The video game industry had a stellar 2018, with record-breaking sales of software and hardware combined. But don’t expect a similar performance in 2019.
U.S. video game-related sales climbed 18% to $43.4 billion last year, shattering the previous record of $36.9 billion set in 2017, according to the Entertainment Software Association and the NPD Group.
Breaking down the total for 2018, software sales — meaning game titles, in-game purchases, and subscriptions — saw record growth rising 18% to $35.8 billion. Meanwhile, hardware sales — including consoles, portable game devices, and accessories — rose 15% to $7.5 billion.
Mat Piscatella, an analyst with the NPD Group, explained the big year by pointing to the strong slate of new games from prominent developers. Those games included Ubisoft’s Assassin’s Creed Odyssey and Rockstar’s Red Dead Redemption II, which set a record for the largest opening weekend in all of the entertainment industry.
Fortnite, introduced in 2017, also contributed as it gained momentum, generating a deluge of news stories and a skit on Saturday Night Live. The free-to-play game may not seem like a big money maker, but it nevertheless generates considerable revenue from players buying clothing, or skins, for their characters along with dances that those characters can perform.
Fortnite gained users as its publisher, Epic Games, expanded the game’s availability to Nintendo Switch and mobile (previously it was only playable on computers, the PlayStation 4, and Xbox One). But revenue generated by the game sputtered in January, all but killing the idea that the spending frenzy would continue this year.
Another strike against record video game revenue for 2019 is that PlayStation 4 and Xbox One—both introduced in 2013—are becoming elderly by console standards. Sales of the PlayStation 4 have started to slow, according to Sony’s reports, while demand for the Xbox One have always been well below that of the PlayStation, according to analysts.
The nearly two-year-old Switch is expected to be the year’s biggest selling console, but Nintendo recently cut its target from 20 million units sold to 17 million this fiscal year.
Additionally, fewer blockbuster game titles are expected to be released.
“2019 is going to be a bit more challenging,” Piscatella says.
In 2020, with a new generation of consoles expected, video game industry revenue should perk up again, Piscatella said. Microsoft has confirmed that it is working on the successor to the Xbox One, while Sony has made similar hints, but they haven’t said when those consoles will premiere.
In general, game publishers release a raft of new titles when new consoles debut. If that holds true, it would give even more lift to video game sales in 2020—and possibly set the stage for yet another record year.