Video game sales slipped 4% in March as consumers turned to digital downloads and online games

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Sales of video and computer games fell a steep 16% last month, to $735.4 million, compared with $875.7 million a year earlier, according to figures released Thursday afternoon by the market research firm NPD Group.

While the popularity of Nintendo’s new 3DS handheld console helped to drive hardware sales up 12% to $494.5 million in March, that wasn’t enough to compensate for the slide in software sales. When combined with sales of game accessories such as Microsoft’s Kinect and Sony’s Move motion controllers, overall game industry sales were $1.53 billion last month, down 4% from $1.58 billion in March 2010.

‘Software sales were quite disappointing,’ said Michael Pachter, an analyst with Wedbush Securities.

Sony saw a $70-million drop in software sales this March, largely because Sony’s sales last March had a $60-million bump from the sale of God of War III, he said.

And while the 3DS proved popular, the average gamer bought just one game for the $250 device.

‘That’s pretty dismal for a new console,’ Pachter said.

The silver lining for the game industry may be that consumers aren’t cutting back their overall spending on games. Instead, they may be shifting their spending away from games and consoles sold at retails stores and toward buying ‘apps’ for mobile devices such as Apple’s iPad, playing online social games or buying games they can download to consoles or computers -- all sales that are not included in Thursday’s figures.

NPD estimated that such spending accounted for 23% of overall game sales in the U.S. last year.

‘The trends we’ve measured with regard to growth in digital formats like full game and add-on downloads, microtransactions, mobile apps and social network gaming will likely result in net industry growth when we release our full measure of the first quarter consumer spending on games in June,’ said Anita Frazier, NPD’s game analyst.

-- Alex Pham

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