U.S. consumer spending on video game hardware, content and accessories is now projected to reach $55.5 billion in 2022, a decline of 8.7% when compared to 2021.
Some of the drivers of the decline include the return of experiential spending, higher prices in everyday spending categories such as food and fuel, the uncertain supply of video game console hardware and certain accessories such as gamepads, and a lighter release slate of games, among others.
The surge in video game players and engagement the market experienced during 2020 and 2021 has leveled off, and we are now seeing more entertainment opportunities emerge that compete for consumer attention and, of course, dollars.
In hardware, the video game console market has yet to reflect normalized demand given ongoing supply constraints, particularly on new generation systems such as the PlayStation 5 and the Xbox Series X. This is not likely to change throughout 2022 and will lead to continued uncertainty for the market.
On the content front, the expectation is that year-on-year declines will be experienced across PC, console and mobile platforms in both premium game sales and recurrent post-launch spending. The only category of content spending expected to gain when compared to a year ago is subscription spending.
Accessory sales are also expected to fall when compared to 2021, driven by the headset/headphone category. While headset/headphone sales continue to trend above pre-pandemic norms, they are failing to meet the sharp gains experienced earlier in the pandemic with the rise of learning and working from home.
Projected among the top 10 best-selling premium games of 2022 are (in alphabetical order): Call of Duty: Modern Warfare 2, Elden Ring, God of War Ragnarök, Gotham Knights, Horizon: Forbidden West, LEGO Star Wars: The Skywalker Saga, Madden NFL 23, NBA 2K23, Pokémon Legends: Arceus, and Pokémon Scarlet/Violet. This is, of course, pending changes to assumed release timing for announced games, and any surprise releases the market may see.
Some predictions for 2022 at the year’s halfway mark:
- Switch will lead 2022 console hardware in units sold, with dollar leadership a too-close-to-call race between Switch, PlayStation 5, and Xbox Series.
- Xbox Series will be the only console hardware platform to show dollar sales growth compared to 2021.
- Hardware shortages will continue into 2023, particularly on PlayStation 5 and Xbox Series X, while potentially impacting other segments such as VR.
- Elden Ring will finish as 2022’s best-selling premium game in the U.S. market, marking only the 3rd time since 2009 that a Call of Duty franchise release does not lead the market.
- Despite Elden Ring leading the individual title charts, Call of Duty will remain the U.S. market’s best-selling premium gaming franchise for a record 14th consecutive year.
- Increased PC GPU availability and price declines will incentivize PC gamers to upgrade and make PC gaming an even more appealing consumer option.
- Subscription will be 2022’s only video game content growth segment.
We are living in interesting times. And while, generally, the video game market can be at least partially insulated from factors impacting the wider economy, the return of experiential spending and higher pricing in everyday spending categories appear to be impacting the space. The continued challenges in manufacturing, particularly in bringing new consoles and accessories such as gamepads to market is also playing a role, as is the lighter release slate of premium gaming content.
There are many known unknowns when trying to predict what’s next, and a list of unknown unknowns that may be more extensive. In the short-term, this means likely declines, uncertainty, and turbulence. While in the long-term, the growth prospects of the video game space remain as strong as they’ve ever been.