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U.S. video game sales fell by 23 percent in May from a year ago, dipping below the one billion dollar mark for the first time since August 2007, the NPD Group said in its new report.

Sales of videogame hardware, software and accessories dropped to $863.3 million in May from $1.2 billion in May of 2008.

Hardware sales declined 30 percent to $302.5 million and software sales were off 17 percent to $448.9 million. Sales of accessories were 25 percent less at $112 million.

Anita Frazier

"May is typically one of the lowest revenue-generating months in any given year for the industry in general," said NPD analyst Anita Frazier. "The dollar sales decline was exacerbated by a decline in average retail prices for almost all of the categories."

"Every category declined versus a year ago with the exception of portable hardware sales which was bolstered by the continued strong sales of the Nintendo DS including both the DSi and the Lite," she said.

Nintendo's Wii remained the most popular selling game platform in May with sales of 289,500 units followed by Microsoft's Xbox 360 with sales of 175,000 units, Sony's PlayStation 3 sold 131,000 units and PlayStation 2had sales of 117,000 units.

The top-selling game in may was "UFC 2009 Undisputed" with sales of 679,600 units for the Xbox 360 and 334,400 units for the PS3.

"Looking ahead to June, there are some promising games coming out this month between Sims 3 (PC), Prototype, Red Faction, Virtua Tennis, Ghostbusters, Transformers and Tiger Woods just to name a few," Frazier said.