Overall sales fell 20 percent to $515.6 million.
Software sales the video games themselves excluding PC titles fell 9 percent from a year earlier to $237.7 million. Sales of hardware such as Microsoft Corp.'s Xbox 360 and Sony Corp.'s PlayStation 3 fell 39 percent to $150.6 million. Accessories slid 7 percent to $127.3 million.
Xbox 360 sold 193,000 units in August to be the top selling console for the 20th consecutive month.
The study from NPD Group tracks sales of new physical products about 50 percent of the total spending. Excluded are sales of used games and rentals as well as digital and social-network spending. The research firm estimates that when including these, Americans spent $989 million on games in August.
Despite the sharp decline, analyst Todd Mitchell called August's results a "potential bright spot" for video game software. The analyst with Brean Murray Carret noted that it was hardware that dragged on the month, while software sales dipped just 9 percent. New titles, he said, helped boost the year-long video game slump and teased a "possible inflection point."
"A number of blockbusters are expected to be released in September, which could boost software sales into positive territory for the first time in 2012," he added.
NPD also listed the top-selling games in August:
1. "Darksiders II" (THQ Inc)
2. "New Super Mario Bros 2" (Nintendo Co.)
3. "Kingdom Hearts 3D: Dream Drop Distance" (Square Enix Inc.)
4. "NCAA Football 13" (Electronic Arts Inc.)
5. "Lego Batman 2: DC Super Heroes" (Time Warner Inc.'s Warner Bros. Interactive)
6. "Sleeping Dogs" (Square Enix Inc.)
7. "Transformers: Fall of Cybertron" (Activision Blizzard Inc.)
8. "Batman: Arkham City" (Warner Bros. Interactive)
9. "Call of Duty: Black Ops" (Activision Blizzard)
10. "The Amazing Spider-Man" (Activision Blizzard)