Shares of Activision Blizzard Inc. and Electronic Arts Inc. declined Friday after October's video game retail sales report from the NPD Group showed a disappointing performance in the music genre.

Activision publishes the popular "Guitar Hero" series and EA publishes "Rock Band."

"The performance of the broader music genre as well as key new music genre releases 'Guitar Hero World Tour' and 'Rock Band 2' were probably the most negative data points of last night's release," wrote UBS analyst Benjamin Schachter in a client note.

Nonetheless, analysts were optimistic on the games industry as a whole amid the economic downturn and eroding consumer confidence. Americans spent $1.31 billion on video games last month, according to the market researcher. This is an 18 percent increase from the year-ago period.

The next few weeks leading up to the holidays are the most important part of the year for video game companies, because this is when they make most of their money.

"While we view strong headline software growth numbers and solid hardware trends as a clear positive for the industry, it's still early in the critical December quarter," Schachter wrote. He added it's "important to note that with most of the key holiday titles now launched, the core gamers appear to be holding up the industry."

Wedbush Morgan's Michael Pachter called overall sales growth for games software strong, implying that video games have yet to feel the effects of the economic downturn, but he added that several publishers (including Activision, EA and THQ) had weaker than expected results.

Shares of Redwood City, Calif.-based EA fell $1.56, or 7 percent, to $20.66 in midday trading. The stock has traded in a 52-week range of $19.28 and $60.35.

Shares of Santa Monica, Calif.-based Activision fell $1.77, or 14.1 percent, to $10.80.

"Grand Theft Auto" publisher Take-Two Interactive Software Inc., whose "NBA 2K9" game made it into the top 10 best-selling titles in October, rose 23 cents to $10.92.

Shares of THQ Inc., fell 20 cents, or 4.8 percent, to $4. The stock has traded between $3.68 and $29.94 in the past year.