UPDATE 2-U.S. video game sales down 29 pct in July-NPD

Thu Aug 13, 2009 8:21pm EDT

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* EA's "NCAA Football 10" top-selling game (Adds analyst comment, details from NPD)

By Gabriel Madway

SAN FRANCISCO, Aug 13 (Reuters) - U.S. video game equipment and software sales fell 29 percent in July to $848.9 million, research group NPD said on Thursday, as the gaming industry limps through the economic downturn.

Hardware sales fell 37 percent from a year ago, while software sales slid 26 percent, NPD said. Sales of video game accessories declined 12 percent.

It was the fifth consecutive monthly decline for the U.S. video games industry. Year-to-date sales are down 14 percent in a sector once thought to be relatively insulated from the economic downturn.

Wedbush Morgan analyst Michael Pachter said the July results were weaker than he had expected, but noted that the worst is over.

"I think the silver lining is, we're in the trough of the decline," he said. "The bottom is worse than I thought, but I'm certain we've hit bottom."

Nintendo Co Ltd's 7974.OS Wii was again the top-selling home console in July, but sales fell by around half from last year to roughly 250,000 units.

Microsoft Corp's (MSFT.O) Xbox 360 was No. 2. NPD said it is the only console system showing a unit sales increase year-to-date.

Sony Corp's (6758.T) PlayStation 3 was in third place, followed by the PlayStation 2.

Electronic Arts Inc ERTS.O "NCAA Football 10" was the top selling game for the month, with combined sales of 689,000 units across all platforms.

NPD said the U.S. video game industry as a whole will need to come in at least 11 percent higher in the last five months of 2009, when compared with the same period a year ago, in order to match 2008's sales.

Analysts do expect a strong back half of the year, beginning in September when big-name titles such as "The Beatles: Rock Band," and new installments in the "Halo" and "Madden" football franchises are released.

Pachter said he still expects 2009 sales to finish flat to up. He expects September game software sales to rise at least 30 percent and as much as 50 percent from a year ago.

(Reporting by Gabriel Madway. Editing by Robert MacMillan and Richard Chang)

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