launched in November 2005, a year ahead of its rivals.

Sony Corp sold 798,000 PlayStation 3 consoles in December, bringing its total installed base to nearly 3.3 million. The PS3 was outsold by the aging but far cheaper PlayStation 2, which sold 1.1 million units in December.

"Given the breadth of available content and the price point of the PS2, it's a mass-market friendly choice and will continue to be an important part of the games ecosystem for several years," Frazier said.

Nintendo also sold nearly 2.5 million units of its DS handhelds in December, while Sony sold nearly 1.1 million of its PSP device.

In December, Nintendo's "Super Mario Galaxy" for the Wii grabbed the number two slot with 1.4 million copies sold, while Activision's wildly popular "Guitar Hero III" music game sold nearly 1.3 million copies for the PS2 and 625,000 copies for the Xbox 360.

Ubisoft's "Assassin's Creed" for the Xbox 360 sold 894,000 copies, and Sega's "Mario and Sonic: Olympic Games" for the Wii sold 613,000 copies.

(Editing by Carol Bishopric)
© Copyright 2007 Reuters.