Circana Projects U.S. Gaming Industry Spending to Reach $62.8B in 2026
"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.CIRCANA PROJECTIONS:Last week, Circana's Mat Piscatella said that the U.S. video game industry enters 2026 with the potential to reach a new record high in consumer spending, following a year of slight growth driven by new hardware, rising subscription engagement, and robust player demand across platforms. According to Circana's latest Games Market Dynamics report, total U.S. consumer spending on video game hardware, content, and accessories reached $60.7B in 2025, marking a +1.4% increase over 2024. Circana projects U.S. video game industry spending to rise +3% to $62.8B in 2026, surpassing the current all-time high of $61.7B set in 2021. This growth is expected to be fueled by the second year of Nintendo Switch 2, unprecedented anticipation for Take-Two's"Grand Theft Auto VI," and continued strength in subscription-based content. Key opportunities and challenges for the gaming industry in 2026, according to Circana, include: Switch 2 sales; "GTA VI" headlining a software surge; subscription spending remaining strong; hardware pressure from component costs; consumer behavior shifts, and emerging disruptors, including Valve's upcoming Steam Machines.AI DEMAND:Over the weekend, Bloomberg's Debby Wu, Takashi Mochizuki, and Yoolim Leethat rampant demand for memory technologies for generative AI is fueling a growing chip crisis, with such demand issues likely to affect video game hardware. Of note, people familiar with Sony'sthinking told Bloomberg that the PlayStation maker might delay the release of its next PlayStation console to 2028 or even 2029, which would cause a major upset to a "carefully orchestrated strategy to sustain user engagement between hardware generations." Meanwhile, Nintendo is also considering raising prices for its Switch 2 consoles this year despite launching the $450 device just last year, according to Bloomberg.UBISOFT RESULTS:Last week, Ubisoftreported Q3 net bookings of EUR 338M, marking a 12% year-over-year increase. Overperformance versus expectations was primarily driven by partnerships and the "Assassin's Creed" franchise, the company said. Back-catalog was up 11% year-on-year, driven by "Assassin's Creed," "Avatar" and "The Division." Looking ahead, the company reiterated its FY2025-2026 outlook for net bookings and non-IFRS EBIT.MORE VIDEO GAME NEWS:At its State of Play event last Thursday, PlayStation unveiled a new 2D action gamefor PlayStation 5, which launched the same dayfrom the State of Play include an announcement for a remake of the original "God of War" trilogy, as well as an announcement for Konami's"Castlevania: Belmont's Curse" and "Metal Gear Solid Master Collection Volume 2," both out this yearSquare Enix's"Dragon Quest VII Reimagined" was the top-selling game in Japan for the week of February 2-8,Cathie Wood's ARK Investments purchasedof Robloxlast TuesdayMattelagreed to acquire full ownership offrom NetEase
