There's no question that this generation's software and innovations in streaming services have seen massive success. While sales on these items have gone up in the past year, the revenue generated from hardware has gone down.
According to GamesIndustry.biz, a recent report from the NPD group demonstrates that gamers and console owners in the United States have spent $27.9 billion by the end of September since the beginning of 2019 on video game products and services, including software and streaming platforms.
This indicates a 1% increase compared to the same time period from 2018. Additionally, in Q3 of 2019 (July 1 to September 30), consumers had spent $9.18 billion in total on games and services. This is also a 1% sales increase from Q3 of 2018.
However, while gaming products and services are performing well, hardware is not. Although the Nintendo Switch continues to see strong performance, Q3 of 2019 saw $575 million in revenue, a 22% drop in spending from Q3 of 2018. Meanwhile, year-to-date hardware sales have fallen by 23% overall compared to 2018 with $1.9 billion in revenue.
Despite all of this, video game content sales for 2019 are up over 2018 altogether. Currently, 2019 has generated $24.7 billion in video game content sales, which is a 3% increase over 2018. Furthermore, Q3's spending also saw a 3% increase over Q3 of 2018 with $8.1 billion in sales.
Q3's most profitable games include Borderlands 3, Madden NFL 20, Fortnite, Grand Theft Auto V, and Pokémon GO. Given the latest releases of games like Call of Duty: Modern Warfare and others, there is plenty of content available to generate revenue. As such, the slight increase in sales is understandable.
As for the steep drop in hardware sales, this can likely be explained by the fact that gamers are nearing the end of the lifecycle of the Xbox One and PlayStation 4. Good sales (such as those on Black Friday) may be able to help boost hardware sales, but these consoles have now been out for six years. There has been immense attention paid to the upcoming Project Scarlett and PlayStation 5.
As a result, it would make sense that sales on these consoles are winding down and that, perhaps, consumers are gearing up for the next generation of consoles.