U.S. video game retail sales fell 20 percent in August, with total industry sales falling to $515.6 million from $647.2 million a year ago, according to consumer market research firm NPD Group.

The monthly sales drop is getting to be a familiar thing. While gaming continues to grow as a business, sales through digital distribution is growing while purchases at physical retail locations is falling.

Hardware sales are also down, with a 39 percent decline from last year’s $248.4 million to $150.6 million. Video game software sales were down 9 percent, to $237.7 million from $261.8 million a year ago.

The poor overall performance in August matched the 20 percent decline in July. In June sales were off 29 percent, and May saw sales drop 28 percent when compared to a year ago. Total spending on software sales was $252.8 million, down 11 percent from $283.3 million a year ago.

NPD is working with video game research company EEDAR to try to come up with more accurate numbers for global digital and physical game sales.

The top game of August was THQ’s Darksiders II for Xbox 360, PlayStation 3 and the PC. Nintendo’s New Super Mario Bros. 2 for the 3DS was second. The next top-selling games were Square Enix’s Kingdom Hearts 3D: Dream, Drop Distance for the 3DS, Electronic Arts’ NCAA Football 13, and Warner Bros.’s Lego Batman 2: DC Super Heroes.

NPD analyst Anita Frazier said in a statement, “These sales figures represent new physical retail sales of hardware, software and accessories, which account for roughly 50 percent of the total consumer spend on games. When you consider our preliminary estimate for other physical format sales in August, such as used and rentals at $104 million, and our estimate for digital format sales, including full game and add-on content downloads, including microtransactions, subscriptions, mobile apps, and the consumer spend on social network games at $391 million, we would estimate the total consumer spend in August to be $989 million.”

She added, “You can’t talk about the gaming market without taking into consideration the growth in the number of mobile gamers on smartphones and tablets. Our recently released gamer segmentation research indicates that the mobile gamer segment of the market is now slightly larger than the core gamer segment, although their monetary value to the industry varies significantly.  The industry foundation will always be the core gamer who spends 35 percent more on physical games than does the average gamer.”

As for hardware, Frazier said, “Of the platforms that were on the market last August, none realized a year-over-year sales increase.  However, compared to July 2012, the 3DS and the PS3 both experienced unit sales increases in August. The 3DS XL launched on Aug. 19 and represented 44 percent of total 3DS unit sales, which is noteworthy given the fact that only seven days of 3DS sales are captured in this report.”

Frazier also said, “The current hardware systems are showing their age, so it goes without saying that it would be great to have new systems breathe life into traditional retail industry sales. I am anxious to learn more about the Wii U launch later this month. And with any luck we will hear news about other systems on the horizon.”

As for software, she said, “The high-definition platforms posted only a slight 1 percent decline in dollar sales as compared to last August, pointing to a stabilization in that portion of the retail market for games content. One factor contributing to the softness we have seen in retail content sales so far in 2012 has been the decline in the sheer number of new titles.  This, however, was not the case in August because there were more new titles when compared to last year; titles with sales that were significantly better than last year’s launches.  So what we’re seeing impact August results is the domino effect of the light release schedule from earlier in the year. That lack of new releases has had a significant impact on subsequent month’s sales.”

And for accessories, Frazier observed, “Similar to what we’ve seen in previous months, the top of the sales list for accessories is dominated by point and subscription card sales, as well as Skylander character pack sales.”