video gamesU.S. video game industry sales fell 5% in May, driven by a big drop in consoles and portable players that could not be offset by gains in software and accessories, according to an NPD Group report released Thursday.

Industry sales overall fell to $1.65 billion in May, down from $1.73 billion over the same time last year. The figure was dragged down by video game hardware sales tumbling a staggering 20%, while video games, which account for half of the industry's sales, dropped 5% in the month, according to the report.

"The portable hardware category contributed the most to the decline in hardware sales for the month, yet the [Nintendo (NTDOY) DS] is the best-selling hardware system for May," said NPD analyst Anita Frazier, in a statement. "Console hardware unit sales are, in fact, flat to last year. Declines in sales result from a lower average selling price this year compared to last."

"The PS3 Has Really Hit Its Stride"

The bright spots came from video game software sales, which rose 4% and accounted for roughly a quarter of the industry's total take in May. Video accessories, meanwhile, climbed 3% in May compared with the same time last year.

Some platforms fared better than others. "May was the 10th-consecutive month of year-over-year software sales increases for the [Sony (SNE) PlayStation 3] platform," Frazier said. "Combined with the hardware and accessories sales increases for the platform, the PS3 has really hit its stride."

In the accessories arena, video game points and subscription card unit sales jumped 12% in the month, with the Microsoft (MSFT) Xbox Live 1600 point card capturing the top-selling spot for the third-consecutive month.

Still, the industry may take comfort in that May's video games and hardware sales were at least stronger than the previous month -- those segments' sales fell in April by 26% and 37% year-over-year, respectively.

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