If you look at movies, the highest grossing films are always either G or PG-13. This is because those films appeal to the largest possible audience, while being accessible to the largest number of people. Games are pretty much the same.

Also, parents not allowing their child to buy a game isn't stupid.  It's part of being a responsible parent.

It affects sales alot, i have seen parents at ebgames not buy a game for their 10yearold because it was rated teen, they were asking for adventure games and the guy at the store said try Zelda and she said it was too violent, i almost fell over laughing.

I think it hurts for the Wii, but helps for the 360 or PS3, many 360 gamers in their insecure 13-20 year old age would not buy an E-rated game... it would make them feel less... mature. That is why games like Kane and Lynch sell well on the 360.

I would suspect that the rating of a game would impact sales and how it impacted sales would be dependant on the genre and the region you're talking about ... A "Mature" first person shooter is the norm so receiving that rating will not have much of an impact on sales; on the other hand a "Mature" JRPG could (potentially) see far lower sales because parents (and some gamers) who don't like pointless violence/sex will avoid buying the game because it is "Mature" ...

There are fewer mature games out there but they have a bigger share of the total sales so I can't say that it can be that negative of an impact. Now a rating of AO is the kiss of death.

 So? They are still gonna buy it or have someone else buy it for them.

Ratings don't effect game sales that much. It's NOTHING like Movies. Most of the best selling games are M, like Halo and GTA

 Actually the vast majority of the best selling games are rated T.  There are a few shining stars among M rated games, but T and E games sell higher numbers over all.  Regardless of the system.  A few of the best selling games of all time are M rated, but that isn't an indication of overall sales trends.  Go take a look at the top 50 for each console right now and you'll see that even though M rated games do sell well, the majority of games are T.  I don't feel like doing the math, but I'm willing to bet that if you added up the sales numbers of all M rated games, T rated and E rated, T and E both would beat M.  Combined they most definitely would.

In Australia anyone can buy games regardless of rating. Hell if a game is for person's over 15, it makes sense for a retailer to sell the games to kids who are like 12 or 13 your main customers. The parents will get the games for the kid's anyway for their birthday or Xmas.

It certainly decreases sales to children or teenagers who want to play the M rated game. However, I think that some of that is offset by older gamers, who just left their teens, and buy anything that is M (think hormonally charged 18 year old casual gamer, who only plays sports games and FPS games).