America's video game boom is stalling out
The industry now finds itself in an unusual position of selling plenty of devices to play games on — but struggling to sell the games themselves
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The video game industry generates almost $189 billion in annual revenue and reaches 3.6 billion players worldwide, dwarfing Hollywood's box office take and rivaling the global music industry. For a generation of developers, designers, and artists, gaming represents not just entertainment but a viable creative career, a chance to build worlds that millions will inhabit.
That growth story is now stalling out.
New data from market research firm Circana reveals that 63% of U.S. gamers now purchase two games or fewer per year, and a third of American gamers don't buy any new games at all in a typical 12-month period.
The Nintendo Switch 2 is smashing records and hardware sales are up 20% this year, yet Americans have largely stopped buying the software that developers pour years of their lives into creating.
This represents a dramatic shift for an industry that enjoyed nearly a decade of explosive growth. Consumer spending on games grew by an average of almost 10% annually through 2021, fueled by smartphone ubiquity and pandemic lockdowns that turned casual users into regular players. But that momentum has evaporated. Spending in 2025 has grown by less than 1%, according to estimates from Ampere Analysis.
The decline marks a fundamental change in how Americans engage with gaming. While hardware like the Switch 2 is outpacing the original Switch by 77% at the same point in its lifecycle, software purchases are stagnating. The industry now finds itself in an unusual position of selling plenty of devices to play games on — but struggling to sell the games themselves.
Only superfans are still buying games
This shift likely reflects several overlapping trends. Subscription services like Xbox Game Pass allow players to access hundreds of titles without buying them individually. Free-to-play games like Fortnite and Roblox $RBLX are extremely popular and don’t require upfront purchases. And so-called live-service games, which continuously add new content rather than releasing sequels, keep players occupied with a single title for months or years. Apex Legends, now in its sixth year, exemplifies how one game can satisfy players indefinitely.
It's possible players are spending as much as ever, just in ways that don't show up in sales data. Micro-transactions and in-game purchases, which aren't typically counted as game sales, may also be cannibalizing traditional software revenue. A player spending $10 monthly on Fortnite skins for their in-game characters generates more annual revenue than someone who buys one $70 game, but only the latter registers as a game sale in industry statistics.
These economic pressures are reshaping the industry's structure. Electronic Arts $EA, maker of the FIFA and Battlefield franchises, was recently taken private in a $55 billion deal backed by Saudi Arabia's Public Investment Fund. The move will saddle EA with $20 billion in debt, likely pushing the company to double down on lucrative but controversial monetization tactics like loot boxes (randomized paid rewards) and battle passes (seasonal paid content) rather than experimenting with new intellectual property.
The few mega-hits propping up the industry
The stagnation in game purchases makes the industry increasingly dependent on blockbuster releases. Grand Theft Auto VI, launching later this year after a 13-year wait, is expected to generate more than $3 billion in its first year, potentially the most valuable launch in entertainment history. EA's Battlefield 6 became 2025's best-selling US game in less than a month.
But these mega-hits are rare, expensive to produce, and risky to develop. Video game budgets have ballooned, with top titles now costing hundreds of millions of dollars and taking five to seven years to complete. The industry's concentration around a few massive franchises leaves little room for mid-budget games or experimental titles.
Adding to the uncertainty, the industry is divided over AI's role. Gaming executives such as Razer CEO Min-Liang Tan predict AI will ”completely disrupt everything,” from how games are developed to how players engage with them. Some see AI as a solution to ballooning development costs — automating testing, generating assets, speeding up production. But others view it as an existential threat to creative work. Indie developers are now marketing their games as ”AI free,” with a golden cog-shaped seal declaring ”no gen AI was used” appearing on store pages as a badge of honor for human-made games.
The Switch 2's record-breaking hardware sales suggest Americans still want to game. They're just not buying games the way they used to. Whether the industry can adapt its business models to match this new reality will determine its trajectory for years to come.
For now, a handful of devoted superfans and a few massive franchises are holding the entire market together.