Physical video game sales are expected to vanish entirely within the next decade as digital distribution continues to dominate the entertainment market. Despite a minor 3% increase in U.S. physical game spending over the 12-month period ending in May 2026, industry data suggests this is a deviation from a long-term decline that began in 2009, according to analysis by Circana senior director Mat Piscatella.
The shift away from boxed media has been accelerated by hardware design, with manufacturers increasingly releasing consoles without disc drives. As reported by Piscatella, more than half of all Xbox Series consoles in the US don’t have a physical drive, while over a quarter of PS5’s are the same. This hardware trend, paired with the industry’s move toward digital-first software delivery, signals a significant transition for collectors and gamers alike.
The Long-Term Decline of Physical Software
The gaming market has seen a consistent contraction in physical software sales since 2009. While the 12-month window ending in May 2026 saw spending reach $1.6 billion, this figure represents an increase over the previous year. According to data shared by Piscatella on the social platform Bluesky, the market is currently driven by a clear preference for digital storefronts, rendering the second-hand physical market increasingly marginal to the broader industry.
US new physical video game software spending. 12 months ending May 2007-2026:— Mat Piscatella (@matpiscatella.bsky.social) 2026-06-25T11:30:56.827Z
The recent, albeit small, uptick in physical sales has sparked debate regarding its cause. It’s unclear exactly, but it could be due to the launch of the Switch 2, whose audience typically buys more physical games than any other. However, this demographic trend is not expected to halt the industry-wide migration toward digital-only ecosystems.
Industry Shifts and Publisher Strategy
Major publishers are already adjusting their release strategies to reflect the waning demand for physical discs. A recent case in point is the approach taken by Rockstar, which has opted to distribute physical copies of GTA 6 with only a download code at launch. This strategy minimizes the overhead associated with manufacturing and logistics.
The future of physical media may ultimately mirror the trajectory of the music and film industries, where physical ownership has transitioned into a niche interest. Specialist companies such as Limited Run or iam8bit currently cater to this collector-focused market, producing small-batch physical releases for titles that would otherwise be digital-only. This suggests that while “big-box” retail distribution of games may cease, a boutique market for physical artifacts is likely to persist as a premium service for enthusiasts.
What Happens Next for Console Hardware
The critical indicator for the survival of physical games will be the hardware specifications of the next generation of consoles from Sony and Microsoft. As global demand for memory remains high, the cost of manufacturing consoles with optical disc drives continues to be a factor for hardware developers. If the next generation of systems moves exclusively to digital-only formats, it will effectively finalize the transition that began with the introduction of digital-only SKUs for the PlayStation 5 and Xbox Series X/S.
Conversely, if manufacturers continue to offer split-SKU options—where consumers choose between a disc-capable console and a digital-only version—the price of the optical drive itself may become a point of contention. As hardware costs fluctuate, digital-only consoles are positioned to remain the more affordable entry point for the average consumer, further incentivizing the shift away from physical media.
The industry is expected to provide more clarity on hardware roadmaps, where manufacturers typically outline their long-term supply chain strategies. Until then, the market remains in a state of flux, balancing the convenience of digital access against the enduring, yet shrinking, demand for physical ownership.
We invite readers to share their perspectives on the future of game ownership in the comments section below.