According to NPD data released today, about $6.7 billion, or 40 percent of consumer retail spending, was spent on the Xbox, breaking down into two categories: $2.1 billion on consoles and $4.6 billion on games.

The figures take into account U.S. retail sales of new physical videogame content, including portable and console hardware, games and accessories.

In all, those sectors generated revenue of $17.02 billion in 2011, an 8 percent decline over the $18.6 billion generated last year. (Yes, I repeat, Microsoft got 40 percent of that in 2011.)

The initial report does not take into account sales from digital formats such as downloadable content on the console, social and mobile games, or other categories, including used and rentals.

Those so-called “newer” categories generated $7.24 billion in revenues last year, an increase of 7 percent over the prior year.

The increase in spending on alternative formats, however, wasn’t enough to offset declines in physical retail. All told, consumer spending across both categories totaled between $16.3 billion and $16.6 billion, falling 2 percent over last year.

Separating physical and digital sales is quickly becoming an outdated concept, since the two are so intertwined. Consumers have the choice of purchasing many of the games over the Internet via a digital download versus buying them at Wal-Mart or Target.

NPD acknowledged today that it needs “deeper visibility” into digital distribution to get a complete picture of the industry, which will be its focus in 2012.

Still, the report can still be used as a litmus test to see what is performing well.

Overall, a surprisingly disappointing December is what dragged down results for the whole year, NPD discovered.

“Because of the great slate of content that came to market during the fourth quarter, I had expected December sales to represent a larger portion of total year sales than what occurred,” said NPD Group analyst Anita Frazier, in a release.

Frazier added that December sales accounted for just 23 percent of the annual total, compared to the past 10 years, when December, on average, represented 28 percent of the total.

In addition to Microsoft’s Xbox, Sony’s PlayStation also performed well, with both witnessing a 5 percent increase across all game categories for 2011. Meanwhile, the Nintendo Wii, which cannot display HD content, saw a decline year over year.

In a separate statement, Microsoft said that it outsold the PlayStation, the second-place console, by 2.7 million units, and that in all, it has now sold 66 million Xboxes and 18 million Kinect accessories. On a global basis, Sony said in a statement that it sold more than 6.5 million units worldwide this holiday season.

Here are the Top 10 best-selling games in December, according to NPD:

1. Call of Duty: Modern Warfare 3 by Activision Blizzard
2. Just Dance 3 by Ubisoft
3. Elder Scrolls V: Skyrim by Bethesda Softworks
4. Mario Kart 7 for 3DS by Nintendo
5. Battlefield 3 by Electronic Arts
6. Madden NFL by Electronic Arts
7. Assassin’s Creed: Revelations by Ubisoft
8. NBA 2k12 by Take Two Interactive
9. Super Mario 3D Land for 3DS by Nintendo
10. Batman: Arkham City by Warner Bros. Interactive

The NPD Group released a new report today that calculated the amount of money Americans are spending on games from the nontraditional market. That includes a lot of digital content, such as subscriptions, digital downloads, social games and mobile games, but also used games and rentals.

In the third quarter, it found that the amount spent on that “other content” totaled $1.64 billion.

While significant, NPD said it wasn’t enough to offset lower revenue from the traditional game market. NPD defines the traditional market as packaged goods sold at retail. In the third quarter, that totaled $1.3 billion.

“New physical retail sales had a rough third quarter,” said Anita Frazier, an analyst with NPD. “Increases in sales from some of these other monetization methods, and full game and add-on digital downloads in particular, only partially offset the decline see in the new physical retail channel.”

She said the overall market, including hardware, totaled $4.2 billion, down 11 percent compared to the same period a year ago.

For companies like Electronic Arts, which is investing heavily in mobile and social games and is placing big bets on online content, like today’s release of Star Wars: The Old Republic, the results of these monthly and quarterly reports are unrepresentative of the trends they are seeing.

“Everything is growing. If you look at the total interactive business, it’s a $50 billion market internationally, and that’s up double digits. That’s where we play,” said EA’s President of Labels Frank Gibeau. “We find it frustrating because it doesn’t tell the whole picture.”

