UPDATE:NPD: US Videogame Hardware Sales Fall 19% In September

U.S. video game industry sales fell in September, painting a potentially grim picture for the crucial holiday shopping season.

U.S. sales throughout for video game software, hardware and accessories fell to about $1.2 billion, a drop of 8% from roughly $1.32 billion in the same month a year earlier, according to market research firm NPD Group. Analyst Anita Frazier said the slowdown particularly hit video game hardware makers, whose sales fell 19% from the previous year.

The video game industry is suffering as recession-weary consumers pinch pennies. Analysts have also expressed concern about the impact of cheaper mobile and Internet-based games that can be accessed on sites such as Facebook and devices such as Apple Inc.'s (AAPL) iPhone and iPad.

Results from September could further fuel those worries, continuing the potentially painful trend for the industry.

However, Frazier said the results may be overly dramatic because NPD's reporting method includes only new retail sales. Electronic, used game and mobile app sales, for example, are absent from the company's methods.

"While industry sales of new physical retail sales show a decline versus year ago, it's important to remember that there is a growing volume of content being sold digitally, or otherwise outside the traditional retail channel," Frazier said in a statement.

Microsoft Corp.'s (MSFT) Xbox 360 was the only winner among hardware makers, NPD numbers showed. The much-anticipated release of the video game "Halo: Reach" helped to bolster its hardware sales through special edition bundles, Frazier said.

Halo was also the top-selling among software titles, followed by Electronic Arts Inc.'s (ERTS) "Madden NFL 11" and Capcom USA's "Dead Rising 2."

Sony Corp.'s (SNE, 6758.TO) "Move" products for the PlayStation 3 were also a standout success, Frazier noted. PlayStations packaged with the motion-based technology pushed average sales higher.

Motion controllers designed for the PlayStation and Xbox are being released in time for the holiday season, in a bid to capture some of Nintendo Co.'s (NTDOY, 7974.TO) success with its popular Wii.

-By Ian Sherr, Dow Jones Newswires; 415-439-6455; ian.sherr@dowjones.com

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