U.S. retail sales of video game consoles and software dropped 4 percent in January but the falloff would have been larger if not for the burgeoning popularity of Ubisoft’s “Just Dance 2” and other dancing games.

Market researcher NPD Group reported last week that total sales of game software, hardware and accessories, such as Microsoft Corp.’s Kinect motion-sensing controller, were $1.14 billion last month. That’s down from $1.18 billion in January 2010.

Hardware sales fell 8 percent to $324 million from $353.7 million.

Software sales slipped 5 percent to $576 million from $606.8 million. That’s a smaller drop than the 8 percent falloff in software sales that analysts had been expecting.

((Editor’s note: Check out WRAL Tech Wire’s 2011 Triangle Gaming series starting today with an inside look at Epic Games. Read the exclusive interview here.)

According to GameSpy, Microsoft said sales of its Xbox 360 console increased 15 percent to 381,000. Nintendo said it sold 320,000 Wii platforms. Sony PlayStation 3 model sales were 267,000. Only Xbox 360 sales were up over last year.

However, PlayStation 3 software sales were up 25 percent compared to January 2010

The top 10 selling games, as reported by GameSpy followed by platform and publisher::

1. Call of Duty: Black Ops (360, PS3, WII, NDS, PC) Activision Blizzard
2. Just Dance 2 (WII) Ubisoft
3. Dead Space 2 (360, PS3, PC) Electronic Arts
4. Little Big Planet 2 (PS3) Sony
5. Zumba Fitness: Join the Party (WII, 360, PS3) Majesco
6. NBA 2K11 (360, PS3, PSP, WII, PS2, PC) Take 2 Interactive
7. Assassin’s Creed: Brotherhood (360, PS3) Ubisoft
8. Dance Central (360) MTV Games
9. Michael Jackson The Experience (WII, DS, PSP) Ubisoft
10. DC Universe Online (PS3, PC) Sony

Jesse Divnich, an analyst at Electronic Entertainment Design and Research, said the smaller-than-expected decline was due to strong sales of dancing games, which are just starting to take off.

The month’s best-selling game was, as expected, the blockbuster shooter “Call of Duty: Black Ops” from Activision Blizzard Inc. The game set entertainment industry records when it launched last November.

But “Just Dance 2” came in at No. 2 and another dance game, “Dance Central,” which works with the Kinect, was also in the top 10. A dance-exercise game, “Zumba Fitness: Join the Party,” was No. 5.

“It’s not typical to see this style of game do this well outside of the holiday season,” Divnich said. “Dancing is going to be the new craze.”

But, he added, “it’s not going to last forever.” Case in point: Activision killed off the iconic “Guitar Hero” last week, due to sluggish demand for the once-unstoppable franchise.

Divnich said software sales are on the decline because more people are acquiring games through digital means — as downloads, for example — rather than going to stores to buy a packaged disc. NPD does not include game downloads in its monthly sales data, so the numbers can show a decline even if more people are playing games.

Sales of video game accessories rose 6 percent to $235.1 million.

Read the full GameSpy report here.

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