The June NPD numbers are out for console sales and things are grim out there. It’s another nail in the coffin for gaming’s recession resistance as console sales plummeted 38% relative to this time last year. Microsoft was quick on the spin, however, pointing out that the 360 enjoyed modest growth in the face of the overall downturn as well as a hefty 73% growth in Xbox LIVE paid downloads. Microsoft is still playing third fiddle to Nintendo’s DS and Wii overall, though their exclusive growth probably assuages the angst somewhat.

It’s difficult to say if tightening purse strings are solely responsible for the shrinkage. The summer doldrums have also set in as publishers gear up for the impending holiday season, and could well result in a lack of perceived value that’s really driving the loss. A 40% contraction would sting far more in December when the industry has its most tempting offerings, and so would make a more convincing metric for the health of gaming at large.

The expansion of digital distribution is consistent with a dearth of compelling retail titles, as gamers turn to Xbox LIVE for a gaming fix they can’t find on the shelves. Unfortunately, price is conflated with availability, so it’s just as plausible that frugal gamers are turning to digital distribution as a way to get more bang for their bucks and the doldrums aren’t creating an especially bad console market. Time will tell, so we’ll let you know if anything interesting comes out of the December numbers.

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