The console business is being squeezed by rising component costs, increasingly expensive hardware, and a shortage of major system-selling releases. S&P Global expects 2026 to become the weakest year of the decade so far, and even Grand Theft Auto VI may not be powerful enough to reverse the decline.

The console industry may be heading into one of the most difficult periods it has ever faced. Higher component prices have pushed current hardware further out of reach for many consumers while also complicating work on the next generation of systems. S&P Global believes the pressure could produce record-setting lows in 2027, but the downturn is already expected to be severe this year. Shipments may fall by as much as 19.5% in 2026, making it the weakest annual result of the decade to date.

The research firm argues that several structural problems are now converging at the same time. “The market faces an increasingly serious problem: hardware that is either too old or too expensive for the average consumer, a limited software offering save for a handful of flagship releases, and an economic environment that prevents any significant price reductions,” its analysts explained. This generation may also have effectively lost the price-conscious audience that traditionally waited until the later years of a console cycle to buy discounted hardware, because meaningful reductions are becoming increasingly difficult to achieve.

S&P Global also examined the outlook for Nintendo, Sony, and Microsoft individually. Although each company faces a different set of challenges, none of the three forecasts points toward an easy year.

• Nintendo Switch 2: The firm expects sales of roughly 17.1 million units in 2026, but predicts a substantial slowdown afterward. Component shortages could limit momentum, while the absence of an obvious near-term blockbuster may make it harder for Nintendo to maintain the system’s current pace.
• PlayStation 5: Sony is projected to ship 13.2 million consoles this year, down sharply from 17.1 million in the previous period. S&P Global is not convinced that Grand Theft Auto VI alone can compensate for the high cost of buying into the platform.
• Xbox Series: Annual sales are estimated at only 2.5 million units, followed by what the analysts describe as “a rapid trend to zero.” They attribute the decline to an uneven exclusive lineup, a subscription-led strategy that failed to produce a meaningful hardware boost, and pricing that now places the Xbox Series X €100 above the standard PlayStation 5.

The Outlook Remains Difficult Beyond 2026

S&P Global expects a gradual recovery to begin in 2028, but that projection depends on a favorable assumption that may not hold. “A key assumption we make in predicting a recovery period in the latter years of this decade is that the component crisis will have eased sufficiently by 2028 to allow Sony and Microsoft to launch their new hardware at prices ranging from $600 to $800,” the firm stated.

There is no guarantee that supply conditions will improve that quickly. Several companies now expect demand for memory to remain above available production capacity until 2030, which could extend the crisis well beyond current estimates. If that happens, next-generation consoles may perform worse than S&P Global currently predicts and recreate a familiar cycle from the beginning of the present generation: consumers cannot afford the new machines, publishers continue supporting older hardware, and cross-generation releases further reduce the incentive to upgrade.

Source: 3DJuegos