Industry analysis firm DFC Intelligence has released its 2024 market report and forecast, and despite the past two years of uncertainty, sweeping layoffs, and studio closures, the industry is set to rebound. After two years of major growth fueled by the pandemic, and its subsequent slump, DFC predicts the industry will return to growth in 2025 and beyond.

As of 2024, the number of gamers worldwide is around 3.8 billion, a figure DFC expects to reach 4 billion--around half the global population--by 2028. Of that number, 10% are considered core gamers and account for 65% of video game spending, while the rest are considered casual gamers, many of whom only game on mobile devices and don't own any dedicated hardware.

Nintendo is set to be a major winner in the next few years, with its next console (colloquially known as the Switch 2) expected to release in 2025 with little competition from Sony or Microsoft. DFC predicts that the Switch 2 will sell 15-17 million units in 2025, and more than 80 million by 2028.

The sales of Nintendo's upcoming console will add to an ongoing trend of high spending on gaming hardware, which surpassed PC and console software sales in 2023. The category includes not only video game consoles, but PC parts and accessories, and handheld devices like the Steam Deck. This trend is driven by the core gaming audience, especially PC players who see high-end gaming hardware as a status symbol. Despite the cost of some video game accessories and hardware, DFC points out that it is still far more affordable than other hobbies like "sports cars, arts/antique collecting, travel, skiing, golf etc."

Despite the favorable outlook for hardware sales, DFC is predicting that there will be a major loser in the next generation of console wars--which could be either Sony or Microsoft depending on a number of variables. Getting in early is likely to be the deciding factor, but DFC also says a portability feature, like the Switch's, could make a difference. At this point Sony has a slight advantage thanks to its loyal user base, while Microsoft could pivot to focus on software and distribution as the largest software publisher in the industry.

"Overall, 2025 is also shaping up to be one of the best years ever for new game releases," DFC adds, singling out the highly anticipated release of GTA 6, which is expected to break records. The firm also expects that new consoles from Microsoft and Sony will release sometime between 2026 and 2028, contributing to DFC's prediction that PC and console revenue will reach $200 billion a year by 2028.