The next-generation console market is picking up speed as homes and players trade older boxes for more powerful, connected devices. Forecasts expect the market to grow from about USD 2.4 billion in 2026 to roughly USD 6.1 billion by 2035, driven largely by better hardware, wider digital distribution and changing player habits.
Market growth and what’s driving it
Analysts put the compound annual growth rate at roughly 9.8% for 2026–2035. That expansion reflects three clear trends: faster processors and larger, quicker storage; broader network connectivity that turns consoles into always-on platforms; and a shift in how people use consoles—less as single-game machines and more as multifunctional entertainment hubs that combine gaming, streaming and social features.
What that means for companies and consumers
As demand for higher-spec hardware and online services rises, manufacturers will need to balance performance with price and power efficiency. Game publishers are likely to lean further into digital distribution and live-service models that generate recurring revenue. Retailers and accessory makers will increasingly offer bundles and subscriptions to capture lifetime value. For consumers, the result is shorter hardware cycles and a growing emphasis on ecosystems—who you buy into matters almost as much as what you buy.
Regional patterns and the Asia Pacific lead
Regional dynamics shape where growth happens. Asia Pacific dominates, commanding about 43.6% of the market thanks to a dense population of players and faster device penetration. China is a standout inside that region: a roughly USD 0.42 billion segment growing at about an 11.3% CAGR. Platform engagement remains high—PlayStation, for example, reported around 116 million monthly active users—even if migration to new hardware is unfolding more gradually than in previous cycles.
Product mix and how people spend
Spending concentrates on portable form factors and core hardware. Handheld consoles account for roughly 43.8% of the market, reflecting strong demand for flexible, on-the-go play. Hardware itself makes up about 68.4% of total market demand, underscoring that device purchases still dominate consumer outlays. Offline retail continues to matter too: tactile, in-person experiences drive about 59.7% of sales, helped by demos, bundled offers and higher confidence among first-time buyers.
Who’s playing and why it matters
Casual gamers are the backbone of the console market—about 72.4% of adoption, by current estimates. That explains the industry’s focus on accessible interfaces, hybrid designs and services that extend console value beyond single titles. While many users still held onto older-generation devices through late 2026, analysts estimate that about 65% of the active install base had moved to ninth-generation systems by 2026. Slower generational turnover has been softened by strong uptake of key new launches and the rise of digital services.
How companies are responding
Manufacturers have adjusted release cadences and marketing to broaden appeal rather than chase niche technical bragging rights. Bundles, demos and service tie-ins now play a larger role in customer acquisition and accounted for a significant share of recent sales. Meanwhile, the revenue mix is shifting toward subscriptions, storefront sales and cross-platform services—making ecosystem strength a critical competitive advantage.
Where investors and platform owners should focus
Three areas stand out:
– Hardware performance: Securing partnerships with semiconductor and storage suppliers helps protect supply and performance differentiation.
– Software and services: Strong ecosystem hooks and recurring-revenue models capture more value as digital sales dominate.
– Pricing and segmentation: Tiered hardware lines and bundled offers help bridge legacy installed bases and newer, higher-margin devices.
Digital sales already account for more than 70% of console purchases in many markets. That tilts the opportunity toward services—cloud gaming, subscription libraries and digital storefronts—where recurring revenue improves lifetime value and reduces dependence on one-off hardware cycles. Still, higher-spec components push retail prices up, which can slow adoption among price-sensitive buyers; semiconductor availability and supply-chain complexity remain production risks.
Competition, innovation and recent milestones
Platform owners are competing on content depth, service quality and ecosystem breadth. Exclusive games and timed releases still drive engagement, but bundled subscriptions, cross-platform libraries and advanced peripherals (controllers, storage expansions, immersive accessories) are equally important for lifting average revenue per user.
Market growth and what’s driving it
Analysts put the compound annual growth rate at roughly 9.8% for 2026–2035. That expansion reflects three clear trends: faster processors and larger, quicker storage; broader network connectivity that turns consoles into always-on platforms; and a shift in how people use consoles—less as single-game machines and more as multifunctional entertainment hubs that combine gaming, streaming and social features.0
Market growth and what’s driving it
Analysts put the compound annual growth rate at roughly 9.8% for 2026–2035. That expansion reflects three clear trends: faster processors and larger, quicker storage; broader network connectivity that turns consoles into always-on platforms; and a shift in how people use consoles—less as single-game machines and more as multifunctional entertainment hubs that combine gaming, streaming and social features.1