Video Game On!

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Shares of video game hardware, software, and accessories retailer Electronics Boutique (Nasdaq: ELBO) jumped today on news that holiday sales rose more than 24% on the back of a 2.5% increase in same-store sales. (The announcement also helped shares of competitor GameStop (NYSE: GME), which didn't report news today.)

This is significantly better than expected when the company reported fiscal Q3 results in late November. At that time, Electronics Boutique was looking for a same-store sales decline of between 4% and 7%, citing weak hardware sales.

Lower hardware prices were seen as a critical boost to software sales for companies like Electronic Arts (Nasdaq: ERTS) and Activision (Nasdaq: ATVI), as well as license revenues for the console makers. True to form, all Nintendo, Sony (NYSE: SNE), and Microsoft (Nasdaq: MSFT) consoles can be had at discounts, particularly on the secondary market.

But what about profits? Electronics Boutique says it drove stronger-than-expected hardware and software sales by advertising aggressively, increasing promotions, and offering special "bundles." Those can be great ways to boost sales, but Electronics Boutique needs both strong revenues and profits in the all-important holiday season.

It will be some time before we get a full picture of Electronics Boutique's holiday quarter, which ends this month. Until then, it's encouraging that management narrowed its earnings guidance -- for the quarter and for the fiscal year -- by raising the low end and leaving the top end unchanged.

Both Electronic Arts and Activision are among David Gardner's Motley Fool Stock Advisor recommendations. Dave Marino-Nachison can be reached at dmarnach@fool.com.