U.S. gaming industry feels squeeze after pandemic boom
A customer plays on an Xbox xCloud device at a Microsoft store, London, UK, July 11, 2019. /CFP

A customer plays on an Xbox xCloud device at a Microsoft store, London, UK, July 11, 2019. /CFP

At the height of the pandemic, video games offered people solace in isolation. But as life slowly returns to pre-crisis normal and inflation soars, U.S. gaming companies are feeling the pinch.

Makers of consoles, accessories, and software for gaming are experiencing the same post-pandemic effect as tech titans who saw their businesses boom while COVID-19 fears kept people close to home.

The squeeze has been exacerbated by steep inflation spurring belt-tightening and gaming fatigue after years of relying on indoor entertainment.

U.S. consumer spending on video games fell 11 percent in June and is expected to decline 8.7 percent this year, data from market research group NPD showed.

Video game giant Activision Blizzard, which Microsoft is in the process of purchasing, reported that sales in the first half of this year declined, with gamers spending less time playing its powerhouse "Call of Duty" franchise.

Nvidia, the California-based maker of high-performance graphics cards popular with gamers, recently issued an earnings warning because of "declining revenues in video games."

Even spending on mobile games is showing signs of weakening, according to analysts.

"Higher prices in everyday spending categories such as food and gas, the return of experiential spending such as travel and attending live events, a lighter release slate of new games, and continued new generation console hardware supply constraints were all likely contributors to the decline seen in the second quarter," said Matt Piscatella, an analyst with NPD.

Piscatella expressed hope the video game market will stabilize in the year ahead and then return to steady growth.

U.S. consumer prices were unchanged in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief for weary Americans who have watched inflation climb over the past two years.

(Sources: AFP, Reuters with edits)

Read more: U.S. July inflation may worsen Fed's future dilemma

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