We’re approaching that time of the year when people begin asking me about my expectations for the holidays. My current expectation is that fourth quarter spending on video game content, hardware and accessories in the U.S. will increase 3% when compared to the fourth quarter of 2020, reaching $18.9 billion. Further, I expect that full-year 2021 sales will total $61.7 billion, an increase of 10% when compared to 2020.

I also expect to be wrong.

The current global supply chain and component challenges impacting everything from appliances to autos continue to have a significant influence on the video game market. New console hardware supply has been unpredictable and insufficient to meet demand. Accessories, such as gamepads and headsets, have also been intermittently affected by these hurdles. Content is not exempt from these challenges either. Many game development studios have been forced to delay expected releases due to ongoing issues associated with the pandemic.

These factors have combined to make the video game market unpredictable. The sales results published each month reflect as much the integrity of the supply chain as they do ongoing consumer demand.

There are few signs that relief will come in 2021, or even well into 2022. Because of these factors, when it comes to fourth quarter results, what I am really expecting is more of the unexpected.

On to the predictions…

No relief expected for console hardware shortages

PlayStation 5 and Xbox Series consoles have been selling out as soon as they are replenished even months after launch. This will not change for the holiday quarter, with the result that a great deal of demand will remain unsatiated. Alternative video game products may benefit, so long as these products also remain in stock. Rather than the gift on the list, consumers may simply have to pick from what’s available.

Subscription and mobile will continue to thrive

Through August 2021, year-to-date spending on mobile gaming has increased 10%, while spending on gaming subscription services has grown 7%. I expect these growth rates to tick up in the holiday quarter. On the subscription side, holiday releases such as Halo Infinite and Forza Horizon 5 coming to the Xbox Game Pass Ultimate service on day 1 should provide a meaningful boost.

Nintendo Switch will lead the hardware market in unit sales, while PlayStation 5 will rank first in dollars

PlayStation 5 continues to trend as the fastest unit-selling PlayStation console in U.S. history; However, due to price differences, Nintendo Switch is likely to lead in fourth quarter in hardware unit sales, while PlayStation 5 is likely to lead the market in hardware dollar sales.

Call of Duty: Vanguard will be the quarter’s best-selling game, but watch out for Grand Theft Auto: The Trilogy – The Definitive Edition

A Call of Duty game has been the best-selling game of its release month for an amazing 13 consecutive years, and that trend should hold in 2021. I’m also expecting Call of Duty: Vanguard to finish as 2021’s best-selling game of the year. However, I also wouldn’t be surprised to see Grand Theft Auto: The Trilogy – The Definitive Edition pushing for that position. This release will feature Grand Theft Auto 3, Vice City, and San Andreas in one package, including graphical improvements and modern gameplay enhancements. A release date has not yet been announced.

Despite supply and production challenges, 2021 spending could set new records across all gaming segments

Through August, video game hardware (+49% versus a year ago), accessories (+12%) and content (+11%) were trending at record levels. Even with intermittent supply, production hurdles, and content delays, we still may see each segment set new annual records. Coming into the year that was certainly not the expectation. But again, continue to expect the unexpected.

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