US video game spending saw a significant decline in July, falling 10% year-over-year. New data from Circana reveals record lows in physical software sales and a sharp drop in hardware spending.
- Total US video game spending fell 10% to $4.5 billion in July.
- Physical software sales hit an all-time July low of $85 million.
- Hardware spending dropped 29% compared to last year.
- Average hardware selling price rose by 16% to $542.
The US video game industry faced a significant downturn this July. According to recent data released by Circana, total video game spending in the United States plummeted by 10% year-over-year, settling at $4.5 billion. This slump marks a departure from the steady growth seen in previous months.
Record Lows in Software and Hardware
The decline was particularly evident in the physical media sector. New physical software sales reached a staggering all-time July low of just $85 million—the lowest since Circana began tracking data in 1995. Simultaneously, hardware sales saw a sharp contraction, hitting their lowest July levels since 2020.
Mat Piscatella, Senior Director of Video Games at Circana, noted that while unit sales fell by 39%, the average selling price of new hardware jumped by 16% to $542. This price hike, driven by ongoing component crises, has significantly dampened consumer enthusiasm for new consoles.
Why This Matters
BozokMedia analysis shows that the rising cost of entry into the next generation of gaming is creating a barrier for many consumers. As hardware becomes more expensive, the velocity of console adoption slows down, impacting the entire ecosystem of software and services.
Higher hardware prices driven by the components crisis have had a significant impact on PS5 and Xbox Series X|S sales.
Looking at specific platforms, PlayStation 5 unit sales dipped by 6%, while Xbox Series saw an 18% decline. Interestingly, the Nintendo Switch 2 experienced a 51% decline in unit sales compared to last July, yet it remains a powerhouse, outselling the original Switch by 11% during its 14 months on the market.
Content Trends and Top Performers
Content spending also fell by 9% to $4.1 billion, largely driven by a decline in mobile gaming. However, certain titles defied the trend. Call of Duty: Black Ops 2 emerged as the top seller in dollar sales, bolstered by its recent port. Meanwhile, Pokemon Go saw a massive resurgence, with revenue surging +230% month-over-month due to its 10th-anniversary celebrations.
| Game Title | Performance Metric |
|---|---|
| Call of Duty: Black Ops 2 | #1 in July Dollar Sales |
| Pokemon Go | +230% MoM Revenue Growth |
| Resident Evil: Requiem | Best-selling game of 2026 YTD |
| GTA 6 | Projected $400M pre-launch revenue |
Frequently Asked Questions
Q1: Why is hardware spending declining?
A1: Increased average selling prices due to component shortages are making consoles less affordable.
Q2: Which game had the biggest growth in July?
A2: Pokemon Go saw a massive 230% increase in revenue due to anniversary events.
