Sales fell 17% in April to $1.03 billion compared to a year ago, and sales were down 30% from the month of March, which saw sales of $1.43 billion.
According to NPD, hardware sales fell eight percent year-on-year to $391.6 million, software sales dropped 23% to $510.7 million and sales of accessories were down 15% to $129.4 million.
"While April sales might appear soft on the surface, it's important to remember that April is being compared against a month that realized nearly 50% growth over April 2007," said NPD analyst Anita Frazier.
April 2008 saw the release of hot-selling games Grand Theft Auto IV and Mario Kart.
"While the continued difficult economic environment is a factor to consider," Frazier said, "video games is the category that consumers tell us they're least likely to cut their spending on in coming months."
Nintendo's Wii remained the top-selling game platform in April but its sales of 340,000 units were down 43.4 percent from March.
Sales of Microsoft's Xbox 360 plunged 47 percent in April compared with the previous month to 175,000 units while Sony's PlayStation 3 saw sales drop by 41.7 percent to 127,000 units.
Sales of Sony's PSP handheld console fell 30.9 percent in April to 116,000 units.
Sales of Nintendo's DS soared in April to 1.04 million units from 563,000 in March on the release of the Nintendo DSi, the latest version of its handheld console.
Sony's PlayStation 2 also bucked the trend, selling 172,000 units in April, up from 112,000 in March, due largely to cutting the price to what the NPD's Frazier called the "budget-friendly price point of 99 dollars."
Among game titles, Nintendo's Wii Fit with Balance Board was the top-selling game in April, selling 471,000 units, followed by Nintendo's Pokemon Platinum Version on sales of 433,000 units.
Nintendo grabbed six spots in the list of 10 top-selling titles for the month.
Frazier said new releases to watch in May include Terminator Salvation, Patapon 2, Fallout 3 downloadable content, InFAMOUS, and UFC Undisputed.