The video game industry is low on its health bar.

April was a savage month for the sector. Industry tracker NPD Group is reporting that U.S. hardware and software sales fell 26% to $766.2 million.

It's not pretty. Software sales fell 22%, with a sharper 37% slide on the hardware side. If the results were stacked against a buoyant April last year, a letdown would be normal. Unfortunately, sales were on the receiving end of a 17% smackdown in April 2009, too.

We can go back to a robust April in 2008 when Take-Two Interactive's (Nasdaq: TTWO) Grand Theft Auto IV broke records, but what's the point? This isn't just a monthly anomaly. Year-over-year sales have been falling sharply for most of the past year.

I may have rubbed die-hard gamers the wrong way when I was bearish on the industry's prospects last summer on CNBC, but was I wrong? There have been the occasional hit releases, but folks just don't seem to buying games the way they used to. A year ago, the argument was that the recession was holding consumers back -- even as multiplex operators had no problem turning in a record year at the box office. Now that general retail sales have been going higher, who wants to explain why video games aren't hopping on the recovery bandwagon?

Sure, console makers did break out price cuts heading into last year's critical holiday shopping season. A 37% slide in sales doesn't mean a 37% slide in units. However, the 22% drop on the software front says it all -- especially because hardware discounts were supposed to breathe new life into the titles themselves.

Some will argue that NPD Group doesn't cover all of the industry's distribution channels, but that's not going to help GameStop (NYSE: GME). Analysts see the specialty retailer posting improving quarterly earnings on Thursday. I wouldn't be so sure about that. Any growth in this industry is taking place in the mobile and social fronts, where game prices are substantially lower and transactions skirt around GameStop's physical distribution.

Electronic Arts (Nasdaq: ERTS) reported that 13.7% of its sales came from downloads and online subscriptions in its latest quarter, but management sees those sales growing at a 30% clip next year. Models are changing -- and the success of Microsoft's (Nasdaq: MSFT) Xbox Live and Apple's (Nasdaq: AAPL) iPod touch, iPhone, and now iPad can't be ignored.

Die-hard gamers will disagree, naturally. They're not the ones fertilizing virtual crops on Facebook's free FarmVille or downloading $0.99 games through Apple's App Store. However, the industry needs mainstream acceptance to fit back into its 2008 swimsuit. The public has moved on, with apparently little time left over for hardcore gaming.

Disagree with me? Let me have it in the comments box below.

Microsoft is a Motley Fool Inside Value pick. Take-Two Interactive Software is a Rule Breakers selection. Apple and Electronic Arts are Stock Advisor recommendations. Motley Fool Options has recommended a write-covered- calls position on GameStop and a diagonal call position on Microsoft. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz loves playing video games but doesn't own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.