U.S. video game industry spending fell 10% year-over-year to $4.5 billion in July 2026, driven by a record low in physical software sales. Physical game revenue hit an all-time July low of $85 million, the lowest monthly total recorded since tracking began in 1995.
Hardware spending dropped 29% to $282 million as unit volume plunged 39%. Despite a 51% drop from its 2025 launch, the Nintendo Switch 2 led in units, while the PlayStation 5 led in revenue. Call of Duty: Black Ops 2 topped software charts after its PS5 port.
Rising costs define the market, with average device prices up 16% to $542. By September 2026, all current consoles will cost more than at launch, with the Xbox Series X hitting $800. Sony also plans to phase out physical disc manufacturing by the year 2028.