US Holiday Video Game Spending Expected to Increase 24% to $13.4 Billion

Spike driven mostly by sales of consoles and storage solutions, NPD Group reports

Video game consumers in the United States are expected to spend $13.4 billion on gaming equipment and software this holiday season — a 24% increase from last year according to a new report from market research firm NPD Group.

The majority of game spending this holiday season — which NPD Group classifies as the months of November and December — is expected to be driven through console sales. Both Microsoft and Sony Interactive Entertainment are releasing next-generation hardware this year, the Xbox Series X and the PlayStation 5, both of which have been available to pre-order for about a month now.

NPD Group analyst Mat Piscatella said in the report that annual U.S. consumer spending on video games could reach a new high by the end of 2020 and exceed $50 billion.

Piscatella offered several predictions for the holiday season, including the obvious — that both the new Xbox and PS5 will be in hot demand. Pre-orders opened about a month ago for both devices, and retailers are already finding the next-gen devices are flying off the (virtual) pre-order shelves.

“Units will be tough to find with continued strong demand into 2021,” Piscatella said, which could lead to Nintendo’s Switch console achieving high holiday sales numbers. NPD Group predicts the Switch will be the top-selling console of this year.

Piscatella noted, “Switch will be a hot holiday gifting item with more households picking up multiple Switch consoles in the fourth quarter… The lack of available inventory of new PlayStations and Xbox systems will leave Switch as an appealing available option (although supply may still be difficult to find).”

The new gaming consoles are deliberately designed with less than a terabyte of storage space on the hard drives, which in today’s world of game design where some titles are upwards of 100GB to download, won’t be enough for most players. Piscatella wrote that he predicts sales of external storage will skyrocket this holiday because consoles won’t offer enough space.

“For those early adopters who will want to dive into their content libraries or explore the content available through subscription services and free-to-play live service games, additional storage may become a must-have,” Piscatella said.

Piscatella added that the player base is growing — according to NPD Group’s gamer segmentation report released earlier this year, there’s about 244 million video game players in the U.S., about 30 million more than two years ago. The average gamer is spending about 14 hours per week playing video games, compared to 12 hours reported in 2018.

So far in 2020 players have spent a whopping $33.7 billion on games equipment, up 21% from last year and driven largely by the coronavirus pandemic, NPD Group found. In a separate report released Oct. 16, NPD Group found that U.S. players spent $4.3 billion in September this year, up 10% from the year prior and driven mostly by mobile and hardware sales.

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