US video game market spending falls as physical sales hit record July low

The U.S. video game market experienced a significant downturn in July 2026, with total consumer spending falling 10% year-over-year to $4.5 billion. According to data from Circana, physical software sales hit an all-time July low of $85 million, the lowest since tracking began in 1995.

Hardware sales saw a sharp decline, with spending dropping 29% to $282 million. While unit sales fell 39%, the average selling price of consoles rose 16% to $542, driven by a component and RAM crisis. Among major platforms, Nintendo Switch 2 led in units sold despite a 51% decline from its previous year's launch period, while PlayStation 5 generated the highest revenue.

In software, Call of Duty: Black Ops 2 led the charts, driven by its recent release on PS4 and PS5. The top ten list featured several legacy titles and remakes, reflecting a trend toward older franchises.

The industry is also navigating a major shift toward digital formats. This transition is underscored by Sony’s announcement to end physical disc production for new PlayStation games by 2028, a move that has sparked debate regarding game ownership and preservation.