Sales of video game equipment and software in the United States tumbled 19 percent in October to $1.07 billion, research group NPD said on Thursday, troubling figures as the industry heads into the most important selling weeks of the year.

Once thought to be relatively insulated from economic concerns, video games have had a difficult year, with sales in the once robust music software category flagging and few blockbuster titles to compel worried consumers to spend.

Price cuts on the home game consoles have had little impact, as evidenced by a 23 percent decline in U.S. hardware sales in October.

It's clear that the consumer's not back yet, said Wedbush Morgan analyst Michael Pachter. The games were good, but hardware was surprisingly low.

Nintendo Co Ltd's <7974.OS> Wii returned to the No. 1 in the monthly home game console rankings, following last month's surge to the top by Sony Corp's <6758.T> PlayStation 3.

The Wii sold 507,000 units in the U.S. in October, followed by 321,000 for the PS3 and 250,000 for Microsoft Corp and its Xbox 360. Sony said the PS3 was the only console to see year-over-year growth.

But Nintendo of America President Reggie Fils-Aime sounded upbeat on the remainder of the year and disputed the notion that demand for the Wii and DS handheld system are fading.

Our projections for November and December continue to be very strong. We have seen some holiday seasonal pickup, which means consumers are out and buying.

U.S. software sales dropped 18 percent in October, NPD said, while sales of video game accessories were off 2 percent. Sony's Uncharted 2 was the top-selling title in the month.

The music/dance category continued to be a thorn in the side of the industry, with sales down 60 percent from a year ago.

The continued economic turmoil, and in particular the troubling unemployment rate, is undoubtedly impacting industry sales, NPD analyst Anita Frazier said in a statement.

Earlier this week, software giant Electronic Arts Inc said it would slash 1,500 jobs in another round of cost-cutting.

Still, there are some bright spots in the industry. Activision Blizzard Inc said Thursday it smashed first-day sales records with the launch of Call of Duty: Modern Warfare 2 earlier in the week.

(Reporting by Gabriel Madway; editing by Andre Grenon)

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