Has the recession finally caught up to the video game industry?

According to leading video game analyst firm, The NPD Group, the video game category is finally seeing a sign of weakness as it records its fifth straight month of decline in US sales.

According to the Group’s latest figures, US video game sales were down 29 per cent for July to $848.9 million compared to the corresponding period in 2008. This brings the year to date figure as of July 2009 to $8.16 billion, a drop of 14 per cent from last year.

In terms of hardware sales reached $280.94 million for the period and $3.34 billion year to date, which is a fall of 37 per cent and 16 per cent respectively.

Video game software also didn’t fare too well with sales of $436.99 million for July and $4.23 billion year to date, a drop of 26 per cent and 14 per cent respectively.

Over July the Nintendo DS was the highest selling console with 538,900 units sold, followed by the Nintendo Wii with 252,500 units and the Microsoft Xbox 360 with 202,900 units.

Sony filled out the bottom three positions with 122,800 PSP units sold, followed by the Playstation 3 with 121,800 and the Playstation 2 with 108,000.

According to NPD analyst Anita Frazier, the industry has some work to do to make up ground.

“In order for the industry to come in flat or slightly up for the total year, the back five months of the year have to come in 11 per cent (or more) higher than the last five months of last year,” she said.

But Frazier highlighted that this was not out of the question due to the fact that there are some blockbuster titles due for release in the near future.

“While year-to-date results are weak, there are some big titles set to be released over the next several months, including Madden this month, which should help spur sales,” she said.

“The worst should be behind us, and looking beyond August we have The Beatles: Rock Band, Halo 3: ODST and Call of Duty: Modern Warfare 2 to look forward to.”

Some other interesting facts to come out of the report were that the Xbox 360 was the only console system to show a unit sales increase year to date and of all game genres, the music/dance genre suffered the greatest decline this year, with nearly $390 million less revenue than the same time period last year.