In the second quarter, EA’s digital revenue, which includes downloadable console content, mobile and social — was up 30 percent year over year.

Even a company like Activision, which has been slower to develop games on Facebook and mobile, said that during the second quarter, revenue from digital channels — mostly downloadable content — increased 27 percent year ove year, and accounted for 37 percent of the company’s total net revenue.

For all-digital companies, like Zynga, which went public last week to raise $1 billion, its impact hardly seems to register.

“I think that ultimately we are an interactive entertainment company, not a packaged goods company,” Gibeau said. “We are platform and channel agnostic. The physical channel is a great channel and it’s going to be around longer than people think. … We are fine with that model, but then, when you bring that game home, you should be able to connect to the larger online world.”

“This November marks the best November on record for sales of new physical content,” said NPD Group’s Anita Frazier.

Activision said within the first five days of sales, Call of Duty shattered all previous entertainment records, grossing more than $775 million. In fact, its first month of sales beat the game’s predecessor by about 7 percent, NPD added.

In NPD’s report released today, it analyzed videogame sales for November, taking into account sales made at retail across both hardware and software. It excludes the sale of digital content, like mobile games and downloadable content.

In November, NPD said software sales totaled $1.7 billion, jumping 15 percent from $1.45 billion in the same month last year. Hardware sales weren’t so lucky, falling 9 percent to $982 million from $1.1 billion in November 2010.

The second-most popular title during the month was Bethesda’s Elder Scrolls V: Skyrim for Xbox, PlayStation and the PC. “In one month, Elder Scrolls V: Skyrim is just about half a million units shy of matching Elder Scrolls IV: Oblivion in lifetime sales. Its first month performance was a five-fold increase over Oblivion’s first month sales,” Frazier said.

The rest of the titles in the top 10 are:

• Battlefield 3, Electronic Arts
• Assassin’s Creed: Revelations, Ubisoft
• Just Dance, Ubisoft
• Madden NFL 12, Electronic Arts
• Uncharted 3: Drake’s Deception, Sony
• Saints Row: The Third, THQ
• The Legend of Zelda: SkywardSword, Nintendo
• Batman: Arkham City, Warner Bros. Interactive

However, those gains are little consolation when you learn that May 2011 was the lowest month of sales for the industry since October 2006. NPD Group, which released highlights for the month today, said the poor performance was directly attributable to a light slate of new releases.

The analyst firm’s figures only represent physical retail sales for hardware, software, and accessories — and not the digital format content distribution, which is currently seeing the most growth.

While Xbox was the top selling platform, it was not the only hardware that experienced gains year over year. So did Sony’s PS3 and PSP.

Meanwhile, May was a slow month for Nintendo. Both sales of the 3DS and the Wii were light. The 3DS could gain momentum as more titles are released that take advantage of the device’s 3-D capabilities, but the Wii platform is expected to continue to sputter for the next year.

At E3 last week, Nintendo announced the console’s successor called the Wii U, which comes with a tablet-sized controller, but is not expected to launch until late 2012.

NPD Group Analyst Anita Frazier reports that combined sales of the PS3 and Xbox 360 are up 28 percent for the month and 21 percent year to date, and that declines in the month of May are mostly attributable to the Wii.

However, the Wii still has the highest install rate in the the U.S. at 36 million, a position that it will likely still hold a year from now — although both the Xbox 360 and PS3 are closing the gap quickly.

As for software sales, which fell 21 percent to $400 million in May compared to the same month in 2010, there are two explanations.

First, there were only 42 new games introduced in May as compared to 58 last May, and 72 in 2009.

Big publishers like Electronic Arts, Ubisoft and Activision have decided to pare back the number of games they are publishing to make higher quality titles that can be more profitable. All three publishers are also creating digital downloads for those titles that extend the life of the games and make more money. Revenue from those downloads would not be reflected in NPD’s figures.

