Jesus C., the U.S. videogame industry revenue

fell more than expected in July led by a sharp drop in console sales. Sales fell 29% to $848M, the fifth straight double-digit drop and nearly twice the -15% analysts predicted. Microsoft’s (MSFT) Xbox 360, up 10%, was the lone gainer among consoles, though that too was short of consensus.  Could it be time to short the video game stocks?

In July, according to industry analyst the NPD Group, video game sales

fell for the fifth straight month, and the year-over-year numbers are striking: In July, the video games business posted sales of $848.9 million, down 29 percent from $1.1 billion a year earlier. Year-to-date sales, reported NPD, were at $8.16 billion, down 14 percent from the same time period a year ago.

And things are only getting worse. While the industry’s June numbers were down a full 31 percent from a year earlier, they still topped nine figures, coming in at $1.17 billion in June. But that means that in July, sales were down 27.4 percent from just a month earlier.

SHORT THE GAME STOCKS?
That’s the natural knee jerk reaction, so which stocks make the best shorts right now?  Cue the big boys:

Company name	Price	Change	Chg %	d | m | y	Mkt Cap
TTWO	Take-Two Interactive S…	10.15	-0.03	-0.29%		814.18M
MSFT	Microsoft Corporation	23.59	-0.03	-0.13%		210.29B
THQI	THQ Inc.	6.28	-0.28	-4.27%		423.67M
ERTS	Electronic Arts Inc.	21.27	+0.23	1.07%		6.88B
MWYGQ	Midway Games Inc.	0.0275	-0.0025	-8.33%		2.54M
ATVI	Activision Blizzard, Inc.	12.53	+0.18	1.46%		15.94B
KNM	KONAMI CORPORATION (ADR)	18.71	-0.14	-0.74%

It wasn’t that long ago that many people were making the argument that video games–because of their relatively low cost and many hours of entertainment value–were seen as close to recession

-proof. But now, it would be hard for anyone to make that case.

Indeed, NPD analyst Anita Frazier wrote in a report Thursday that, “In order for the industry to come in flat or slightly up for the total year, the back five months of the year have to come in 11 percent (or more) higher than the last five months of last year.”

We’d rather go long than short the stocks mentioned above but if you can’t beat em, join em?

DISCLAIMER: NO POSITIONS IN ANY OF THE SECURITIES MENTIONED IN THIS PUBLICATION