Sliding activity challenges outfits like Walt Disney (DIS) and Zynga (ZNGA), maker of "Farmville" and other social games often played on Facebook (FB), as well as makers of traditional PC and console games such as Electronic Arts (EA), Take Two Interactive(TTWO) and THQ (THQI) and Activision Blizzard (ATVI), though the latter's aided by its action role-playing game "Diablo III."

In late-afternoon trading, Zynga shares dropped 5%, Electronic Arts 3.6%, Take Two Interactive 2.3% and Activision Blizzard 0.2%, while console maker Microsoft (MSFT) fell 1.6% and Nintendo (NTDOY) 1.3%.

NPD Group reports official June video game sales on Thursday. Year-over-year industry sales have been down for months, and Cowen & Co. analyst Doug Creutz says traditional game publishers have pared their release slates. In a research note Tuesday he also calls PC-based social gaming "an evolutionary dead-end" giving way to mobile platforms.

More than half of the 20 top-grossing titles on Facebook are more than a year old, Creutz says, but 17 of the top 20 games on Apple's (AAPL) iPhone are under a year old. He notes that the top-grossing iPhone game in June was Kabam's "Kingdoms of Camelot: Battle for the North."

Time Warner's (TWX) "Lego Batman 2" is apt to top June packaged game charts with about 350,000 units sold, Creutz estimates, while "Diablo III" will help Activision Blizzard boost its comparable sales about 17% year over year. He forecasts EA's will be down 49%, Take Two's 53% and THQ's 67%.

Aging game consoles like Sony's (SNE) PlayStation 3, Microsoft's Xbox 360 and Nintendo's Wii appear to be losing luster. But digital downloads of games and add-ons seem to be climbing, fueled in part by a shift to handheld games.

Creutz predicts that video-game sales should begin to pick up in the second half of the year, with game companies back-loading release dates to capture more holiday sales.

Also, makers will eventually update those consoles. Nintendo, whose Wii sales have fallen the most sharply, is expected to release a next generation Wii U in November. Sony has previously said its almost 6-year-old PS3 still has a lot of life in it. But Creutz thinks Sony and Microsoft could be rolling out more powerful machines in the fall of 2013.

"Despite continued NPD softness, we believe video game publisher shares are positioned for improving performance over the next 18 months," he said in one of two research notes on gaming Tuesday. It's "due to the historically positive trading period beginning a year ahead of a new console cycle, which we expect to kick off in earnest in fall 2013 with the potential launches of the next Xbox and PlayStation consoles."