The official software sales figures for March in North America show a drop of 8 per cent compared to the same period last year, but fared 10 per cent better than recent forecasts from US market analysts.
Last week, Michael Pachter of Wedbush Morgan predicted a decline of 18 per cent compared to the same month in 2005, and Lazard Capital's Colin Sebastian echoed the gloomy outlook with an estimated 20 per cent drop.
Both analysts admitted however, that the previous year's figures were significantly boosted by the release of Gran Turismo 4, and the US launch of Sony's PSP, making a direct comparison difficult.
Despite more positive software sales than anticipated, helped by the launch of titles such as Oblivion and Kingdom Hearts II, the market remains in decline as consumers await the completion of a full transition to next-generation hardware.
Overall sales - which include software, hardware and accessories - are down 16 per cent, and, perhaps unsurprisingly, hardware sales were hit hardest, with a decline of 31 per cent compared to 2005.
The true test will be in the coming months, as consumers prepare for the latest next-gen launches, which will have a direct impact on current generation sales of both hardware and software.
Echoing Pachter's comments last week, NPD's game analyst, Anita Frazier, told the Associated Press that "things are likely to get worse before they get better. As we get closer to the release of PlayStation 3 and Revolution, more consumers will likely delay purchases in anticipation of a pricey hardware purchase."