US retail spend on games dropped to $669.9 million in August, marking a 23 percent year-on-year decline, according to market research firm NPD Group.
It's the fourth decline in as many months in a year that has only seen growth at retail twice.
NPD noted that, despite increased unit sales, hardware spend fell 12 percent year-on-year. Handhelds, however, saw growth thanks to a significant rise in 3DS sales.
Meanwhile, software sales fell 37 per cent to $285.9 million, with Deus Ex: Human Revolution topping the monthly chart.
Despite the slump, NPD remains optimistic for the remainder of 2011. Analyst Anita Frazier said: "More than half of industry sales are still to be realised in the back four months of the year. Given the strong release schedule in the coming months, new physical sales could still be flat to slightly up once full-year sales are tallied."