Here’s a list of the top five-best selling games in May across all platforms:

1. L.A. Noire (360, PS3), Take 2 Interactive.
2. Brink (360, PS3, PC), Bethesda Softworks.
3. Lego Pirates of the Caribbean, (Wii, 360, NDS, PS3, 3DS, PSP, PC), Disney.
4. Portal 2 (360, PS3, PC), EA.
5. Mortal Kombat 2011 (PS3, 360), Warner Bros. Interactive.

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According to NPD Group, Nintendo sold more than 620,000 hardware units in the U.S. in April. This includes more than 257,000 units in the Nintendo DS family, and only 194,000 Nintendo 3DS units. Nintendo also sold more than 172,000 Wii consoles.

Nintendo attributed the gap between the two handheld game units to the staying power of the original DS family–and avoided any implications that the 3DS was not selling well.

“With a rich library of games, Nintendo DS has something for everyone. The system’s staying power is exemplified by the recent launch of the Pokémon Black Version and Pokémon White Version games,” Nintendo said. Those two games sold an impressive 2.8 million units or more combined during their first 60 days of availability.

After the 3DS went on sale March 27, Nintendo was eager to report that the glasses-free 3-D device broke sales records. However, the original DS still appears to be benefiting from having a deeper catalog of games available for sale. Additionally, sales may have been hurt by concerns of younger players viewing 3-D images over long periods of time, or complaints that 3-D images made people dizzy, or gave them headaches.

Overall, NPD Group said that the videogame industry saw very strong sales for hardware, software and accessories in April, compared to the year-ago period.

NPD’s Anita Frazier wrote that all three categories experienced double-digit dollar growth compared to April 2010, reversing a negative downward trend.

“Easter purchasing occurred in April this year as opposed to March last year,” Frazier wrote. “The Easter timing shift could explain about $60 million of the growth, but even accounting for that shift, sales of new physical product realized a notable increase versus last year.”

Hardware sales were strong across the board with the PS3, PSP and Xbox 360 platforms all seeing an increase in unit sales versus April last year. The Xbox 360 platform was the best-selling device of the month in terms of unit sales, followed by the Nintendo DS.

Software performed even better in April. It was the first month that new physical retail sales of content showed growth in both units and dollars since November of last year.

One indicator is the sales of prepaid gaming cards that are purchased at Walmart, Target, 7-11 and many other retailers.

While the game cards are typically purchased in person, they can be used for a range of things, from buying virtual goods within FarmVille  to buying a game that’s digitally delivered over the internet via Xbox Live.

Today, NPD released industry sales figures for February today, reporting that prepaid game cards now account for 22 percent of all accessories sold and that sales have increased 52 percent compared to a year-ago.

Meanwhile, in the same time period console software sales only increased by 2 percent.

NPD’s Analyst Anita Frazier said the jump in game card sales points to the increased importance of digitally distributed content sales within the games industry, and that last month marked the best February on record for accessory sales.

The top-selling item was the Xbox 360 1,600 points card.

Overall, NPD reported that physical retail channel in the U.S. generated video game hardware sales in February of $467 million, increasing 10 percent. Video game software, including console and portable totaled $601.4 million, dropping 5 percent, and video game accessories totaled $257 million, increasing 22 percent.

April was another lousy month for the videogame industry. With overall revenue down 26 percent and hardware down 37 percent, it was the worst monthly year-over-year sales decline since last July, according to research house The NPD Group. It was also the 10th time in the last 13 months that sales have fallen year-over-year.

• Nintendo sold 277,2000 Wiis, down from 557,500 in March and 340,000 a year ago. The company sold 440,800 Nintendo DS’s, down from 700,800 in March and 1.04 million a year ago.
• Microsoft sold 185,400 Xbox 360s, down from 338,400 in March, but up from 175,000 a year ago.
• Sony sold 180,800 PlayStation 3s, down from 313,900 in March, but up from 127,000 a year ago. And it sold 65,500 PSPs, down from 119,900 in March and 116,000 a year ago.

