$708 million month is the worst for retailers since 2006

The vidgame biz took a 26% dive in July, earning nearly $708 million in the U.S. — the worst month for retailers since October 2006.

The May results had previously been the industry’s worst month in nearly five years with a $743 million tally.

The results reflect only physical sales, however, and don’t take into account the growing revenue publishers are generating from digital downloads, rentals, mobile, social and other online transactions, NPD Group said.

Overall, software sales generated $336 million, down 17%, while hardware earned $223 million, down 29%. Accessories fell 8% to come in at $127.8 million, driven mostly by Microsoft’s Kinect motion-sensing system.

The top-selling titles for the month included Electronic Arts’ “NCAA Football,” whose sales were up 15% over the same period a year ago; Disney’s “Cars 2”; Activision Blizzard’s “Call of Duty Black Ops”; and Disney’s “Lego Pirates of the Caribbean: The Video Game.”

Only eight games sold more than 100,000 units last month vs. 19 last year. Only 17 games were released in July vs. 29 during the month last year. Microsoft’s Xbox 360 was the top console during the month, moving 277,000 units.

August sales are also expected to come in lower due to the delay of EA’s “Madden 2012” to September.

Last year, “Madden” game sales at retail comprised 14% of the total new physical retail sales in August, NPD said.

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