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Video game industry sales sink 23 percent in U.S.

May's lackluster also marks the first time since August 2007 that the industry's monthly sales dip below $1 billion, NPD says.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
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Lance Whitney
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Video game industry sales in the U.S. dropped 23 percent to $863 million in May compared with $1.12 billion a year ago, according to a new report.

This marked the first time since August 2007 that monthly sales dipped below $1 billion, NPD Group said Thursday in its report.

The drop was felt across the board as gamers coughed up less cash for hardware, software, and accessories. Sales for hardware fell 30 percent year over year to $302.5 million. Software revenue was down 17 percent to $449 million, while sales of gaming accessories tumbled 25 percent to $112 million.

"The video games industry continues to struggle with difficult comparisons to last year," NPD analyst Anita Frazier said in a statement.

NPD blamed most of the decline on the lack of blockbuster games rather than the weak economy. The report noted that last year's sales were boosted by the launch of popular software titles such as Grand Theft Auto IV. Nintendo's Wii Fit also was a hot commodity in 2008.

"While there were some very strong new releases this month," Frazier said, "this month's top 10 games sold 2.6 million units combined, whereas last year the top 10 sold 3.7 million units. Again this illustrates how tough the comparisons are to last year."

Nintendo's Wii was the best-selling system in May at 289,500 units, though sales plummeted from last year. Microsoft's Xbox 360 found 175,000 new customers, a gain of 22 percent from a year ago. Sony brought up the rear, selling only 131,000 PlayStation 3 and 117,000 PlayStation 2 consoles.

Despite the sluggish sales, NPD has a positive outlook for the rest of the summer.

"Looking ahead to June, there are some promising games coming out this month between Sims 3 (PC), Prototype, Red Faction, Virtual Tennis, Ghostbusters, Transformers and Tiger Woods just to name a few," noted Frazier. "June comparisons are still likely to be tough, but the wide variety of new content could help reinvigorate things somewhat."

The May report followed NPD's analysis for April, which showed that video game sales had dipped 17 percent year over year.