Sales of consoles and portable software — the videogames themselves — fell 23 percent from a year earlier to $278 million.
Sales of hardware fell 32 percent to $151 million. Accessories sales bucked the trend, rising 8 percent to $137 million.
Even with the anticipated launch of Nintendo's Wii U later in the year, NPD predicted full-year sales will be $14.5 billion, down from $17 billion last year.
NPD analyst Anita Frazier said Thursday the July figures only represent about half of spending on video games.
NPD estimates used game purchases and rentals amounted to $117 million in July, while spending on downloadable games, add-ons, subscriptions, and tiny transactions in social games came to $439 million. It plans to give a full report on non-traditional categories in November.
The top-selling games for the month were "NCAA Football 13" by Electronic Arts; "Lego Batman 2" by Warner Bros. Interactive; and "The Amazing Spider-Man" by Activision Blizzard.