Analyst firm DFC Intelligence predicts record game sales and revenue as cost of living continues to rise

Market analyst firm DFC Intelligence published their full games industry forecast for 2025 with predictions for record revenue fueled by Nintendo – and by how expensive everything else is

Nintendo

Market analyst firm DFC Intelligence published their full games industry forecast for 2025 with predictions for record revenue fueled by Nintendo – and by how expensive everything else is. The report comes a few weeks after DFC published a preview outlining major trends to watch in the coming months, such as the battle over game distribution platforms and the belief that the industry will once again have room for mid-sized studios making AA-style games.

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“Over the past three decades, the video game industry has grown more than 20x, and after two years of slumping hardware and software sales, it’s poised to resume growing at a healthy rate through the end of the decade,” DFC Intelligence founder and CEO David Cole said. “While 2025 will mark the beginning of that upward trajectory, some huge questions remain, including who will lose the next-gen console war and who will win the game software distribution battle. And with the large publishers focused on live services around evergreen franchises, opportunities for smaller studios will be plentiful.”

The report begins with an outline of factors influencing the industry’s struggles during the Covid-19 pandemic and beyond, including “artificially inflated” revenue from 2020-2022, when consumers had little choice but to find entertainment at home. Studios overhired to meet increased demand and compensate for workflow interruptions while transitioning to remote work. When actual evenue fell short of expectations from a combination of software delays, Covid restrictions lifting so people spent money elsewhere, and lower-than-anticipated hardware sales, studios and publishers started laying people off en masse – despite global software revenue only declining by four percent.

Casual and non-gamers might be the biggest audiences, but DFC says they spend the least / DFC Intelligence

DFC points to those layoffs as the cause of additional disruptions that delayed development cycles even further, and they affected most major studios and many smaller ones. Riot and Humble number among those who laid off large numbers of employees, while full studio closures, such asSony recently announced for Concord-maker Firewalk and Neon Koi, were common as well. Microsoft laid off thousands of workers throughout the year, while others such as Activision Blizzard engaged in "soft layoff" tactics, forcing remote employees who worked out of state to relocate or lose their jobs.

Long-delayed software finally nearing the end of development cycles is only part of DFC’s prediction for a stronger 2025. As cost of living increases continue to rise around the world, consumers are looking for ways to spend less while still enjoying themselves. DFC says spending on activities such as dining and moviegoing has slowed in 2024, and despite higher entry barriers, gaming is a low-cost hobby. The firm cites theme parks as an example. For the cost of taking a family of four to a theme park for one day, that family could purchase a video game console that remains relevant as a source of entertainment for years.

A strong lineup of highly anticipated releases for 2025 – including GTA 6, Avowed, and a new Assassin’s Creed game – should boost software sales. DFC also believes that stabilized workflow and an end to, or at least reduction in, supply chain issues will help keep the next generation of consoles from experiencing 2020-style disruptions beyond 2025. By 2028, DFC believes revenue from console and PC gaming software alone will reach $83 billion worldwide, with over 4 billion people buying and playing video games.

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Despite software playing a prominent role in these predictions, DFC believes a sizeable portion of games revenue will come from add-ons – DLC, expansions, microtransactions, and subscriptions. The firm says larger publishers will continue seeking opportunities for expanded revenue in these areas, which leaves a gap for premium releases that they believe smaller studios and publishers will fill. Live-service games may occupy most of a consumer's time and money, but DFC's data shows standalone purchases don't lag far behind. Even when consumers don't spend much time with a specific game, they still purchase it as part of their collection or with the intent to play later.

Subscriptions make up a much smaller portion of games revenue, while add-ons and premium games are still where most of the money comes from / DFC Intelligence

In addition to new game releases, DFC says Nintendo’s Switch 2, or whatever the company plans on calling it, will also drive growth. The firm believes Nintendo will sell 17 million units of its new console in the system’s first year, assuming Nintendo has enough supply to meet demand. That demand is higher than usual for a new console release thanks to the original Switch lasting eight years, but also as part of the market’s burgeoning love for portable gaming, which the Switch helped inculcate. 

Sony’s or Microsoft’s next console will lose market share, the report says, though that balance where one succeeds while the other struggles is in keeping with how PlayStation and Xbox have existed for over a decade. Which console captures a larger audience depends on additional features, such as portability, though DFC believes Sony’s standing with consumers gives the PlayStation 6 a slight advantage, at least with hardware. Xbox’s many studio acquisitions should give it an edge in software development – assuming no further delays – though whether Xbox releases a traditional console or moves further into cloud streaming remains to be seen.

Whatever the case, DFC believes hardware spending on PCs and accessories will also increase, helped by a new range of Nvidia graphics cards set to launch in 2025. The demographic that spent the most on games and hardware in the last few years includes people who are already established in the sector – consumers who own a PC or multiple consoles, in other words. They continue to spend more than most on upgrading their setups with new graphics cards, console variations, and accessories such as mice and headsets. 

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DFC believes this demographic’s spending habits are part of a growing trend. Consumers are spending on higher-end hardware as a less expensive hobby, as it requires less investment than other activities, and as a status symbol. Unlike the Baby Boomer generation, Gen X grew up playing games and will continue to spend as they age – on portable PCs to have more ways to access their software library, on consoles for family so members of a household have their own devices, and on their own upgrades.

Whether this growth results in a more open job market, so the tens of thousands of people laid off might find stable employment again, remains to be seen. DFC’s report is focused on large-scale industry trends – not people.