By Scott Hillis

SAN FRANCISCO (Reuters) - U.S. sales of video game hardware and software hit $1.33 billion in February, up 34 percent from a year earlier, with Sony Corp's PlayStation 3 topping Microsoft Corp's Xbox 360 for the second month in a row.


Nintendo Co Ltd's Wii was still the best-selling console, moving 432,000 units and topping the 281,000 PlayStation 3s and 255,000 Xbox 360s, according to market research firm NPD.

"With several marquee titles still to come in the front half of the year, the industry is poised to achieve another year of record-breaking sales despite difficult economic conditions," NPD analyst Anita Frazier said in a statement.

Software sales in February were up 47 percent year-on-year while hardware sales rose 19 percent, NPD said.

Microsoft, which outsold Sony every month up until January, blamed its weak showing on inventory shortages caused by stronger-than-expected demand over the holidays.

"Our manufacturing team guesses five months out. They made their forecast and didn't have as high a forecast as they should have," said Microsoft spokesman David Dennis.

"We're doing everything we can, pulling all the levers" to boost output, he said.

Microsoft said it expects to have a healthy supply of Xbox 360s by April, when Take-Two Interactive Software Inc's "Grand Theft Auto 4" hits shelves in what is widely expected to be the biggest game of the year.

But the company, which earlier this week cut Xbox prices in Europe to boost sales, may feel pressure to take a similar move in the United States if it continues to trail the PS3, said Jesse Divnich, an analyst with The simExchange, an online prediction market for game sales.

"Given these past two months and the momentum that the PS3 has gained, Microsoft must react quickly as the PS3's momentum will only get stronger," Divnich wrote in a note.

Sony's PlayStation 2, which uses 8-year-old technology but costs just $130, about one-third of the cheapest PS3, saw surprising strength, selling 352,000 units, 19 percent more than a year ago.

Military shooting game "Call of Duty 4" from Activision Inc was the top game for a single console, moving 296,000 copies for the Xbox 360, NPD said.

"Devil May Cry 4," a demonic-themed fighting game from Japan's Capcom , sold a combined 529,000 copies for the Xbox 360 and PS3.

The top games for Nintendo's Wii were its "Wii Play," which came in at number three with 290,000 copies, and Activision's "Guitar Hero 3," with 223,000 copies.

"Our momentum has not let up since the holidays and we expect it to continue throughout the year," Cammie Dunaway, executive vice president of sales and marketing for Nintendo of America, said in a statement.

(Reporting by Scott Hillis; editing by Jeffrey Benkoe)
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