According to a recently released NPD report, console sales have declined significantly in the past twelve months.

The report shows that all consoles, with the exception of Sony’s PlayStation 3 and to a lesser degree Microsoft’s Xbox 360 saw a significant decrease in sales over the year.

According to the report, video game sales in the US from January 2009 to January 2010 were $1.17 billion, a 13 percent decrease from the previous year.

Overall the PS3 led the growth – showing a 36% year on year increase. Behind it was the Xbox 360 which showed a 7.7% increase.

The biggest loser was, predictably, the PlayStation 2 which showed a massive 59% decrease in sales. Behind that was the Sony PSP which declined by 42%.

The only major console manufacturer to see solid decline across the board was Nintendo, which saw sales decline by 31% and 17% for the Wii and the DS respectively.

Some may argue that the release of the PS3 Slim and the subsequent decline of PS3 prices across the board may have spurred this trend; although, both Microsoft and Nintendo quickly followed suit with price cuts of their own.

It would seem that consumers appear to be drifting away from handheld or novelty/casual consoles towards those which provide more high tech, high definition options.

In 2009 it seems that people became more aware of High Definition and online gaming. Nintendo caught the attention of the casual market in 2007 and 2008, but it seems that Sony and Microsoft did the same in 2009 and is expecred  to do so in 2010.

This leaves Nintendo in a rather sticky situation – should it flog what’s left of a console in decline before the PS3 Arc and Project Natal, or go back to the drawing board before it’s too late?