Is it game over for the video game market? Not quite, but after a couple of years of explosive growth, sales are declining.
From 2019 to 2021, the video game market blew up—growing 26 percent to a record $191 billion. CNBC cites data showing that video game sales have consistently grown since 2015. But the really explosive sales were driven by the pandemic, which kept people locked down inside, and then the introductions, by Microsoft and Sony, of the newest Xbox and Playstation consoles that gamers could not wait to buy and use.
But 2022 is different, and growth is slowing. Video game sales are expected to contract 1.2 percent in 2022, to $188 billion. Sales have already fallen 13 percent in the second quarter, and fell 8 percent in the first quarter.
Why? A combination of factors seems to be at work, including people being out in the physical world again, spending money on travel, concerts, and basically everything that is not sitting in front of a screen at home. Inflation and consumer wariness about a possible recession on the horizon are not helping matters. Furthermore, industry executives and analysts have noted that the “dearth” of exciting new products is another contributing factor. Even the war in Ukraine is having an effect, in that some game companies have suspended operations in Russia—a very big market, whose loss as a destination for consoles and games is expected to lead to $1.2 billion less in sales.
But hope is not lost. First of all, sales are still up from pre-pandemic levels. And second of all, there’s still a lot of people playing video games, and they account for a promisingly large market—216 million players in the United States alone in 2021, the last year for which data were available. That’s noticeably lower than 2020’s 227 million—but higher than the figure from 2020, which was 214 million.
- Why are video game sales slowing down?
- What could make sales go back up?
- How would you attract more buying, if you were advising a video game company?
Source: Sarah E. Needleman, “Videogame Companies Face Slowdown as People Spend Less on Gaming,” The Wall Street Journal, August 9, 2022; Ryan Browne, “Video Game Sales Set to Fall for First Time in Years as Industry Braces for Recession,” CNBC, July 7, 2022; Stephen Totilo, “Number of Video Game Players in U.S. Dips After Pandemic Surge,” Axios, June 7, 2022