Shares of video game companies took a hit Monday, even as rumors mounted about a looming price cut for Sony Corp.'s PlayStation 3.

The shares dropped just a few days after market researcher NPD Group reported a sharp drop in video game retail sales for the month of July. Much of this was due to slow console sales, as consumers are waiting to buy gaming systems because they are anticipating price cuts.

"Evidence is mounting that there will soon be a price cut on the PlayStation 3 (PS3), which could serve as just the catalyst the industry needs heading into the fourth quarter," wrote FTN Equity analyst James Hardiman in a note to investors. He added that an announcement "could be made as soon as Tuesday," when Sony takes the stage at a video game conference in Europe.

Hardiman initiated coverage of the video game sector Monday, starting Activision Blizzard Inc. with a "Buy" rating. The company's shares fell 60 cents, or 4.7 percent, to $12.09.

Shares of Electronic Arts Inc., which the analyst rates "Neutral," fell $1.66, or 7.8 percent, to $19.63.

Shares of Take-Two Interactive Software Inc. fell 39 cents, or 3.9 percent, to $9.71. Hardiman rates the company "Neutral."

Shares of THQ Inc. fell 55 cents, or 8.8 percent, to $5.70. The analyst rates the company "Neutral" as well.