"While year-to-date results are weak, there are some big titles set to be released over the next several months, including 'Madden' this month, which should help spur sales," NPD analyst Anita Frazier said in a statement.

The game market shrank 29 percent down to $848.9 million in July, according to NPD, with Nintendo Wii game sales dropping 55 percent, Sony PlayStation 3 sales slipping 46 percent and the Microsoft Xbox 360 console sales falling just 1 percent.  Despite June's sales figures dropping 31 percent over 12 months, industry insiders were still relieved that sales numbers totaled $1.17 billion.

"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," Frazier also noted in the report.  

When looking at the current trends of the video game industry, it seems highly unlikely it'll be at least 11 percent higher than the last five months of 2008.

It's unknown if the video game industry will have to face continued struggles over the next few months leading into the holiday shopping season, but at least one analyst believes there will be a turnaround in the immediate future.

"I think the silver lining is, we're in the trough of the decline," according to Wedbush Morgan analyst Michael Pacter.  "The bottom is worse than I thought, but I'm certain we've hit bottom."

July's lackluster sales will add pressure on Sony, Microsoft and Nintendo to cut prices on their consoles.  Sony has denied a price cut is in the works, but not making a move if its competitors slash prices would not be wise, analysts warn.