The video game console market is bracing for a substantial downturn, with industry analysis predicting a nearly 20% drop in console sales by 2027. This decline is attributed to a confluence of factors, including persistent component shortages that have driven up hardware prices and a challenging macroeconomic environment.
According to a report from S&P Global Market Intelligence Kagan, shared by GamesIndustry.Biz, the era of consoles becoming cheaper over time appears to be over. Instead, escalating manufacturing costs have made systems like the Nintendo Switch 2, PlayStation 5, and Xbox Series X|S less accessible to consumers. The firm forecasts that global console shipments will fall to approximately 27.1 million units by 2027. A recovery to 37.4 million units by 2030 is contingent on the stabilization of the component supply chain by 2028, which could pave the way for next-generation consoles such as Sony's PS6 and Microsoft's Project Helix.
Analyst Neil Barbour noted that the market is currently grappling with hardware that is either aging or prohibitively expensive for the average buyer, coupled with a software library lacking breadth beyond major releases. "For now, the market faces a compounding problem: hardware that is either too old or too expensive for the median consumer, a software slate that is thin outside a handful of tentpole releases, and a macro environment that keeps any meaningful price relief off the table," Barbour stated.
For the Nintendo Switch 2, S&P projects sales of 17.1 million units in 2026, aligning closely with Nintendo's own expectations. This figure represents a 16.9% decrease from its launch year. While a potential $50 price increase in September is a factor, S&P also points to a perceived lack of a system-selling game for 2026 as a drag on sales, though the 2027 release of Pokemon Winds and Waves could stimulate demand. Rumors of an OLED version of the Switch 2 are also circulating, but concerns about its potential price point are reportedly a significant consideration for Nintendo.
The PlayStation 5 has also seen its sales momentum falter, with recent price adjustments failing to bolster its performance. S&P forecasts a 15.2% year-on-year decrease for the PS5, with Sony expected to ship 13.2 million units in 2026, a notable reduction from the 17.1 million units shipped in 2025.
The outlook appears particularly challenging for Xbox. S&P reports that Microsoft shipped 3.2 million Xbox Series X|S consoles last year, the lowest annual total to date, a figure Microsoft has not publicly disclosed. The firm predicts sales will drop further to 2.5 million units in 2026, followed by a significant decline as Microsoft prepares for its next-generation hardware. Project Helix, expected to support both console and PC platforms, is anticipated to be an expensive device. S&P forecasts initial launch-year sales of 2 million units for Project Helix, potentially reaching 7.3 million by 2030. Barbour indicated that these figures represent a middle ground between a traditional console successor and a certified living-room PC. Court documents and industry statements suggest that the next generation of consoles is tentatively expected to begin in 2028, though market conditions remain volatile.