U.S. Physical Game Spending Rises 5% in 2026, Driven by Game-Key Cards

Key points

• Circana reports a 5 percent year-over-year increase in U.S. spending on new physical video games in 2026, the first growth in over a decade.
• The rise is driven by a 631 percent increase in game-key card spending, offsetting a 3 percent drop in other physical media categories.
• Circana analyst Mat Piscatella notes that 54 new game-key card titles were published this year compared to 10 last year, largely for the Switch 2.
• Total content spending fell 10 percent in August to $4.3 billion, with declines in mobile and console sectors offset by gains in PC and subscription services.
• Hardware unit sales dropped 15 percent year-over-year, the lowest August total since 2013, with Xbox down 31 percent and Nintendo down 15 percent.
• NBA 2K27 was the top-selling game in August, followed by Madden NFL 27, Marvel Tokon: Fighting Souls, and Star Wars: Zero Company.

Background

Recent industry shifts have seen publishers explore hybrid physical-digital models, such as Microsoft's Disc-to-Digital feature for Xbox, which allows some physical discs to be converted to digital copies. Meanwhile, the broader market has faced challenges, including significant layoffs at studios like Supermassive Games, which cut over 70 staff in late 2026. The current surge in game-key card sales represents a notable deviation from the long-standing decline in traditional physical media, suggesting a renewed consumer interest in tangible formats for specific platforms like the Switch 2.

Why it matters

The resurgence of physical game spending, albeit driven by a niche format, signals a potential shift in consumer behavior and publisher strategy. The success of game-key cards on the Switch 2 platform may influence how other console manufacturers approach physical distribution and pricing. Additionally, the divergence between rising physical software spending and falling hardware unit sales highlights the complexity of the current market, where price increases and platform-specific strategies play a critical role in revenue generation.

What to watch

Analysts will monitor whether the growth in game-key card sales sustains beyond the initial Switch 2 launch window. Publishers may expand their use of this format for other consoles if the trend continues. Hardware manufacturers, particularly Sony and Microsoft, will need to address the significant drop in unit sales to stabilize the market. The upcoming release of GTA 6 in November 2026 could also impact physical sales trends, depending on its distribution model.