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Sales of video game discs and consoles plummeted 22% last year, as consumers flocked to new digital devices and cut their spending, while publishers released fewer games.
The drop was much sharper than 2011's 9% decline from 2010.
Total spending in the U.S. on physical game products was $13.26 billion, according to NPD Group. The research firm did not estimate the annual total including other avenues for game spending, but did say that used games, rentals and digital formats accounted for about half of total spending in December.
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The bestselling game of the year was "Call of Duty: Black Ops II." Annual sequels in Santa Monica-based Activision Blizzard's military shooter franchises have been the top-selling video games for four years straight.
The news was not as good for Nintendo's new Wii U console, the follow-up to its popular Wii device. Nintendo said consumers snapped up 890,000 units from its late November launch through the end of the year.
However, NPD analyst Liam Callahan said unit sales for the Wii U had lagged behind those of its predecessor, which launched in late November seven years ago.
Because the Wii U costs more, however, total consumer spending on the device was up 10% from launch through the end of the year, at $300 million, a Nintendo spokeswoman said in an email.
Although sales for the year were down, Microsoft's Xbox 360 was once again the bestselling console in 2012, a position it has held for 17 straight months.
Much of the decline in software sales was self-inflicted as video game publishers cut back their slates.
"A major culprit in the decline in retail sales in 2012 was the lack of new releases," Callahan said.
Other top-selling games last year included Electronic Arts' "Madden NFL 13," Microsoft's "Halo 4," and Ubisoft's "Assassin's Creed III" and "Just Dance 4."
Gamers reserved the bulk of their retail dollars for these popular titles, which they were likely to play for dozens or even hundreds of hours online with friends. The top 10 games accounted for 46% of spending in December, Callahan said, compared with 36% during the same month in 2011. As a result, sales for "middle-tier games" and catalog titles have suffered.
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