What’s driving the drops? Blame the portable gaming industry, which contributed more than its fair share to the industry decline, said NPD analyst Anita Frazier.

“The portable business across hardware, software and accessories accounted for 25 percent of total industry dollar sales in April,” Frazier explained. “But declines in portable sales compared to April ’09 accounted for 61 percent of the total industry decrease.”

That’s just abysmal, even if April is traditionally the slowest month of the year for videogame sales. Consider this: At 440,800, sales of the Nintendo DS tanked by more than 50 percent from more than one million last April.

So what’s going on? Perhaps consumers are postponing new portable game system purchases in anticipation of Nintendo’s new 3DS. Or perhaps they’re finding that their smartphones make fine gaming devices.

It’s not yet clear. But what is clear, and painfully so, is that the hardware refresh promised by Sony (SNE) and Microsoft (MSFT), which are adding new motion technology to their players, and Nintendo, which is debuting the 3-D version of its DS handheld, can’t come soon enough.

“The continued economic turmoil, and in particular the troubling unemployment rate, is undoubtedly impacting industry sales,” said NPD analyst Anita Frazier. “Our latest Economy Tracker indicated that although consumers’ general opinion about the economy is improving, their outlook on their own personal situation is worsening. If consumers’ personal outlook continues to erode, they could very well be much more conservative with their holiday shopping this year.”

A somber warning for the videogame industry. Even recent price cuts on game consoles have done little to spur demand.

“Year to date, the hardware category has experienced the sharpest decline in the industry, with unit sales down 10 percent compared to the same time period last year,” Frazier wrote. “Recent price cuts helped spur a one- to two-month increase in unit sales, and this month’s Wii sales reflect that boost, but the other platforms have not sustained the sales momentum after price reduction.”

The videogame industry may be recession-resistant, but it is clearly not recession-proof, as some once believed. Sales data, below.

U.S. Hardware Sales, October 2009

1. Wii 506.9K
2. Nintendo DS 457.6K
3. PlayStation 3 320.6K
4. Xbox 360 249.7K
5. PSP 174.6K
6. PlayStation 2 117.8K

U.S. Top Ten Software Sales, October 2009

1. Uncharted 2: Among Thieves (PS3, Sony) 537,000
2. Wii Fit Plus (Wii, Nintendo) 441,000
3. Borderlands (360, Take 2) 418,000
4. Wii Sports Resort (Wii, Nintendo) 314,000
5. NBA 2K10 (360, Take 2) 311,000
6. Halo 3: ODST (360, Microsoft) 271,000
7. NBA 2K10 (PS3, Take 2) 213,000
8. Forza Motorsport 3 (360, Microsoft) 175,000
9. Kingdom Hearts 358/2 Days (DS, Square Enix) 169,000
10. FIFA Soccer 10 (360, Electronic Arts) 156,000

That’s the obvious conclusion of the latest monthly sales data from research firm NPD Group.

According to data released late Thursday, video game industry overall sales fell 17 percent in March from a year ago, with hardware down 18 percent, software off 17 percent and accessories off 15 percent. For all of Q1, overall industry sales were flat, with hardware up one percent year over year, software down two percent, and accessories down three percent.

Wait, wait. How did this happen? NPD Group analyst Anita Frazier asserts that the steep fall off reflects two unusual factors. One, she explains, is that Easter last year fell in March, whereas this year it fell in April. And secondly, she notes that last March included the release of Super Smash Bros. Brawl, which she points out was the fourth-best selling game in 2008.

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A remarkable metric, given the economic downturn. How is it that gaming is thriving at a time when the global financial crisis is squeezing wallets? “There are a couple of reasons,” Ron Meiners, director of community for the Hollywood Interactive Group, recently told News.com. “One is the traditional value of entertainment during tough economic times. Like the great fantastic musicals in the 30s. Movies did great, because they took people’s mind off of the troubles they were facing. [And] videogames have great value as entertainment. The number of hours of solid entertainment that comes from a videogame purchase is much greater than a movie, for example, for very comparable cost.”