Report: 2025 Tracked For The Biggest Drop On Physical Sales In Three Decades

The landscape of gaming right now is in a very questionable state. While the industry is still in motion, what still lingers is for how long or if it is still sustainable. One big concern is the available chips to manufacture consoles or build PCs. It was reported that both Xbox & PlayStation could potential push its new hardware past estimated release plans. There is even a halt on gaming handhelds as well Rectify Gaming did an editorial on as the market is truly starting to kick off.

Atop of these challenges, general spending is at an all-time low. For Xbox, this has been no question with reports indicating that 2025 was a very weak year for its financial performance. However, it was discovered that overall consumer engagement has been at its worst in three decades as Black Friday revealed that spending was at its worst since 1995.

Now in a new thread on BlueSky, Circana senior director and video game industry analyst Mat Piscatella shared that physical games are also suffering as a result of this spending pattern. He previously indicated that this past holiday found tangible game purchases to be at a 14% decline, but goes on to share new information in this new thread.

“So yes, the rate of decline slowed. But that’s mostly because we’re nearing the bottom, and the launch of Switch 2 helped stabilize. There’s definitely something to be said for the desire to return to analog and non-connected devices, especially for Gen Z. But ‘dramatic shift’? Don’t see it, he added. “The peak for US new physical video game spending was 2008, at $11.6 billion. New physical video game spending has declined every year since. The sharpest decline was in 2024 (-28% vs YA), followed by 2012 (-22%).”

Physical games remain to see a sharp reduction with digital become ever more prevalent. Atop of the ordeal with Nintendo Switch 2 Game-Key Cards, PlayStation is forming a trend of games without physical as well. Alongside the approaching Marathon, there have been growing number of collector’s editions that only include a digital code. You can read the full report by heading here.

Are you surprised by this ongoing development in the gaming industry?