GameStop Corp said holiday sales increased slightly as sales of new video game software from PlayStation 3 and Xbox 360 titles such as Call of Duty 3 and Elder Scrolls V offset a 20 percent drop in hardware sales.

But GameStop shares fell as much as 5 percent in early trading as some investors were disappointed by the sales numbers, according to analysts.

Sales of traditional video game products such as consoles have been struggling globally as gamers turn to lower-priced online games and spend more time gaming on tablets and phones. GameStop has weathered the trend by focusing on selling used games to console owners.

GameStop said total sales rose slightly to $3.02 billion for the nine-week holiday period to December 31. It said total company same-store sales decreased 0.3 percent -- composed of an increase of 0.3 percent in the United States offset by a decrease of 1.5 percent internationally.

One of the areas of strength for GameStop was digital sales, which increases 60 percent, led by Call of Duty Elite subscriptions for downloadable content.

Morningstar analyst Liang Feng said his firm believes GameStop shares are currently moderately overvalued, but he was surprised by the share sell-off since the margins on hardware sales are much lower than software sales. Other analysts agreed.

We believe GameStop's holiday comps were slightly ahead of expectations and should be viewed favorably in light of a very promotional holiday period and weaker trends in the hardware category, Credit Suisse analyst Gary Balter said in a client note.

Chief executive Paul Raines said in an interview that the company's own data indicated GameStop has managed to win market share from rivals like Best Buy during the holiday period. He said the company was helped by its loyalty reward program. It meant they were turning left to come to GameStop rather than turning right to go to a big box.

The games retailer lowered its same-store sales forecast for the fourth quarter and full year to be down 1 percent to 2 percent.

(Reporting By Yinka Adegoke; editing by Mark Porter and Maureen Bavdek)