Physical video game software dollar sales in the U.S. experienced a sharp decline in July, reaching an all-time low of $85 million. This figure represents the worst performance since sales tracking began in 1995, according to new data from Circana.
The report indicates that for the 2026 year-to-date period, games released for Nintendo platforms accounted for 63% of all new physical software sales in the U.S. PlayStation hardware game sales comprised 32% of this spending. Xbox was not mentioned in the breakdown of physical sales.
This downturn in physical sales occurs in the wake of Sony's announcement that it will cease the production of physical discs for PlayStation games starting in 2028. Sony stated this decision reflects shifting consumer preferences, with new titles increasingly being released digitally via the PlayStation Store and at retailers.
Despite industry trends, Sony's decision has drawn criticism from some segments of the gaming community. Online petitions and social media campaigns have emerged, urging Sony to reconsider its stance and addressing concerns about video game preservation and digital ownership. The UK's Digital Entertainment and Retail Association (ERA) also characterized Sony's move as prioritizing corporate convenience over consumer choice.
Sony has maintained that discontinuing physical discs will not negatively impact its business, acknowledging strong community reactions but affirming its commitment to the decision. However, the latest data highlights that PlayStation hardware still represents a substantial portion of the remaining physical game market.
Further reinforcing the shift towards digital, Sony's recent financial reports show an 82% digital download ratio for full game software across both PS4 and PS5. Mat Piscatella, Senior Director and Video Game Industry Advisor at Circana, noted that only seven PlayStation video games have sold more than 100,000 physical units in the U.S. year-to-date, with just two titles exceeding 10,000 physical units during the week ending July 11.
July proved to be a challenging month for the overall video game market. Total U.S. consumer spending on video games fell 10% year-on-year. Hardware spending saw a significant drop of 29%, a decline attributed to comparisons with the launch of the Nintendo Switch 2 and increased prices for the PlayStation 5 and Xbox Series X/S consoles. Hardware spending in July reached $282 million, a low not seen since July 2020.
Subscription spending was the sole segment to show growth, increasing by 6% compared to the previous year. Piscatella cited the record-setting launch of the Nintendo Switch 2 in June 2025 as a factor impacting market comparisons, but also pointed to rising hardware costs due to component shortages, which have affected sales rates for PlayStation 5 and Xbox Series consoles. A price increase for the Nintendo Switch 2 is also scheduled for September 1, 2026.
Total hardware unit sales decreased by 39% compared to July of the previous year, while the average selling price of new video game hardware rose by 16% to $542. All console platforms experienced a decline in unit sales. PlayStation 5 unit sales were down 6%, Xbox Series dropped 18%, and Nintendo Switch 2 saw a 51% decrease. Despite this, the Nintendo Switch 2 remains 11% ahead of the original Switch's sales pace at the same point in its lifecycle.
In terms of individual game sales for July, Call of Duty: Black Ops 2 was projected to be the best-selling game in dollar sales, largely due to the release of a PlayStation port. Call of Duty: Black Ops also saw a PS4/PS5 port and ranked fifth. Ubisoft's Assassin's Creed: Black Flag: Resynced and Halo: Campaign Evolved placed third and sixth, respectively, while Splatoon Raiders took seventh place.