US Video Game Hardware Spending Collapses to Lowest July Since 2020 as PS5, Xbox and Switch 2 All Slide

US spending on video game hardware collapsed in July 2026 to its lowest level for that month since 2020, according to a new Circana report shared by analyst Mat Piscatella. Total hardware spending for the month came in at $282 million, a 29 percent year-over-year decline and the weakest July result since the height of the COVID-19 supply chain crisis, when console stock was nearly impossible to find on shelves.

Unit sales were down across every major platform. PlayStation 5 sales fell 6 percent compared with July 2025, Xbox Series X and S sales dropped 18 percent, and Nintendo Switch 2 sales declined by 51 percent. Circana notes that the Switch 2 figure is being compared against the console's own launch month, which distorts the read somewhat, but says the broader decline is still clearly tied to higher console prices rather than any lack of demand for the systems themselves.

The bigger story is the price backdrop. Piscatella directly attributed the collapse to "higher hardware prices driven by the RAM and component crisis," which has significantly impacted the selling rates of both the PlayStation 5 and Xbox Series X. Sony has raised the base PS5 from $499.99 at launch to $649.99 today across two increases, while Microsoft's Xbox Series X now sells for $799.99, a $300 jump over its launch price. Nintendo is following with its own $50 Switch 2 increase on September 1.

Software spending tells a slightly different story. Overall video game spending in the US was down 9 percent year over year in July, with the physical market particularly weak. Circana's data, cited by Metro, shows that only 4 percent of physical game sales in July were for Xbox titles, another sign of how far Microsoft's retail footprint has slipped compared with PlayStation. The Switch 2's biggest new release in July was the Splatoon spin-off Splatoon Raiders, which is reported by VGChartz as the best-selling game of the month in the US.

Piscatella, who shared the figures on his Bluesky account, also pointed out that the $282 million hardware total was only slightly higher than the $163 million spent during July 2020, four months into the US lockdown period when most retailers were sold out of consoles. In a typical year at this point in a console generation, prices would have been cut rather than raised, which historically boosts software attach rates. With that playbook now off the table for Sony, Microsoft and Nintendo, both Eurogamer and Polygon have framed the report as evidence that the industry's hardware economics are entering uncharted territory, and that the upcoming next-generation consoles from Sony and Microsoft will arrive into a market where buyers have grown used to paying more for less.

The Circana figures are preliminary retail tracking numbers for the US market and may shift in Circana's full monthly report.