From Singapore: the physical video game disc has been on life support for years, but new data published this week makes the prognosis official. US physical video game sales totalled just $1.5 billion in 2025, the lowest figure in the entire 30-year history of Circana's tracked dataset, according to a post by Circana senior analyst Mat Piscatella. The number puts a stark figure on a structural shift that has been reshaping retail shelves, publisher balance sheets, and consumer habits across the English-speaking world, including in Australia.
The peak, for context, was 2008: the market for new physical video game sales in the US hit $11.6 billion that year. With $11.6 billion in 2008 and $1.5 billion in 2025, physical video game sales have fallen 87 per cent over 17 years. Adjusted for inflation, the picture is grimmer still. The total inflation rate from 1995 to 2025 is roughly 113 per cent, meaning those 1995 baseline figures represent considerably more real purchasing power than the 2025 numbers suggest.
There is one piece of relatively encouraging data buried in the figures. Spending dropped by 11 per cent in 2025, which is the smallest decline since 2021, and a significant improvement over 2024's year-on-year decline of 28 per cent. But Piscatella himself was careful not to oversell what that means. "So yes, the rate of decline slowed. But that's mostly because we're nearing the bottom, and the launch of Switch 2 helped stabilise. There's definitely something to be said for the desire to return to analog and non-connected devices, especially for Gen Z. But 'dramatic shift'? Don't see it."
The headline physical sales number sits in sharp contrast to the broader health of the gaming industry. According to Circana, US video game hardware, content, and accessories sales in 2025 reached $60.7 billion, a 1.4 per cent total increase over 2024, and just shy of the $61.7 billion record set in 2021. The same Circana 2026 forecast report goes further, stating the year has the potential to reach a new record high in consumer spending. The industry is not contracting; it is transforming.
Circana's report indicates that shifts in consumer behaviour, including an "accelerated adoption of cloud gaming" and the rising popularity of subscription-based services like Xbox Game Pass and the PlayStation Plus Game Catalogue, may be driving the divergence. Subscription revenues tell that story clearly: a 23 per cent increase in subscription spending in January 2026 compared to the same month a year earlier combined with slight gains across console and PC content.
The trend carries direct relevance for Australian retailers and the local gaming market. In Australia, 2024 already saw a significant decline in digital (14%), retail (34%), and hardware (17%) full-game sales, according to the Interactive Games and Entertainment Association (IGEA). The digitisation of video games has similarly dampened physical game sales locally, with consoles like Sony's PlayStation 5 and Microsoft's Xbox Series X facilitating digital downloads. For Australian bricks-and-mortar retailers such as EB Games and JB Hi-Fi, the US data is a leading indicator of where their own physical shelves are headed.
Advocates for the physical format do raise legitimate concerns worth taking seriously. Digital-only ownership means consumers have no resale rights, no tangible asset, and are entirely dependent on platform operators maintaining access to purchases indefinitely. The collapse of a digital storefront, as has occurred on several older platforms, can erase entire libraries. For budget-conscious households, the second-hand physical game market has historically provided an accessible entry point that digital ecosystems simply do not replicate.
The supply chain impact will be felt in ways that extend beyond gaming aisles. Physical game distribution relies on optical disc manufacturing, warehousing, and freight logistics, all of which represent economic activity that digital delivery bypasses entirely. As the format shrinks further, those downstream jobs and supply relationships face continued pressure.
What the data ultimately shows is a market that is growing in value while shrinking in physical form. For consumers, that is broadly convenient. For retailers, publishers who depend on second-hand sales margins, and the workers behind physical distribution, the picture is considerably more complex. Video game retailing has managed to stave off online subscription services for longer than movies and music, but the gap is closing fast. Whether governments or industry bodies have any appetite to address the consumer rights dimensions of an all-digital future remains, for now, an open question. The Interactive Games and Entertainment Association represents Australian industry interests in these debates, though its primary constituency is publishers rather than consumers or retail workers.