2024 has been a difficult year for the U.S. video game industry. After explosive growth in the early years of the pandemic, when consumers stayed at home and bought games and consoles to pass the time, the gaming industry continues to struggle with declining sales.
In its latest quarterly report, Microsoft (MSFT) reported a 41% drop in Xbox hardware sales, while Sony (SONY) said it sold 2.4 million PlayStation 5 units during the same period last year, down from 3.3 million units. Nintendo (NTDOY), meanwhile, said hardware sales fell a staggering 46.3% during the quarter, from 3.91 million units to 2.10 million.
New games also struggled to gain traction as players continued to watch older titles like Fortnite, Call of Duty and Roblox.
At EA (EA), net purchases fell from $1.5 billion to $1.2 billion in the last quarter. In contrast, “Grand Theft Auto” publisher Take-Two Interactive (TTWO) reported slightly better profits than expected.
The industry’s overall poor performance can be attributed to a handful of factors, but the main causes include a combination of declining revenue and engagement compared to the early pandemic years, as well as the fact that the PlayStation 5, Xbox Series line, and Nintendo Switch are entering the later stages of their life cycles, where sales tend to decline.
But according to Mat Piscatella, video game industry consultant at Circana, the future of gaming looks brighter.
“The transition to the new normal in the video game market has not been painless,” Piscatella said in a press release. “However, the long-term outlook remains optimistic, with 2025 in particular holding significant growth potential.”
2025 should drive growth
2024 hasn’t been all bad for gaming. According to Circana, EA Sports College Football 25 has performed exceptionally well, taking the top spot as the best-selling game of the year so far, boosting hardware and accessory sales.
One of the most important launches of the coming year is Nintendo’s successor to the Switch.
Available since 2017, the Switch has been a runaway success for Nintendo thanks to its accessible games and captivating console design. The 2-in-1 Switch, which can be used to play games on a TV via a docking station or as a handheld system, is Nintendo’s second best-selling platform of all time after the Nintendo DS handheld, with a total of 143 million units sold. The company has also sold more software for the Switch than for any other console: 1.2 billion titles.
But the Switch, which was arguably underpowered when it launched compared to the PlayStation 4 and Xbox One X, is starting to look a little dated. Developers have tried to bring games developed for the PlayStation 5 and Xbox Series X to the Switch, but they’ve been poor ports to say the least. Just look at the much-criticized version of Mortal Kombat 1 for the Switch, which looked laughably bad compared to the PS5 and Xbox versions.
That said, Nintendo is behind on a new console. Although the company hasn’t revealed many details about the system, Nintendo president Shuntaro Furukawa noted on X, formerly known as Twitter, that the gaming giant will make an announcement about the Switch’s successor within the fiscal year.
Nintendo is reportedly launching the next generation of Switch sometime in March 2025, which could kick off a massive sales cycle for the Mario maker.
Circana noted that there is a surge in the industry for other portable gaming consoles in the style of the Switch, including handheld PC systems like Valve’s Steam Deck, which lets you play PC games on the go without the need for a bulky laptop.
The category is still in its early stages, but it’s being helped by companies like Sony, which has launched its PlayStation Portal, which lets you stream games wirelessly from your PlayStation wherever you have a decent connection. Microsoft is also reportedly working on its own portable device, though that’s probably a long way off.
“Grand Theft Auto VI” is going to be huge
The other big new release that will drive the gaming industry in 2025 is also one of the most anticipated games in years: “Grand Theft Auto VI”. The successor to the hugely successful “Grand Theft Auto V”, “GTA VI” is scheduled to hit the market in fall 2025.
According to Take-Two, GTA V is the best-selling game in the US in terms of units and revenue over the last 10 years. And it continues to dominate the charts. To date, Take-Two has sold 200 million copies of the title, and the online version GTA Online is drawing players into its world.
The excitement surrounding GTA VI will not only help Take-Two increase revenue. Sony and Microsoft are also likely to see an increase in console sales as consumers who have not yet purchased the systems snap them up to play the title.
The new Switch and GTA VI aren’t the only products that will boost the industry in 2025. Expect a steady stream of new releases that will help turn the fortunes of the gaming world in the coming year. And I’m already preparing my dent in the couch.
Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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