US Video Game Industry Sees Revival

The US video game industry has experienced a rollercoaster ride over the past decade, marked by a surge in player engagement and revenue during the pandemic, followed by a decline as people returned to spending on experiences. However, with the supply of new-generation hardware stabilizing and blockbuster games being released, the market has begun to settle into a new normal. Circana, a leading market research firm, predicts that the US video game market will achieve 3% growth in 2023, reaching a total value of $58.3 billion. Several key factors are driving this growth, including improved hardware supply, the release of hit games, and shifting player engagement patterns. Over the past 12 months, hardware sales have played a significant role in driving market growth, with sales of new hardware products contributing $7 billion to the total $57 billion spent on video games in the US. This represents a 19% increase over the same period last year. The supply of new hardware has become more readily available, with PlayStation 5 being a top performer. Despite initial supply constraints, each console is comparing favorably to its predecessors, with PlayStation 5 trending 5% above PlayStation 4 and 87% ahead of PlayStation 3 in terms of units sold. The customer base for new video game hardware is also shifting, with high-income households contributing the most to current sales. This shift is likely due to factors such as higher prices for everyday spending categories and a move towards more expensive consoles like PlayStation 5. The growth of digital premium full game downloads has been a significant contributor to content performance, driven by prominent new releases and a shift towards digital downloads over physical discs. Blockbuster titles have offset declines in mobile and digital add-on content spending, while subscription spending has plateaued at around $400 million per month. Accessories spending has also seen an uptick, driven by the increased availability of PlayStation 5 and Xbox Series consoles, as well as replacement purchasing for headsets and headphones. Premium gamepads like the PlayStation DualSense Edge and Xbox Elite have also contributed to this growth. As the market continues to evolve, several trends are worth watching, including the competitive holiday season, the potential impact of student loan repayments on discretionary spending, and the growth of portable PC gaming. Despite potential turbulence, the US video game market remains a dynamic and rapidly changing landscape, with opportunities for growth and innovation in the short and long term.