The U.S. video game industry fell 31 percent down to $1.17 billion in the month of June, according to research group NPD, who noted it's the largest decline for the game industry since 2000.

"This is one of the first months where I think the impact of the economy is clearly reflected in the sales numbers," NPD analyst Anita Frazier said.  "This level of decline is certainly going to cause some pain and reflection in the industry."

Video game software sales declined 29 percent down to $625.8 million, with hardware sales dropping 38 percent down to $382.6 million.  Video game accessories, including controllers and other add-ons, dropped 22 percent.

The best selling title in June was Activision Blizzard's Prototype, selling 419,900 units, with THQ's UFC 2009: Undisputed video game coming in second, selling 338,300 units.

"The first half of the year has been tough largely due to comparisons against a stellar first half performance last year," Frazier also said in the report.

It's likely consumers are waiting for blockbuster game titles releases and for hardware prices to fall -- then they'll think about spending money in the struggling video game industry.  Until then, consumers are expected to continue saving money during a turbulent economy that has hurt other technology sectors as well.

Although Sony is under pressure to slash the price of its PlayStation 3 game console, CEO Howard Stringer denies the need for a price cut any time soon.  The Microsoft Xbox 360 game console is expected to have a price cut this fall, while there are even rumors the $249 Nintendo Wii game console will drop prior to the 2009 holiday shopping season.

Analysts are optimistic the industry will pick up throughout the rest of the year, but console makers need to lower prices and each console must have at least one major game release.