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updated 10/14/2010 7:28:41 PM ET 2010-10-14T23:28:41

In grim news for video game companies, market researcher NPD Group said Thursday U.S. retail sales of game hardware, software and accessories fell 8 percent in September to $1.2 billion.

Game hardware sales tumbled 19 percent to $383 million as fewer people bought Wii and PlayStation 3 consoles. Only the Xbox 360 sold more units during the month than it did the same time a year ago. Citing NPD figures, Microsoft said it sold 484,000 of the consoles, up 37 percent year-over-year. (Msnbc.com is a joint venture of Microsoft and NBC Universal.)

Nintendo, meanwhile, sold 403,000 of its handheld DS systems in the U.S., and 254,000 Wii consoles. Sony would not disclose how many PlayStations it sold, and NPD stopped disclosing the sales figures for individual gaming systems this month.

Software sales were also down, dropping 6 percent to $614 million, though analysts were expecting a slight increase. Microsoft blockbuster "Halo: Reach" sold 3.3 million units, but it wasn't enough to lift the category. Other top-selling games included "Madden NFL 11" from Electronic Arts and "Dead Rising 2" from Capcom USA.

Jesse Divnich, an analyst with Electronic Entertainment Design and Research, said he had expected software sales to grow 3 percent. Part of the decline could be attributed to "Halo." The game is so popular that the rest of the industry was afraid to go up against it and did not launch big titles last month, he said.

NPD Analyst Anita Frazier said while retail sales showed a decline, "it's important to remember that there is a growing volume of content being sold digitally, or otherwise outside the traditional retail channel."

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That means more people are downloading games and buying extra content online — though most video games are still sold in brick-and-mortar stores.

Game accessories were the only category to see an uptick, boosted by Sony's new Move motion controller. The best-selling accessory was the Xbox Live 1600 point card, lets users pay for movies, games or extra game content through their Xbox 360 consoles. The Network Card for the PlayStation 3 came in second. Both cards cost $20.

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