Spending on video games down 2% so far in 2024

After enjoying several incredible years of success in a row, 2024 is now set to be a year filled with uncertainty for the video game industry. Circana, a tracking firm in the U.S. that focuses on consumer spending has shown that already in the first few months of the year, things aren’t looking so good.

The data shows that right now, sales figures are down by around 2% compared to that of 2023. While this decrease in sales is relatively small at the moment, some industry experts have already started to speculate that it could soon rise to over 10% or more in the coming months.

For the first time in years, the lack of certainty across the industry has reached almost unprecedented levels. Despite some hushed rumors here and there, there has of yet been no significant information about the future of console hardware, and there is also a distinct shortage of AAA games scheduled for release this year.

As proof of this, two of the biggest titles released so far this year have been Palworld and Helldivers 2. Both of which flew mostly under the radar before their release and both have now quickly become big hits.

Match this with the fact that it was another new IP, Hogwarts Legacy, that took the video game world by storm in 2023, and you might be looking at both a trend in gaming and a greater opportunity than ever for indie developers and new original titles to make their mark on the industry.

2025 is set to see some substantial releases like Grand Theft Auto 6 and Death Stranding 2 – to name just a few – as well as a potential Nintendo Switch 2 release. However, with all that said, this only highlights the fact that 2024 is shaping up to be a comparatively lackluster year.

With a scarce few ‘big’ games announced for upcoming release and simply some mid-generation updates to come for the PS5 and Xbox Series X/S, it will potentially be a ‘light’ year for gaming companies in terms of profits, unless something significant happens. Many fans will be looking forward to getting their hands on a PS5 Pro or an Xbox X/S refresh, but this won’t be enough to move the needle in terms of sales compared to other years.

On the bright side, gamers could be looking at a year filled with increased sales, deals, and promotions, bridged across all platforms in an attempt to minimize this decrease in consumer spending projected for 2024.

Another issue that has contributed to this recent decline in sales – particularly in the video game retail space – is the continuing shift away from physical games in favor of its digital counterpart. Video game stores have had to rapidly adapt to this change, as the ‘physical’ side of the industry continues to diminish.

The lack of new games and consoles also ties in with this, especially in regard to the Nintendo Switch. Sales of Nintendo Switch games are around 50% physical and 50% digital, which is way more than the now mostly digital other consoles. As a consequence, retail stores rely much more on Nintendo, so a lack of new titles or release of an updated Switch console will affect retailers the most.

Despite this, physical retail stores are not dead just yet. The data shows that items such as gift cards and game-specific gift cards for titles such as Roblox and Fortnite enjoyed considerable growth over the holiday period, and continue to be strong sellers for these stores. This might also be a way for retailers to stay afloat in the digital game space.

Up until now, digital sales haven’t been tracked as closely as that of physical sales. For instance, Nintendo’s digital sales aren’t tracked at all for the most part and smaller publishers such as the creators of Palworld have yet to become part of the tracking list.

The debate for focusing on physical sales over digital ones is that the data recorded is tangible and real. Therefore, that makes it more valuably quantifiable to have a list that contains real physical numbers rather than digital ones.

However, in our rapidly increasing digital age, this logic of thinking might be about to change as almost every media platform now uses digital makers to represent and measure value. Think of YouTube views or Instagram followers as an example. Even money is no longer backed by anything physical and talk of moving to digital currency is always a prevalent topic in current economic circles.

For now, top 20 lists for topics such as the best-selling games of the year will remain a physical affair. There are a number of reasons for this. For starters, lists like this get plenty of interest and views online and viewers can understand the numbers in relation to being an actual item. A digital list could also potentially be manipulated and tampered with, and this is something that can’t happen with a physical list.

Tracking firms such as Circana – which tracks multiple industries – acknowledge that the video game industry has many aspects that are unique. For the most part, the video game industry uses a distinctive business model, not to mention the level of secrecy between companies.

One thing is known for certain though and that is that 2024 is going to be a tough year for the industry. The saving grace is that 2025 looks to be shaping up to be another exciting and potentially groundbreaking year. Especially with GTA 6 confirmed to be released at some point in the year.

All in all, it has been an interesting couple of years in the world of gaming. From record-breaking releases to hardware shortages, big leaps in technology to massively buggy game launches, there is never really a dull moment when it comes to the gaming industry.

The excitement may slow down for a while in 2024 and things might get worse before they start to get better, but looking to the long-term, 2025 has the making to be another unforgettable year, with no doubt a few surprises and twists and turns along too.