NPD Group and the iGEA have reported that Australia saw AUD$1.161 billion in traditional retail sales for 2012.
The figure represents a 23% contraction from last year's sales, but the iGEA, Telsyte and GDAA all remain confident in the industry's ability to pick up the slack in the form of digital downloads and subscription services.
NPD noted an increase in annualised franchises including FIFA, Call of Duty, Assassin's Creed and Skylanders.
The top ten selling titles in December 2012 represented 46% of total sales, a 12% increase over 2011.
Guild Wars 2 and Diablo III were cited as being strong reasons why the PC games market saw an increase in unit sales of 3.4%.
Hardware overall dropped 26.9%, while home console hardware dropped 10.6%.
Price-conscious consumers led the Christmas rush, with the value of hardware bundles grew 66% year-on-year in December.
The peripherals market was the only one to show solid growth in units and value (presumably not including digital), with Skylanders forming a big part of its 20% unit sales increase.