Recent data from The Wall Street Journal, analyzed by market research firm Circana, shows that younger Americans (18 to 24 years old) have significantly cut back on their spending for video games, dropping by 25% compared to last year. This decline, part of a broader 13% dip in overall spending across various categories, is especially pronounced in tech accessories, furniture, and gaming, which have each seen drops in the 12-18% range.
The gaming sector, however, experienced the steepest fall, signaling a shift in how younger generations allocate their money.
The report suggests that economic pressures are the primary driver behind these changes. Many young graduates are struggling to find stable employment, with student loan repayments restarting, adding to the financial strain. Additionally, rising credit card delinquency rates, particularly among those aged 18-29, indicate a broader financial struggle. The New York Federal Reserve’s data shows these delinquency rates are at their highest since the pandemic began.
Interestingly, this data does not take into account the June 2025 release of the Nintendo Switch 2, which is expected to revitalize gaming sales. Additionally, the anticipated release of Grand Theft Auto 6 next year is set to break records across all entertainment sectors, including gaming. Despite these upcoming events, the overall cost of gaming has increased, with game prices now reaching $80, higher prices for consoles, and more aggressive in-game monetization strategies.
While the gaming industry remains profitable, there has been a surge in layoffs, particularly from large companies like Microsoft. In 2025 alone, over 2,800 game developers lost their jobs, on top of thousands of cuts in previous years. These layoffs, combined with the increasing cost of gaming, have added to the uncertainty surrounding the industry.
Despite these challenges, many players are still engaging with free-to-play games on platforms they already own, such as mobile devices and PCs. As Mat Piscatella from Circana pointed out, while people are still playing, they are increasingly choosing free-to-play options over traditional paid games, suggesting a shift in how the younger generation engages with gaming.