Brett Molina

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Shares of video game retailer GameStop plunged nearly 20% to $36.50 in afternoon trading after releasing a mixed report on holiday sales.

The company reported total global sales of $3.15 billion, up 9.3% from the same time last year. However, sales of new video game software dipped more than 22% compared to the same time last year.

The slump in software was offset by hardware sales that were nearly double that of the 2012 holiday, thanks to the arrival of Sony's PlayStation 4 and Microsoft's Xbox One.

Sterne Agee analyst Arvind Bhatia says the dip in new video game software -- which consists primarily of games on older systems -- and surge in hardware signals that "people are moving on to the next gen faster."

"It's a classic transition time," says Bhatia.

Both the PS4 and Xbox One have gotten off to strong starts at retail. Sales of the PS4 reached 4.2 million worldwide, while the Xbox One has topped 3 million. The combined 7.2 million in sales is ahead of an expected 6 million in sales, Bhatia says.

Last week, GameStop shares were hit after Sony announced a new cloud-based gaming service that would allow users to either rent individual titles from the PlayStation, PS2 and PS3 libraries, or start a subscription for greater access.

Follow Brett Molina on Twitter: @bam923.