July U.S. Retail Video Game Sales Lowest Since 2006

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It's good news for digital but somber news for new physical retail sales in NPD's July 2011 video game market report. Even NPD analyst Anita Frazier was somewhat downbeat, launching with: "There is no getting around the fact that video game [dollar] sales in the new physical retail channel suffered [their] lowest month since October 2006."

Total U.S. game sales in new physical retail for July were $707.7 million, down from $961.3 million year-on-year, a 26 percent decline.

On the upside, says Frazier, new physical retail sales were only down 4 percent year-to-date, adding that the upcoming holiday season should either zero the year out, or decrease the year-on-year differential to a more modest negative 2 percent.

Curiously, the biggest single contributor to the dollar decline was console hardware, and not because of selling price, which NPD calls "flat" compared to last year—unit sales of console hardware were simply down overall.

As usual, Microsoft's press statement included Xbox 360 units sales (277,000, in first place), while Sony's note skirted the PS3's lower unit sales number and instead highlighted PlayStation peripheral sales (up 18 percent year-on-year). Microsoft says the Xbox 360 was first for the fifth month in a row, "selling more units in the U.S. than any other console for 13 of the past 14 months," and claims the Xbox 360 is "on track to have the biggest year in Xbox history."

It looks like the Xbox 360 and PS3 contributed most to hardware, software, and accessory sales, while all the other platforms (read: everything Nintendo, plus Sony's PSP) declined, and that's both year-on-year and year-to-date.

NPD tips its hat to digital sales, calling their growth "remarkable" and noting growth in this area "combined with a flat to modest decline in new physical sales should result in 2011 showing growth over 2010."

Top of the chart in software sales: NCAA Football 12 (Xbox 360, PS3).

So U.S. retail headed for a down or flat (which is really down, too) annual finish, digital sales stepping in to fill the gap and then some. Is anyone surprised?

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