USA’s Video Game Industry Declined in 2024 – Is it Poised for Growth in 2025?

The U.S. video game market contracted considerably in 2024 during a year of economic turmoil and changing player tastes. Once considered a bulletproof sector, consumer spending of $58.7 billion marked a fall from the $59.3 billion spent the year before. Although the decline was not disastrous, it begged serious concerns about the sector’s direction.

However, as 2025 picks up, I believe that this decline might only be a transient change required before the next significant surge. With fresh technology, much-awaited games, and a changing market, the U.S. video games industry could just be laying the groundwork for a strong comeback.

What Went Wrong: The Downturn of 2024

I’ve listed some of the reasons the video game industry witnessed a downturn in the previous year:

Slump in Hardware Sales

Hardware sales, which fell dramatically from $6.5 billion in 2023 to just $4.9 billion in 2024, stood out as the most startling aspect of the fall. Software was very steady, so this decline could be explained by a maturing console cycle. Customers were not upgrading systems as often, and excitement in the hardware market languished without fresh flagship releases from heavyweights like Sony or Microsoft.

Economic Problems 

Many homes have had to reevaluate their entertainment spending in light of inflation and a higher cost of living. Consumer spending on very expensive AAA games and in-game purchases suffered. I have personally had to scale back my spending on games, and I know many others are in a similar situation. 

Digital Dominance Upends Retail

Further upsetting retail dynamics was the ongoing change from physical media to digital sales. Originally a mainstay of physical console sales, GameStop closed more than 500 outlets in 2024 alone. Even as platforms like Steam, Xbox Game Pass, and the PlayStation Store became dominant, this retail contraction had an impact on casual players who still favoured physical purchases. My preference is still for physical copies, but even I have had to turn to digital versions in recent years. 

Reasons To Be Bullish About The 2025 Video Game Industry 

Though there was a fall last year, all indicators point to 2025 reversing the trend, maybe drastically. I’ve highlighted a few key factors below: 

Nintendo’s New Console 

By the second half of 2025, Nintendo is getting ready to introduce the successor to the Switch, tentatively called “Switch 2”. Particularly with a supposed focus on improved third-party support and stronger technology, industry sources believe this next-generation hybrid system might compete with PlayStation and Xbox. Should it arrive before the holidays, I think there could be a significant increase in hardware sales.

New AAA Titles

Some of the industry’s biggest companies are getting ready for a blockbuster year. Anticipated for late 2025, Rockstar’s Grand Theft Auto VI is the most eagerly awaited game of the decade. Its release will most likely result in billions of sales, revive public interest, and encourage mass gear purchases.

While there are plenty of games to look forward to in 2025, I’m particularly excited for the following: 

• South of Midnight
• Elden Ring Nightrein
• Borderlands 4

I believe that these titles and the income surges they provide could be the difference-makers for industry performance.

Innovative Portable Consoles

Devices like ASUS’s ROG Ally and Valve’s Steam Deck have introduced a new class of portable, powerful, and incredibly customizable devices. These portable devices give players more freedom in how they play, therefore bridging the difference between mobile and console gaming.

Industry Voices Anticipate a Revival

DFC Intelligence claims that thanks to more worldwide market expansion and technical innovation, the industry is set for a great comeback. The U.S. still has the biggest video games market in the world, and the need for immersive entertainment has not diminished with last year’s downturn.

One overlooked element is the worldwide knock-on impact. Global patterns could also support the U.S. recovery as publishers create games for cross-market appeal. Aiming for both Eastern and Western audiences, companies like Epic Games, Activision Blizzard, and Take-Two Interactive keep ahead with broad ideas.

Pressures the Sector Could Experience

Pressures from Tariffs

Higher levies on imported devices could drive next-generation hardware prices, including the Switch 2, upward. In my opinion, this could slow uptake, especially among budget-conscious players.

Inflation in Game Prices 

From $60 to $70, the typical cost of a new AAA game has increased; certain games, like Nintendo’s most recent Mario Kart Ultimate Edition, surpassed $80. While die-hard supporters might pay up, more casual players would choose to wait for discounts or completely turn away. 

The Future of the Industry

The gambling sector is experiencing more overlap with video games. An increasing number of video games include real-money rewards and competitive components. Furthermore, there are developing synergies between esports, fantasy games, and online casinos, with more information available on AskGamblers. This increasing crossover with gambling will likely be a key driver for video game industry growth in 2025.

Of course, while increased crossover between gambling and gaming offers more entertainment opportunities, it’s always important to stay safe while doing so. GambleAware offers a range of tools to help you safely and securely manage your gambling activity.

One last word…

Though it was hardly a collapse, 2024 represented a cooling-off moment for the U.S. video games sector. I think that 2025 could show a significant comeback with fresh hardware releases, big games, and increasingly immersive portable experiences on the horizon.

Still, the sector cannot afford to coast. Developers and publishers have to strike a balance between cost and creativity so that new devices and titles are available in an unpredictable economic environment. Should they be successful, my belief is that interactive entertainment might usher in a new golden age rather than only a comeback.